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Sony, Bertelsmann in tune?
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February 1, 2000: 11:26 a.m. ET
Report: music giants may be mulling tie-up that could eclipse Time Warner-EMI
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LONDON (CNNfn) - Sony and Bertelsmann may be looking to turn up the volume in the growing chorus of entertainment-oriented deals with a music merger that would eclipse last week's epic Time Warner-EMI tie-up, creating the largest music company in the world, according to a published report.
Sony Corp. subsidiary Sony Music and Bertelmann's BMG are feeling the consolidation heat as they scramble to secure a paramount position in the global music industry, the New York Post reported.
Germany's Bertelsmann was approached last year about a merger with America Online, but the overture met opposition from Bertelsmann's shareholders. AOL ultimately merged with Time Warner, the owner of CNNfn, in the largest corporate tie-up ever, one which aims to fuse "old" and "new" media formats on a scale never seen before.
Late last month, Bertelsmann set the tone for its near-term business strategy when it said it would seek acquisitions as a way of leaping to the head of the music industry. About the same time, Germany's Der Spiegel magazine said Bertelsmann was mulling a buyout of Sony Music or EMI Group.
Time Warner's tie-up with EMI leaves Bertelsmann with fewer options, although Sony remains an obvious choice. A merger between Sony Music and BMG would create a music mammoth: together the company's generated 1999 sales of $10 billion, and take a 29 percent share of the global market, the New York Post said.
That compares with a 27 percent share for Warner-EMI, based on 1998 figures.
Ajax Scott, a writer with Music Business International in London, said speculation has circulated in the industry for several weeks that Sony and BMG were poised to announce a merger. He suggested a Sony Music-BMG merger would be harder to pull off than the Time Warner-EMI deal, however, given the German and Japanese companies' contrasting corporate cultures.
A Bertelsmann spokesman declined to comment Tuesday on the reports, preferring to reiterate the company's official strategy.
"It's known all over the world that it's Bertelsmann's aim to go forward worldwide...We want to reach the number-one position in the music business."
Asked whether that inevitably meant a tie-up with Sony Music, currently third-ranked in terms of market share, assuming the Time Warner-EMI deal goes through, the spokesman suggested Bertelsmann had several options.
In terms of sheer recording talent, a Sony-BMG combination would be a worthy rival to Time Warner-EMI, which boasts stars such as the Spice Girls and Madonna. Sony Music's roster features artists such as Mariah Carey and Michael Jackson, while BMG has the Eurythmics, TLC, Santana and Whitney Houston.
Among the record industry's five leading record labels last year in terms of album sales growth, Seagram's Universal garnered top billing, followed by Sony Music, Bertelsmann's BMG, Time Warner's Warner Music and EMI. 
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