BERTIE, ZOMBA DEAL GETS OK
The deal will see Zomba end up under the control of Bertelsmann's BMG, which owns more than 200 record labels, including Arista and RCA.
In a statement the European Commission said the takeover of Zomba did not violate the EU's competition rules in music distribution or publishing, according to the Associated Press.
"The increase in BMG's existing market share is limited," the Commission said adding that Zomba had a "relatively small" share of the music recording and publishing industry in Europe.
It added that regulators found that the BMG-Zomba linkup would not radically alter Zomba's two main markets in Germany and Britain. Vivendi Universal and EMI remain the market leaders in those EU countries.
Bertelsmann now is focusing on consolidating its sprawling media empire, after recently dismissing CEO Thomas Middelhoff.
In June, Zomba ruler Clive Calder said his company had exercised its option for its remaining shares to be acquired by Bertelsmann.
The deal enabled BMG to snap up the 80% of Zomba’s record division, with its cornerstone label Jive Records, and the 75% of its music publishing division it did not already own. Terms of the agreement had not been disclosed, but sources place the price tag in the $3 billion range.
The surprise news came as Bertelsmann’s put option to purchase the parts of Zomba it did not already own was slated to expire in December 2002. Jive Records, which had become known as the home of teenpop, has been on a chilly streak lately, topped off with last week’s R. Kelly child-pornography scandal.
Zomba has seen its marketshare drop from a high of around 6% to its current YTD 3.4%, of which Jive represents 2.4%.
Concern is still focused on how Zomba and BMG will be integrated.
The business relationship between Zomba and Bertelsmann dates back to the early ’80s, when the Jive label launched as the BMG-distribbed home for such early hit artists as Billy Ocean, A Flock of Seagulls and DJ Jazzy Jeff & the Fresh Prince. BMG acquired a 25% stake in Zomba’s music-publishing division in 1991 and 20% of its record division in 1996, at which time it negotiated for the put option it has just exercised.
