EMI Group receives a takeover approach from Warner Music Group
By Julia Werdigier
Tuesday, February 20, 2007

LONDON: Warner Music Group said Tuesday that it had renewed its pursuit of a merger with EMI Group after lining up support from independent labels, the fifth attempt to combine in seven years.

EMI, the British music company that has issued two profit warnings already this year, said Tuesday that the approach did not include a formal proposal. Nevertheless, the company's shares rose 18 pence, or 8.4 percent, at 240 pence Tuesday in London, giving the company a market value of £1.9 billion, or $3.7 billion.

EMI, whose music catalogue includes bands like the Rolling Stones and Arctic Monkeys, and Warner Music have been trying to combine to better compete with Universal Music Group, a unit of Vivendi and the leader in a market where online music downloads are cutting into sales of singles and albums. The North American market for compact discs contracted 20 percent last year, EMI said, citing Nielsen SoundScan.

Warner Music, based in New York, said it had made the approach Jan. 24 after the Independent Music Publishers and Labels Association said it would support the merger before the European Union.

Warner, whose stars include Madonna and Enya, and EMI dropped earlier merger efforts over fears of opposition from EU regulators. A European court last June annulled EU approval of the 2004 merger of Sony Music with BMG of Bertelsmann. The European Commission, the EU's executive arm, is expected to rule in March on a new proposal by Sony BMG, which would become the second-largest music company in the world.

Any merger plan by EMI, the No.3 music company, and Warner, No.4, will have a better chance of succeeding if Sony BMG passes regulatory scrutiny, analysts said.

"The industry is having a very bad time now and regulators may take a more lenient approach," said Alex Degroote of Panmure Gordon in London.

"There may be some changes now that the two executives who opposed a deal have left," Degroote said.

EMI forced out Alain Levy, chief executive of its recorded music division, and David Munns, vice chairman of the unit, in January, when the company issued its first profit warning this year. Eric Nicoli, chairman of the overall company, took over the two executives' responsibilities.

EMI, based in London, said last Wednesday

that it was experiencing an "unprecedented level of market decline." It said that sales at its recorded music division would fall 15 percent and earnings would miss analysts' estimates.

Warner and EMI tried to combine in 2000, despite regulators' opposition to the plan. EMI made a second attempt, in 2003, but a group led by Edgar Bronfman won the bidding for the Time Warner music unit.

Actic Monkeys are on EMI now? Damn, I was just going to listen to them. Oh well.

"The North American market for compact discs contracted 20 percent last year, EMI said, citing Nielsen SoundScan."

Not exactly.

"LOS ANGELES (Reuters) - U.S. album sales, which include CDs and digital albums, fell 4.9 percent in 2006 as an increasing number of consumers preferred to download individual songs from the Web, Nielsen SoundScan said."

Once the RIAA finishes up with its abacus work and delivers totals for the year, it's very possible that they may agree with that 20% decline. But it's not what Nielsen said.

Nielsen hadn't already counted all the inventory from Tower Records as sales in previous years. The RIAA did.

So, EMI an Warner still want to have an incestouous marriage?

Oh well, all their offspring as of late are horrible mutations already. Might as well let 'em make even more ugly babies.

nice using genetic-science as analogous to this proposed merger...very fitting

yuck ugly

(didn't want to look in the first place)