Inside Move: Music merger not definite

Talks plauged by fears of EC scuttling deal

A major announcement about the on-again, off-again merger between major labels BMG and EMI is coming early this week, and the word isn’t expected to be good, insiders said Friday.

The discussions, announced officially last November, have been plagued with fears that the European Commission’s competition authority would scuttle the deal over worries of market dominance and the reduction in the number of big industry players.

Pact would create a mega-conglom with 26% of the recorded music market (roughly neck-and-neck with the current leader, Universal Music Group) and whittle the competitive field from five major players to four.

Similar regulatory concerns caused EMI to quit its proposed union with Warner Music Group last year, after eight months of negotiations and more than $60 million in costs.

As recently as last week, both EMI and BMG parent Bertelsmann reaffirmed that they were committed to the talks. Bertelsmann topper Thomas Middelhoff has conceded, however, that the EC’s worries are a threat to the deal.

Another reported sticking point is EMI Recorded Music chief Ken Berry’s reluctance to see EMI assets, particularly Virgin Records, sold off to grease the regulatory wheels.

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