AOL, Bertelsmann Reportedly Mull Music Merger
The woeful state of the recorded music industry could send two of its biggest players into each other's arms.
AOL Time Warner
(AOL)
and Germany's
Bertelsmann
reportedly are discussing a transaction in which they'd merge their music operations into one company, with each side holding a 50% stake. The discussions are "highly uncertain," according to
The Wall Street Journal
.
The entity would combine operations with more than $7 billion in revenue, although that figure includes sales from music publishing, units that would be excluded from the new company. Currently, AOL's Warner Music is the world's fourth-largest music company, while Bertelsmann's BMG is No. 5; a combination would put them closer in size to the biggest U.S. firm,
Vivendi's
(V) - Get Report
Universal Music.
Both firms have previously discussed merging their music operations with the world's biggest music company, Britain's
EMI
, in the past, the
Journal
said.
Regulatory opposition in Europe previously torpedoed a planned alliance between AOL, BMG and EMI, but the industry's subsequent weak performance and contraction might allow the transaction to pass this time around. The music industry claims its overall revenue has declined over the past few years amid a dearth of blockbuster acts and, supposedly, online music piracy.
After closing down 1% at $13.02 Friday, AOL shares weren't doing appreciable volume in Monday's premarket session.