Music Blogs

Lots of chatter in the finance press about the Sony/BMG deal, mainly because everyone seems to think Sony Corp got a very good deal in getting the other half of the major record company for just $900 million (plus $300 million of SonyBMG money), and everyone might be right given Bertelsmann were thought to be asking for $1.5 billion, and bearing in mind they paid $3 billion back in 2002 just for Zomba which, though it did include some publishing catalogues since sold to Universal, was nowhere near as big as the BMG catalogues that Sony have just acquired.

The low price could have a bigger impact on other record companies than on Bertelsmann because it is making city types downgrade even further the value of the recordings business. Some reckon that could impact on Warner's share price, and on any efforts by Terra Firma and Guy Hands to share their EMI related debts. Time will tell I guess.

Meanwhile others have questioned why Sony Corp - despite the good price it got for the other half of SonyBMG - would want to expand its interests in the struggling record industry. The Wall Street Journal's Martin Peer and Thorold Barker offered this theory: "Why would Sony want to double its exposure to recorded music when the industry is in disarray? Perhaps because there is one thing worse than owning a music company in today's brutal market: owning half of one... It is a bold bet for Sony. But at least it has given itself some room to maneuver in such a volatile industry by not overpaying. And who knows, maybe it will finally figure out how to have Sony music content benefit its electronics businesses".

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