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Bertelsmann, EMI Still Fully Behind Merger

Bertelsmann and EMI Group are still fully committed to a music merger, and antitrust issues remain the only obstacle blocking the way, Bertelsmann CEO Thomas Middelhoff said on Tuesday.

Middelhoff told Reuters in an interview the media landscape had changed dramatically over the past year and antitrust issues facing the two companies were not the same as those which scuppered EMI’s previous planned tie-up with Warner Music.

“In reality it’s been a done deal since October. What we need to do now is find a workable situation anti-trust wise,” Middelhoff said. “Both sides desperately want to realize this merger.”

Privately-owned Bertelsmann started courting EMI last year after the British music group pulled out of merger talks with Warner Music in the face of mounting opposition from regulators.

One of the regulators’ prime concerns in the Warner case had been that the merger would reduce the world’s five major music groups to four. Analysts had widely expected EMI and Bertelsmann could create an effective fifth major company by selling off assets to an independent group to appease regulators’ concerns.

“A lot of things have changed since the beginning of last year including the creation of AOL Time Warner, Vivendi Universal, Musicnet and Duet,” Middelhoff said.

“The real question is does it really make sense to speak about a fifth major in this context.”

Middelhoff dismissed any suggestion that EMI was less enthusiastic about a merger and said its partner was simply more cautious after its experience with Warner.

“We have a clear understanding about management values and strategies and there are no open issues there. (EMI chairman) Eric Nicoli and I get on very well,” Middelhoff said.

However, Britain’s Times newspaper reported on Tuesday that EMI was suffering a board-room split over its plans for the merger, with Nicoli clashing with a more cautious head of EMI recorded music Ken Berry.

The newspaper said Nicoli wanted to go ahead with talks, risking regulatory scrutiny and the possible forced sale of key assets while Berry wanted to tread more carefully.

Asked what the chances were of a deal gaining regulatory acceptance, Middelhoff said: “You can’t predict what will happen with antitrust authorities.”

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