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London (pte038/24.02.2003/15:30) - The British EMI group http://www.emimusic.com, the smallest of the world's five largest music labels, is looking for a partner for a new merger.
According to the Wall Street Journal, EMI has cast its eye on Warner Music http://www.warnermusic.com, AOL Time Warner's music subsidiary. But Handelsblatt reports that EMI has also entered talks with the Bertelsmann group about a possible fusion with BMG http://www.bmg.com. In each of the scenarios, EMI would hold the majority in the new music label.
While it may be unusual for the smallest player in the music business to take the initiative, analysts suggest EMI aims to take advantage of a need for fresh capital among the respective parent companies. Both AOL Time Warner and Bertelsmann are also rumoured to be seeking ways out of the difficult music business without completely forsaking their foothold.
EMI is the only independent label not belonging to a larger media group. It is also the weakest label on the stock market. With a market value of just over 1.4m euros, EMI has already been deemed a likely candidate for takeover. By taking the initiative, EMI may ward off this option.
If EMI merged with Warner, the new company would occupy a 22 per cent market share in the United States, placing it second to market leader Universal.
Before any deal can go through, however, it must pass review by the European antitrust authorities, who have stopped similar merger attempts on the part of EMI before. Yet experts say dramatic changes in the music business due to sinking CD sales and online distribution could place such a merger in a new light and help it gain the favour of the authorities.
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