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Bertelsmann's tune-up plan
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January 17, 2000: 5:52 a.m. ET
German media giant aims to top music chart; bids for EMI, Sony seen unlikely
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LONDON (CNNfn) - German media giant Bertelsmann has set itself the target of becoming the world No. 1 in music sales by the end of this year and may bid for a rival such as Sony Music or EMI Group, according to a report published Monday. Analysts warned such a move would face serious obstacles, however.
Bertelsmann chief executive Thomas Middelhoff told the German news magazine Der Spiegel he wants the privately held firm, already the world's second-largest music company, to overtake Seagram's Universal Music unit by the end of the year. Although Middelhoff declined to identify any acquisition targets, the magazine said Sony Music or EMI, ranked third and fifth in the world respectively, may be in his sights.
But analysts said Monday Bertelsmann is unlikely to get a green light from competition authorities to acquire either company.
Gareth Thomas, media analyst at Commerzbank, noted that Bertelsmann, which has a 19.6 percent market share of worldwide music sales, earns 50 percent of its music revenue in Europe. EMI, ranked number five with an 8.2 percent share, makes 40 percent of this in Europe.
"Bertelsmann would love to overtake Seagram, but it isn't going to do it this year," said Gareth Thomas, media analyst at Commerzbank.
"There's going to be a massive monopoly problem" in the event of a bid for either Sony Music or EMI. Seagram's market share was 26 percent last year.
Analysts also said they believe Sony Corp., the Japanese electronics giant that owns Sony Music, has no intention of selling the third-ranked music company.
EMI (EMI) shares climbed 3 percent in London while Sony Corp. closed up 2.7 percent in Tokyo. Both companies declined to comment on the speculation.
One industry source, who declined to be named, said that Bertelsmann had previously expressed some interest in EMI, but declared it too expensive at 350 pence a share. The stock has since recovered and traded at 705 pence at midday Monday.
EMI shares surged last week on the wave of interest in media content providers following the takeover of Time Warner by America Online. The world's biggest music publisher in terms of copyright ownership, EMI has already licensed some of its content to Web-based music suppliers such as Liquid Audio.
Sony Music includes the Epic and Colombia record labels among its assets and its artist roster includes Celine Dion. The company posted sales of $6.03 billion last year. EMI had sales of 2.37 billion pounds ($3.89 billion) last year, bolstered by the performance of British singer Robbie Williams and its Virgin and Chrysalis labels. Among Bertelsmann's top recording stars are Whitney Houston, Kenny G and Carlos Santana.
Global music sales rose just 1.2 percent last year, according to one industry source, though the U.S. market continues to outperform the rest of the world with growth of 6 percent. 
-- from staff and wire reports
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