12 December 2003
GUETERSLOH – German multimedia giant Bertelsmann and the Japanese concern Sony were believed to be close to finalizing a deal to merge their music recording divisions, with an announcement possibly on Friday, according to media reports.
At Bertelsmann headquarters in Guetersloh, a company spokesman decline to comment on the reports, but did say negotiations were proceeding well.
Both Financial Times and the Wall Street Journal were citing sources close to the companies as saying a deal to create a 50-50 joint venture was imminent.
Executives at Sony Music and Bertelsmann’s music division BMG were in negotiations to finalize the agreement which the two companies mapped out in November when they announced their aim for a merger.
The merger would be subject to regulators’ approval both in the European Union and with the Federal Trade Commission in the United States.
Financial Times said the agreement would be expected to start a comprehensive restructuring at the combined music business, producing upwards of USD 300 million (EUR 245 million) in yearly costs savings.
But the paper said the joint venture would not include the companies’ music publishing, physical distribution and manufacturing businesses.
The deal would also pose the next step in a consolidation going on in the international music recording business, after rivals Warner Music and British company EMI were seen moving towards a deal of their own.
After Sony and BMG made their merger aims known in November, Time Warner agreed to sell Warner Music to a financial investors group heaed by Edgar Bronfman. He had offered some USD2.6 billion in topping a rival bid by EMI.
Based on 2002 figures, a Sony-BMG music company would combine for around 26.7 percent of the world music market, inching ahead of the current leader, Universal Music, which held a 25.9 percent share.
Subject: German news