Music News - Sony-BMG Merger On The Cards
08 November 2003 - 0 Comments
In the latest of many music industry courting stories, it seems BMG and Sony Music plan to walk down the aisle together, after confirmation overnight that the companies have signed a preliminary agreement to combine their music divisions.
A 'non-binding letter of intent' signed by Bertelsmann of Germany and Sony of Japan proposes a 50-50 venture to be called Sony-BMG, with combined sales and marketing operations, making it the second largest record company (in dollar terms) in the world, behind Universal.
However, the deal has yet to pass the major hurdle of approval by both American and European anti-trust regulators, which in the past have prevented other music mergers from taking place. The two companies are also yet to perform the standard 'due diligence' analysis of one other's accounts.
BMG NZ Managing Director Mike Bradshaw says the international proposal alters nothing here at this stage. It is the fourth merger negotiation in as many years, the previous three coming to naught.
"It will not alter our view on local, and we will continue to seek and sign the growing talent pool we have here in New Zealand," says Mike.
In local airplay terms, both Sony and BMG are major players on radio. Sony currently has around an 18 per cent share of all music radio airtime while BMG has around 16 per cent. Universal leads the pack with over 25 per cent.
"We live in fragile, and for the record industry, very difficult times," said Sony Music Chairman Andrew Lack, in announcing the deal.
"A partnership like this allows us to manage our way through the difficulties."
Like virtually all in the music business, the two companies have found the going tough lately. BMG reported an operating loss of US$126 million in the first half of this year, nearly triple its losses in the comparable period last year, while Sony Music's profits fell 25 per cent in its most recent quarter.
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