Germany's Bertelsmann and UK music company EMI have confirmed that they are in talks about merging their music assets. Privately-owned Bertelsmann has reportedly proposed folding its music arm into EMI in return for a majority stake in the company, which is listed on London's Stock Exchange.
The talks follow a series of dramatic events at Bertelsmann over the past few weeks, during which the German media group broke ranks with the rest of the music industry to form an alliance with file-sharing outfit Napster, and parted company with its top two music executives - Michael Dornemann and Strauss Zelnick.
For its part, EMI recently came back into play when a proposed merger with Time Warner's music assets was scotched over competition concerns. Time Warner and EMI have an exclusive negotiating position until the end of January, but observers doubt that they will be able to resurrect their merger. A combined Bertelsmann-EMI would have 25% of the global music market compared to 27% for EMI-Warner Music.
Although Bertelsmann would have financial control of the merged entity, the top management positions are likely to be filled by EMI's head of recorded music Ken Berry and chairman Eric Nicoli. Bertelsmann brought back BMG Entertainment's former international chief Rudi Gassner to replace Dornemann and Zelnick, but as the executive is three years away from retirement, the appointment was seen as a temporary measure.