Sony, Bertelsmann Unveil Music Mega-Merger

07 November 2003

In a surprise announcement, media mammoths Sony and Bertelsmann revealed Thursday that they are to form a global music giant.

The two firms have signed a letter of intent to combine their music arms - Sony Music and BMG respectively - into a 50-50 joint venture. Rolf Schmidt-Holz, chief executive of the Bertelsmann unit, will become chairman of the merged firm.

The letter of intent is not at this stage binding. Sony and Bertelsmann will now hammer out a definite agreement, which is expected within a couple of months.

The duo's decision steals the thunder of rival EMI, which has been in lengthy negotiations about buying Time Warner unit Warner Music.

Both deals are likely to undergo close scrutiny from regulators. Together they would result in just three major global players - Sony/BMG, EMI/Warner and Universal Music.

The music industry is looking to consolidate as global demand slows and the threat from piracy grows. In 2002, Sony took a 14.1% share of the worldwide music market, while BMG took 11.1%. Combined they would challenge Universal, which last year managed a 25.9% share.

Data sourced from: Financial Times; additional content by WARC staff