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EMI, BMG Merger In Doubt

EMI Group, the world’s fifth-biggest music company, and Bertelsmann’s BMG music unit may call off merger talks, reports said on Monday.

EMI’s labels represent popular artists such as the Spice Girls,Ý Fat Boy Slim, and Radiohead. BMG’s artists include Whitney Houston, David Bowie, and Christina Aguilera.

Both companies continue to talk but are awaiting merger conditions from the European Commission early this week. Those conditions could mean that the combined group may have to sell businesses to get regulator approval.

Talks to form the world’s biggest music company have been ongoing for the last six months and have at times come close to collapsing.

EMI has been looking for a partner for the last 15 months. The British company ended talks with AOL Time Warner’s (AOL: Research, Estimates) music business in October after EU regulators said it would dominate the delivery of music over the Web.

EMI and Bertelsmann are hoping to persuade the European regulators that a merger would help the companies to compete in a vastly changed media landscape, with the creation of media giants such as Vivendi Universal.

BMG Entertainment has 20 percent share of the music market, behind the 28 percent held by Vivendi (PEX).

A merger with German-based Bertelsmann’s BMG music arm would reap cost savings of around 200 million pounds ($288 million) a year from duplicated overheads and streamlining distribution, administrative and manufacturing costs.

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