Sony Music and BMG to merge

Two of the big five major record labels, Sony Music and BMG, agreed to join forces this week.

The two companies will reportedly keep their autonomy sharing their power 50-50 but now have the opportunity to compete with Universal Music Group to become the largest record company in theworld.

The Sony-BMG merger comes as two suitors are hunting down another juicy target in Warner Music (WEA). EMI reportedly is close to submitting a 1 billion dollar offer for the vast WEA operation whilebillionaire movie producer Haim Saban and former Seagram chairman, Edgar Bronfman Jr. are also reportedly tendering a similar offer. TimeWarner (they officially dumped the AOL from their name a fewweeks ago) has made no secret about their desire to sell off elements of their business that are not making money right now. This includes their music operations and possibly even their sportsfranchises. Earlier in the year TimeWarner sold off their CD pressing facilities although sources close to the deal tell AudioRevolution.com that WEA has a sweetheart deal negotiated for the pressingof their music titles on both CD and any DVD-Audio/CD “flip disc.”

The Sony-BMG deal raises more questions about label loyalties in the SACD/DVD-Audio format war. BMG had been sitting on the sidelines but gave vocal support to DVD-Audio. This holiday season BMG hasa handful of very good, Gen-X oriented DVD-Audio titles (Foo Fighters, Outkast) slated for release however with their new affiliation with Sony Music it has yet to be said whether BMG will startreleasing their new and or back catalog titles in SACD. EMI is a supporter of DVD-Audio in the U.S. but has deals with Sony Music to release SACD titles like Pink Floyd’s Dark Side of the Moon viaits U.K. parent company. If EMI ends up with WEA’s operation if they are rumored to do, Time Warner might mandate that they continue to support the DVD-Audio format that WEA has championed for thepast three years.

Source: Audio Revolution