HITS Daily Double
Many continue to believe that there will be four major music companies by the end of the year, rather than the current five.


N.Y. Post Reports EMI Has Its Acquisition Sites Set on WMG
Music biz mergermania is in the air again.

The New York Post reports that EMI is holding talks about the possibility of acquiring AOLTW's Warner Music Group.

AOLTW had previously announced it is seeking to sell assets to reduce its $25.8 billion in debt.

The music industry has been hit with declining sales, thanks, in large part, to free illegal downloads on the web. Estimates are sales will decline between 5% and 10% this year.

Many continue to believe that there will be four major music companies by the end of the year, rather than the current five.

The world’s largest independent music entity, EMI was previously considered a target for purchase by one of the other four media conglomerates that own its major record company competitors.

The Post reports this deal, valued at $3.5 billion, would be financed by private equity and banks because of the low value of EMI’s stock.

Last month, AOL CEO Richard Parsons called Warner Music "our most structurally challenged business." The company took charges totaling $1.5 billion to write down the value of its music assets in the fourth quarter, just a fraction of the total $40 billion write-off which left them with an almost $100 billion net loss for the year.

Actually, the company’s music division saw revenue increase from $4 billion to $4.2 billion, with EBITDA of $482 million, compared to $419 million a year ago. That accounted for more than 5% of company-wide earnings.

Time Warner Inc. and EMI first tried to combine their music holdings three years ago in a joint venture of equals then valued at $20 billion. Cost savings at the time were estimated at $400 million by the third year, but European antitrust regulators quashed the deal. EMI then looked to hook up with German conglom Bertelsmann's BMG, but that was blocked as well. The Post suggested the antitrust climate has changed since then.

Some insiders are questioning why AOL would sell the music unit when its value is so low, but the company wants to reduce its debt to less than $20 billion by the end of next year. It faces about $1.8 billion in additional debt due to a required payment to purchase Vivendi’s share of AOL Europe and construction of its new offices in Manhattan.

In other Post news, the bodies of three unidentified crack whores were found on the Lower East Side last night.