European Commission's Approval of Sony Music and BMG Merger Sparks Concerns of Industry Consolidation

Europe's independent record companies are sounding the alarm over the proposed merger between Sony Music and BMG, warning of severe consequences for the industry if the deal is approved. Impala, the trade association representing over 2,000 independent labels, has vowed to fight the 50-50 joint venture, which would combine the recorded music operations of both companies. Industry experts predict job losses across the industry, with some estimates suggesting several thousand positions will be at risk.

Key Takeaways:

• Impala, the trade association representing over 2,000 independent labels, has vowed to fight the proposed merger between Sony Music and BMG, citing concerns over industry consolidation and job losses.
• The joint venture would combine the recorded music operations of both companies, resulting in significant cost savings of approximately $300m per year.
• Independent record executives have warned that the deal would give the two major companies, Sony BMG and Universal Music, too much control over the market, potentially leading to price fixing and reduced access to music.
• Martin Mills, chairman of the UK's Beggars Group label, estimates that the merged company would control over 50% of the European market, accounting for almost a third of global music sales.
• Impala has compared the situation to the proposed merger between EMI and Warner Music in 2000, which was ultimately withdrawn due to concerns over competition.
• Impala is urging the European Commission to take a robust view of the alliance and demand significant concessions and remedial undertakings if the deal is cleared.

Statistics:

• The proposed merger between Sony Music and BMG would result in cost savings of approximately $300m per year.
• Over 2,000 independent labels are represented by Impala, which has vowed to fight the proposed merger.
• Martin Mills estimates that the merged company would account for over 50% of the European market and almost a third of global music sales.
• Impala has raised concerns that the deal would result in several thousand job losses across the industry.

Sources:

• "Impala vows to fight Sony BMG deal", Tim Burt, Reuters, January 2003.
• "Mills warns of majors' control over music market", Midem music conference, Cannes, 2003.
• "European Commission delays decision on Sony/BMG merger", Music Industry Analyst, January 2003.