-Caveat Lector- <A HREF="http://www.ctrl.org/"> </A> -Cui Bono?- One-world megalithic corps .. merger madness.. Dave Hartley http://www.Asheville-Computer.com/dave London, Jan. 23 (Bloomberg) -- EMI Group Plc and Time Warner Inc. said they're in talks to combine their music units and create the world's biggest record company. Warner Music Group, whose artists include Alanis Morrisette, Eric Clapton and Madonna, will pay EMI shareholders more than $1 billion, or $1.65 a share, for board control of the 50-50 joint venture, people familiar with the companies said. Warner and EMI - - whose catalog ranges from the Spice Girls to the Rolling Stones to Garth Brooks -- expect to unveil the merger tomorrow, EMI said. The venture, to be called Warner EMI Music, would have sales of about $8.3 billion, topping its biggest rivals, including Seagram Co.'s Universal Music Group. The move will boost its marketing clout and an expanded artist roster will give the venture an edge in selling more albums online through America Online Inc., which has agreed to buy Time Warner. "If you can distribute via the Internet -- via AOL -- it's going to boost sales at EMI," said Nick Ward, an analyst at Commerzbank Global Equities, adding that EMI tends to sell more of its back catalog of titles on the Internet than through retail outlets. $10 Billion Each in Assets EMI and Warner's music assets are worth about $10 billion each, the people familiar said. EMI declined to give any details. Time Warner declined to comment further today. This "represents an opportunity to establish the world's premiere music group and to create very considerable value for shareholders of both companies," EMI said. "The transaction would not involve an offer being made for EMI." New York-based Time Warner, the world's largest media and entertainment company, agreed to AOL's $163.5 billion stock offer earlier this month to give its brands, including Warner Music, a way to expand in electronic commerce. AOL is the world's top Internet service with more than 20 million subscribers. When that transaction was announced, executives said they intended to step up the pace of acquisitions. EMI Chairman Eric Nicoli and Time Warner President Richard Parsons will be co-chairmen of the new venture, a person familiar with EMI said. Warner Music Chairman Roger Ames will be chief executive and Ken Berry, president and chief executive of EMI recorded music, will be chief operating officer. EMI to Keep HMV Media Warner Music will have six directors on the venture's board, while EMI will have five, the person said. It would have headquarters in New York and London. EMI's music business, including recorded music and music publishing, account for about 85 percent of the U.K. company's sales. Its stakes in Internet companies and in bookstore chain HMV Media Group Plc won't be included, and stock in EMI will continue to trade, a person familiar with EMI said. London-based EMI has seen its market share in the U.S. fall as sales in Europe have stagnated. It's done better in Asia, however, where sales more than doubled in the six months through September. It was helped by a debut album from Japan's Utada Hikaru that was the best-selling album in Japanese history. Warner Music Group had 1998 sales of $4.03 billion. It suffered last year from releasing fewer hit albums and delayed releases from popular performers, causing it to slide to fourth place in domestic market share with about 15.8 percent of the market. Fills a Gap Both need to bulk up after rivals have grown through mergers themselves. The move will especially bolster Warner Music's position overseas, where its performance has lagged that in the U.S. "It fills in a gap," said Hal Vogel, an independent entertainment analyst based in New York. "Warner Music was generally very strong in the U.S. and weak outside of the U.S. This pumps them up on an international level." Seagram's Universal Music Group bought Polygram NV in late 1998 for about $10 billion, reducing the number of major record distributors to five. In the 12 months through June 30, 1999, Seagram's music business generated $6.34 billion in sales. It had a domestic market share of about 26.4 percent last year. Combining Warner Music with EMI, the world's No. 3 music company, would cut that number to four. In addition to Warner EMI and Universal, the others are Sony Corp. and Bertelsmann AG. The expected merger announcement doesn't prevent other companies from also making an offer for EMI, Vogel said. Walt Disney Co., for one, has a small presence in music and has tried to expand it in the past. Other Possible Suitors "Disney has to be the prime candidate to be interested in it. (Disney's music business) is still small, and who but Disney with its Broadway shows, theme parks and animation could use music and exploit it better," Vogel said. He also named News Corp. and Sony Corp. as other companies that potentially could be interested in EMI. Warner Music has also been trying to push into the Internet to drive growth. It's combining Columbia House -- the record club that it jointly owns with Sony Corp. -- with online music retailer CDNow Inc. The Internet is driving the price of music down. More sales of CDs and other recordings are being made through Internet retailers such as CDNow and Amazon.com, and music is being distributed over the Web through digital formats such as MP3. "Selling over the Internet lowers the prices of CDs and increases demand," Commerzbank's Ward said. EMI shares have risen 75 percent in the past 12 months, while Time Warner's stock has gained 44 percent. EMI fell 6.6 percent Friday to 648 pence, valuing the company at 5.1 billion pounds ($8.4 billion). Time Warner shares rose 3.8 percent to 91 1/8, valuing the company at $117.2 billion. Warburg Dillon Read is advising EMI, while Morgan Stanley Dean Witter is Time Warner's financial adviser, people familiar with the negotiations said. The transaction was reported earlier by London's Sunday Telegraph. <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are not allowed. Substance—not soap-boxing! These are sordid matters and 'conspiracy theory'—with its many half-truths, misdirections and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. 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