BMG, EMI COURT THE MOUSE

The two record giants, who have been in merger talks for four months now, have approached Disney as a possible buyer of EMI's Virgin Records.

By selling Virgin to Disney, EMI and BMG could satisfy European regulators who want to see the creation of another competitive music force before giving their approval, the Daily News said. The purchase would also catapult Disney into major-label status.

Jive owner Clive Calder is also in the running to buy Virgin.

The Disney talks come amid mounting skepticism that EMI can strike a deal with BMG. A sign of that skepticism is EMI's stock, which has taken a 15% beating in the last three weeks.

"Both of these companies need to do a deal," one analyst said. EMI spent over a year trying to merge with Warner Music Group. During those merger talks, the concept of selling off Virgin in order to appease regulators was also floated (hitsdailydouble.com, 10/4).

The Daily News speculated that the sale of Virgin might not be the answer, citing sources close to EMI who said its chief Ken Berry appears reluctant to sell Virgin.