Sony has previously been reluctant to discuss the option of a merger, but insiders suggest that a joint venture may be in the offering, in the music field at least. German major BMG had been in talks with Warners, but with talks between the two parties breaking down, the Germans are now seen as the obvious contender to merge with Sony.
Any such merger will require the backing of both The European Union and the relevant US competition authorities. The EU blocked a proposed merger between EMI and Warners three years ago on the grounds that the merged company would be too dominant in the marketplace, but insiders predict that the EU will be less strict this time around. However, should the merger happen, it will be the only such deal between two large companies, with any further mergers all but completely ruled out.
Who are these insiders you ask? Who knows. Probably staff at Sony or BMG I guess...
BMG and Sony have signed a non-binding agreement to create a new company equally owned by the two entertainment groups.
The two companies are now in a race with EMI and Warners, whose own merger negotiations are said to be progessing, despite the EU's blocking of the deal three years ago.
Sony and BMG hope to have a deal finalised by the end of the year, which may cause EMI to speed up their dealings with Warners, as many insiders feel it is unlikely regulatory bodies will give the go ahead to two mergers.
DiScuss: Do such mergers spell doom and gloom for independent record labels, or will the shrinking major label market encourage smaller labels to emerge from the woodwork?