Will Sony BMG's Court Trouble Sink Possible EMI-Warner Deal?

Authored by Jay Baage on July 13, 2006 - 8:20am.

A European Union Court decision from two years ago that allowed the creation of the 50/50 joint venture known today as Sony BMG, the world’s second biggest record label with artists such as Christina Aguilera, has surprisingly just been annulled.

Sony BMG is a joint venture between Japanese Sony Corp. and German media giant Bertelsmann AG. The joint venture was created by the two companies spinning off portions of their music divisions and merging them. The deal was approved by the Europen Union's Court of First Instance - the equivalent of the Federal Appeals Court in the US.

While this new court decision does not undo the merger just yet, it does cast doubt on its ultimate fate in an already very unstable music industry, shaken to its foundation by disruptive digital technology.

The ruling also cast doubt on whether a possible tie-up between EMI and Warner Music would ultimately be allowed.The two companies have so far had their efforts to merge rejected by the European Commission. EMI's stock price closed down 9.2% on Thursday in Europe.

Related Links:

http://news.bbc.co.uk/2/hi/business/5175650.stm
http://www.tgdaily.com/2006/07/13/no_more_sonybmg_question-mark/