Indies Furious Over Sony-BMG Ruling

The indie music companies are predictably furious about the European Commission allowing Sony to buy Bertelsmann’s share of their joint venture music company.

They claim the commission made another decision without giving it enough thought.

“It’s as if they went home at the weekend, thought about it all for an hour and then made their decision,” IMPALA secretary general Helen Smith told Pollstar when the European Commission allowed the Sony-BMG merger back in 2004. Current comments suggest the organisation’s attitude hasn’t changed.

“It is difficult for us to understand how there can be such a difference between what the commission says and what the commission does,” said IMPALA co-president Patrick Zelnik.

“Cultural diversity is meant to be properly taken into account in all decisions,” he said. “Merger control rules must be adapted to cultural industries.”

The EC’s ruling allows the world’s largest consumer electronics company to have total ownership of the world’s second-largest music company.

The indies say this will create “a wide array of new vertical and horizontal problems as the industry progresses toward digital delivery of music through multiple platforms.”

IMPALA, which released a statement saying it’s “incredible” that the commission can make such a consequential decision without carrying out an in-depth investigation, will examine the text of the judgment before commenting on how it will respond.

It will likely appeal the decision the same way it appealed the original Sony-BMG merger, another matter the EU authorities are yet to resolve.

Sony agreed in August to buy Bertelsmann’s 50 percent stake in their joint venture for about US$900 million, plus US$300 million of the cash the company had on its balance sheet.

The new music company the deal created will be known as Sony Music Entertainment Inc. (SMEI), which will be the second-largest in the world, trailing Vivendi’s Universal Music Group.

Universal has about one-third of the market and SMEI will have about one-fourth.