Sony-BMG Needs Some EU Approval

The press release accompanying Sony-BMG’s first-half results hinted that the new and maybe even temporary company has found it hard to cut costs ahead of the European Commission finally ruling on the merger, although it says it’s confident of getting positive news on that by the end of next month.

However, the lack of any sort of EU approval for the deal hasn’t stopped it from keeping abreast of Warner and Universal by venturing into the artist management and live entertainment business with the purchase of majority shares in Münster-based management firm MTS and Bucardo. However, both companies are better known for their work in comedy than in music.

The financial details haven’t been revealed but the deals were cut with Töne Stallmeye and Jürgen Hoffmann, the private companies’ respective owners.

Joe Hugger, Sony BMG Germany’s VP for digital and audio-visual, founded the major’s Spassgesellschaft! (fun-loving and fun-making) label and has teamed with MTS and Bucardo on various projects.

Bertelsmann’s first-half figures for its music businesses, which includes its joint interest in Sony-BMG since it sold its publishing to Universal, show it lost euro 3 million on a turnover of 632 million.

The German company’s figures were obviously going to fall, having lost the income from the publishing revenues that it sold to Universal.

In the same period last year BMG Music Publishing made euro 30 million on a euro 183 million turnover.

The loss of the publishing business was partially cushioned by a high-margin product sell-through and some cost savings, although the statement to the EC no doubt says Sony-BMG is now in great need of being given the go-ahead to make even more and fully integrate the two companies.

The strong growth seen in digital formats isn’t compensating for the 20 percent drop in physical sales.

Like Universal, which put out its results a day earlier, the German company’s partnership with Sony is laying any blame beyond what it pitches as a 12 percent overall decline in the value of the market.

Bertelsmann’s group revenues grew 1.3 percent to euro 9 billion, with operating profit before interest and tax rising 1.9 percent to euro 714 million.

But it was even more buoyant about the out-of-court settlements in connection with Napster, which, the company press statement says, "eliminates a potential significant risk for Bertelsmann’s future."

Year-on-year net income shows a drop from euro 354 million to euro 51 million, much of which is down to the Napster settlement agreements.