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The news follows on the heels of the announcement Jobs has locked up all of the Big Five record companies for an easy-to-use Apple subscription service expected to launch by the end of the month.
UMG THE APPLE OF JOBS’ EYE
Apple Computers’ Steve Jobs in Talks with Vivendi Universal to Buy UMG
Imagine Doug Morris reporting to Steve Jobs. It could happen.

The L.A. Times reports today that Apple Computer’s Jobs is in talks with Vivendi Universal to purchase Universal Music Group, the world’s largest music group, for between $5-6 billion.

The formal bid is expected to be made before April 29, the date of the next VU board meeting. The French company is seeking to raise $7 billion this year by selling assets to reduce debt. Investor Marvin Davis had previously offered $13 billion for 65% of the company’s entertainment assets, which include the Music Group. Liberty Media Corp. and several other congloms have been eying some of the company’s other entertainment properties.

When queried about the Times report, a Vivendi spokesperson responded: "There has been interest by third parties in VU's entertainmernt assets, but until such time as there's something concrete to annnounce, it's all rumor and speculation, and we don't want to create any unnecessary anxiety in our employees. So we are declining comment at this time."

The discussions, a closely held secret for several months, could still come undone over several unresolved issues. The news follows on the heels of the announcement Jobs has locked up all of the Big Five record companies for an easy-to-use Apple subscription service expected to launch by the end of the month.

Apple posted an $8 million loss on sales of $1.47 billion for fiscal Q1 ended Dec. 28, its first back-to-back quarterly losses since Jobs returned to the CEO post in 1997. He is also Chairman of Pixar Animation Studios. It has annual sales of about $5.74 billion, with about $4.4 billion in cash and short-term investments. Trading on the stock was down 1.04, from 14.37 to 13.33, today.

UMG earns about $6 billion in sales annually, but saw its operating profit slide 23% to $510 million last year. In today’s trading, it was unchanged at 14.52 a share.

Vivendi first approached Jobs in December, after its music executives visited Apple’s headquarters to see a runthrough of the new digital service. Jobs reportedly met with VU boss Jean-Rene Fourtou and other top execs in N.Y., L.A. and the company’s home base of Cupertino.

Those close to Jobs say he believes the music industry is about to "turn a corner in the copyright war," with digital theft becoming increasingly more unwieldy.

The new service was developed for users of Apple's computers and iPods only. Sources believe the company will now have to develop a version to run on Microsoft Windows as well.

If Apple does acquire UMG, the move would put the biggest and most powerful music group back in American hands, while dramaticcally advancing the likelihood that the music biz, with the visionary Jobs leading the way, will at last be able to turn the online realm into a significant profit center. This could be the paradigm shift the beleaguered industry has been hoping for, and there's little question that the combination of an Apple-UMG teaming and the launch of the first truly attractive online subscription service would serve to boost the industry's and Wall Street's confidence that the music business can weather the current crisis and return to profitability. 

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