German media company Bertelsmann and entertainment conglomerate Sony of Japan have agreed on a merger of their music units in the latest move to consolidate an industry grappling with a four-year crisis.
The 50-50 joint venture, Sony BMG, would be the world’s second-largest record label, combining the recorded music units of Bertelsmann’s BMG and Sony Music, but excluding music publishing and CD production.
“The foundation of a joint music venture with Sony is a clear proof of our commitment to the music business,” said Bertelsmann Chief Executive Gunter Thielen (search) in a statement. “The music business remains a core business for us.”
The creation of the joint venture, based in New York, should help cut costs as the industry grapples with weak retail sales, online file-sharing and fierce competition with other forms of entertainment.
The deal still needs the approval of both European and U.S. competition watchdogs, which have blocked earlier attempts to merge any two of the world’s top five music labels.
The firms are looking for more favorable treatment this time around, though, hoping that regulators will factor in the dismal state of the industry.
Hit by rampant piracy and competition from other entertainment such as video games, music sales are expected to fall for the fourth year in a row in 2004.
Source: Foxnews.com
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