Frankfurt/New Delhi, Nov 07: Sony Music and BMG on Thursday said they plan to combine their music units in a move that could trigger further consolidation as the industry grapples with weak retail sales, online file-sharing and fierce competition with other forms of entertainment.

The 50-50 joint venture combines No 2 Sony, which includes such artists as Beyonce Knowles and Bruce Springsteen, with No 5 BMG, a unit of German media firm Bertelsmann that is home to Britney Spears and Elvis Presley. It creates a powerhouse that rivals leader Universal Music Group.


The deal vaults the companies ahead of Time Warner Inc's Warner Music Group and EMI Group Plc, which are discussing a combination of their own.



"If (Sony and BMG) stood alone, we would have to cut artist rosters and even closing activities in smaller countries," said BMG chief executive Rolf Schmidt-Holtz. "This merger is the best guarantee that we can maintain a broad roster of artists in the current environment."

In the last few years, music sales have declined as the weaker retail market has combined with growing use of file-sharing services such as KaZaa, which the industry views as havens of piracy. CD sales have also suffered as prices of DVDs, video games and other types of entertainment have fallen.
Bureau Report