Music Blogs

Don't you hate it when a big music business story breaks five minutes after you've sent out your daily music news bulletin for the day? You've all experienced that, yes? I suppose it serves us right for getting the Daily out on time I guess - we'll never do that again.

Anyway, it's a big story but not an especially surprising one. As expected by everyone really, German media conglom Bertelsmann yesterday announced that they are selling their 50 percent stake in SonyBMG to Sony Corp. Their JV partners will buy them out of the major record company for $1.2 billion (about £614 million), four years - almost to the day - after the two companies created the joint venture. The music company will now change its name to Sony Music Entertainment Inc - ending the long "is it SonyBMG or Sony BMG?" debate and forcing yet another stationery redesign. The revamped major will become a wholly owned subsidiary of Sony Corporation of America.

Manufacturing and distribution will continue to be shared between Sony's manufacturing subsidiary, Sony DADC, and Bertelsmann's services company, Arvato Digital Services, with agreements with the latter extended for an additional terms of up to six years. Bertelsmann will also be taking over some of SonyBMG's European music catalogue.

Confirming all this, Chairman and CEO of Bertelsmann, Hartmut Ostrowski said: "After a careful and thorough review, we made the strategic decision to sell our investment in this joint venture to Sony, a step that we believe will benefit the stakeholders of both our companies. This move is consistent with our new growth strategy and will enable us to focus on our defined growth areas. Sony has been an excellent partner, and they are the right company to take this business to the next step and ensure that it realizes its full value and potential. We look forward to witnessing Sony Music Entertainment's exciting future under Sony's ownership".

Howard Stringer, Chairman and CEO of the Sony Corporation added: "Music has been a vital and vibrant part of Sony's culture for over twenty years. This acquisition will allow us to achieve a deeper and more robust integration between the wide-ranging global assets of the music company and Sony's products, operating companies and affiliates. It enables us to offer a total entertainment experience to consumers. Over the past four years, SonyBMG has undertaken a very successful restructuring, streamlined operations and developed innovative digital partnerships that ensure it will continue to be a leader in the creation and distribution of music worldwide. It is an organization rich in talent, ideas and enthusiasm, and is a strong fit with our overall business strategy".

There have been reports of Bertelsmann selling out of the SonyBMG partnership ever since the merger of Sony Music and BMG took place in 2004. The merger, of course, was not without controversy, partly because of the indie label community's attempts to have it reversed through the European courts, and then because of all that board room squabbling that went on between former Sony and BMG execs when former Sony Music boss Andy Lack sat at the head of the table. Despite the joint ownership, and that fact that - especially after Lack stood down as overall CEO - former BMG execs often took the top jobs, and that BMG's stakes in the Idol TV shows and Simon Cowell ventures brought more than their fair share of revenues to the table, it's always seemed that most SonyBMGers, in the UK at least, saw themselves primarily as Sony people, meaning the change in ownership shouldn't have any huge impact on the culture there - especially now they're no longer working in BMG's former offices in Fulham.

As for Bertelsmann, they plan to continue running a streamlined BMG unit, but will make it a music rights management business rather than something that releases recordings - ie a primarily music licensing operation. They will begin by proactively licensing music in the European catalogues that they hang on to as part of the Sony deal. As for what the German media firm will do with the booty, well it is likely they will look to expand their media assets via their RTL TV division, which already owns Channel 5 in the UK. Some reckon they may make a bid for BSkyB's 17.9 percent share in ITV.

- Taken from today's CMU Daily, www.cmudaily.co.uk