It may not come cheap, but BMG Entertainment will do what it takes to keep on jivin’.
Still regrouping after its scuttled merger talks with EMI, BMG now is sparring with Zomba Music over rights to continue distributing Zomba’s Jive Records unit in the U.S.
BMG likely will have to pay dearly to hawk Jive’s white-hot pop acts — including ‘N Sync, the Backstreet Boys and Britney Spears — and keep its share of the U.S. market from tumbling.
“They’ve got BMG over a barrel on this one,” says Sanford Bernstein analyst Michael Nathanson. “They haven’t got the major catalog and publishing assets (like those held by some other labels) to fall back on.”
To make matters worse, sources say BMG could post a loss of close to $100 million this year.
Jive acts account for roughly a 6% share of the total market for U.S. music, or one-third of the share enjoyed by the entire BMG operation. Without Jive, BMG would slip into last place among the five majors.
Jive, whose equity is split 80%-20% between Zomba and BMG, has had, since Jan. 1, the right to pull out of its BMG pact, so long as it gives six months’ notice.
Jive did just that in Canada last March, which means it should sever ties with BMG in the region in September. Talks for the U.S. are ongoing.
One of the likeliest suitors beyond BMG is its ex-merger partner EMI, which handles Jive’s distribution in parts of Europe and Latin America.