And Then There Were Three?

The LONDON SUNDAY TIMES has reported that the on-again off-again courtship between EMI MUSIC and the WARNER MUSIC GROUP could indeed be on again, as executives from both camps are reportedly preparing for merger talks.

The deal would reduce the number of large label groups to three. A combined EMI/WARNER MUSIC would rival competitors UNIVERSAL and SONY/BMG in size.

Speaking of SONY/BMG, the NEW YORK POST reports that SONY may soon take complete control of SONY/BMG MUSIC. With a major BERTELSMAN investor seeking to force an IPO, the MOHN family, BERTELSMAN's controlling shareholder, may attempt to fend off the IPO by selling its stake in the joint SONY/BMG venture, or using it as leverage. Either way, SONY is expected to gain control of the entity.

In 2007, either SONY or BMG can trigger a put/call option, allowing for a sale or purchase by the other side or a third party.

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