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Music Industry Takes M&A Pill for Stress

May 12

The slackening demand for music CDís is driving industry players into each othersí -- or other companies' -- arms. AOL Time Warner Inc. and Bertelsmann are talking about merging their music divisions into an entity that would rival Vivendiís leading Universal Music Group (UMG). That development would give the cold shoulder to EMI, the last major music independent, which earlier held exploratory discussions with both AOL and Bertelsmann.

And we previously reported that Steve Jobs was mulling over the acquisition of UMG itself.

Tnen the fabled Tower Records music chain has asked an investment banker to find a buyer, a decision that follows one to delay interest payments on corporate bond obligations.

Declining industry demand is probably due to some combination of depressed domestic and global economies, and to the inroads that freebie file-sharing is enjoying among younger music lovers. In fact, recent studies indicate that those who download free music files share much in common with those who pay.


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