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"With the merger, we will be able to ensure that national repertoire will continue to receive increased support in individual countries, and the artist roster can be even more attractive."
——Rolf Schmidt-Holtz, BMG Chairman/CEO

TIME-WARNER MULLS NEXT MOVE IN EMI MERGER CHESS MATCH

Parsons May Turn to Another Dance Partner for WMG After Sony-BMG Bombshell
OK, Dick Parsons, now what?

Time Warner dealmaker Jeff Bewkes met with EMI Chairman Eric Nicoli yesterday in New York amid speculation TW is questioning whether to continue its joint venture talks in the wake of the Sony-BMG bombshell.

Speculators are speculating Parsons, who still wants out of the music business, may now turn to a private equity group headed by Edgar Bronfman Jr. which includes Mighty Morphin Power Rangers tycoon Haim Saban and Thomas H. Lee Partners.

Meanwhile, Sony and BMG hope to sign a merger pact within the next two months and expect the regulatory approval process to last until at least the middle of 2004.

"While we are optimistic that a partnership between Sony Music and BMG would provide significant opportunities to both companies—and invigorate the music marketplace overall—you should keep in mind that we are at the very beginning of the process, and that we still have to secure approvals from regulatory bodies in both Washington, D.C., and the European Union," Sony Music chief Andrew Lack told employees in an email yesterday as published in the N.Y. Post.

"With the merger, we will be able to ensure that national repertoire will continue to receive increased support in individual countries, and the artist roster can be even more attractive," BMG boss Rolf Schmidt-Holtz told another music trade to tell us. He HeHeHe confirms the new structure will mean layoffs at both companies, with details coming "over the next few months."

Regulators have turned down previous merger attempts by Warner-EMI and later EMI-BMG, but insiders say the harsh conditions caused by Internet piracy and the general downturn in the business could reverse those decisions.

The N.Y. Post speculates the deal to merge BMG with Sony Music is likely the climax of Schmidt-Holtz's music career, paving the way for him to become chief of Bertelsmann’s RTL TV unit, which he ran before taking the reins of BMG in January 2001. He will remain as Chairman of the Board of the newly formed Sony BMG, and will head the company’s integration, audit and compensation committees, but Lack will be in charge of overseeing the day-to-day operations of the joint company.

BMG COO Michael Smellie and Sony Music CFO Kevin Kelleher will retain those titles, while the board will include three executives from Sony Corp. and three from Bertelsmann. Two of the six board seats are already held by Schmidt-Holtz and Lack. The other two from each side will be designated equally by Sony Corp. and Bertelsmann.  A binding agreement should come within 90 days, while regulatory approval is expected by June '04.

Roles for individual label heads within the two companies have not yet been discussed, according to sources.

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