Author Topic: Merge  (Read 793 times)

eltee

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Merge
« on: July 29, 2004, 01:27:00 pm »
After close scrutiny, regulators clear Sony-BMG deal
 By Jayne O'Donnell, USA TODAY
 The proposed merger of Sony Music Entertainment (SNE) and BMG passed its final regulatory hurdle Wednesday when federal antitrust enforcers cleared plans to create the world's largest music company.
 The Federal Trade Commission closed its investigation into whether the proposed joint venture would decrease competition too much in the music industry. No conditions were placed on the approval, and no divestitures were required. European Commission antitrust authorities agreed last week to let the deal go through.
 The FTC gave the deal close scrutiny, in part because of previous consolidation in the industry.
 Commissioner Mozelle Thompson, the only FTC member to issue a statement on the deal, acknowledged it was a difficult decision because he's concerned mergers may have limited the quantity and diversity of music selections and raised prices.
 He noted that investigations by the agency into pricing policies have suggested "a propensity for interdependent behavior among the major labels." He cited deals the agency uncovered in probes of compact disc pricing designed to fix prices and limit advertising.
 But Thompson says he decided to green-light the merger because the growing clout of retailers might be enough to offset the competitive risks.
 The $8 billion company will be a 50-50 venture between the two music powerhouses, whose artists include The Beach Boys, Dave Mason and AC/DC. The combined company tops Universal Music, which would become the second-largest music company. Each of the two companies will have about a quarter of the world music market. Universal Music is owned by Vivendi Universal.
 Nielsen SoundScan says Sony BMG would also become No. 1 in the USA, with a 30% market share vs. 29% for Universal Music.
 Global music sales dropped 7.6% in 2003, says the International Federation of the Phonographic Industry. That represents the fourth consecutive year of falling sales, partly due to the proliferation of music piracy and the popularity of other forms of entertainment, such as video games.
 Former FTC antitrust chief Molly Boast says enough has changed in the marketplace to make the deal acceptable to agency officials. "This is a dynamic industry that has seen much change as the Internet and other technologies offer listeners new ways to obtain music," says Boast, a partner with Debevoise & Plimpton in New York. "The FTC's unanimous vote tells us they were persuaded that under today's conditions, the merger would not harm music consumers."
 
 http://www.usatoday.com/money/media/2004-07-29-bmg-sony_x.htm