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Bertelsmann-EMI Merger Plan Stumbles

Bertelsmann’s plans to merge with EMI appear to have stumbled over regulatory hurdles, putting in jeopardy the two company’s desire to join forces to offer a vast music library to consumers.

Negotiations have been going on for more than five months and, according to a report from Reuters, both sides claim they still want the merger to take place.

Regulators’ concerns stem from the fact that, should a Bertelsmann-EMI merger occur, the galaxy of the world’s largest music companies would be trimmed from five to only four. Some believe that in order for the two sides to get a deal done, one or both of the companies will have to sell some assets to one of the largest independent labels, effectively making that company a de facto fifth major.

EMI has been cautious about any merger or acquisition because it was forced to cease talks with Warner Music when European regulators objected to the creation of such a large media conglomerate.

“If the deal were to happen the new venture would make up for 25.92 percent of the music market worldwide, second only to Universal, which in 2000 held 26.76 percent of the market,” said Dr. Ric Dube, analyst for Webnoize.

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