Sony and BMG to Merge Music Units Into Joint Venture (1 Viewer)

[Phil A]

John, they may obtain some synergy and cost cutting by combining. The biggest point is that when they report to stockholders is that the losses, are, for example, no longer on the books of Sony. Makes earnings look better and can drive up the stock price so execs can cash in those stock options. Sooner or later you know what will hit the fan. That is what happened under the terms of the AOL/Bertlesmann joint venture I noted above. Under the terms of the joint venture I believe AOL had to buy out Bertlesmann's share at the beginning of 2002 so all of a sudden losses that were not impacting their reported financial earnings in periods past hit the fan.

 

[BrianB]

If the two seperately are losing money, on what basis can we say that merging the two is going to improve matters any?

Usually the idea is to reduce costs by getting rid of duplicated functions & increase revenue by the "synergy" of their catalogues/distribution schemes etc. Merging two similiar divisions like this is better than the likes of the big "cross market" mergers we got in the late 90s.

 

[Lee Scoggins]

John, they may obtain some synergy and cost cutting by combining.

Exactly.

 

[Phil A]

They will likely hire consultants and there will be internal power struggles as well. It could be good or bad for hi-rez or for one format vs. another. If they have more than one executive/group dealing with hi-rez projects they may get rid of duplication in that area or others. If they find out they have 3 recording studios in NY that are not fully booked and can get by with 2 then they can get rid of equipment and people. While if will almost certainly result in some savings, the corporate press releases will no doubt make it look several times more effective than it is. At the end of the day it is really about earnings of individual cos. and keeping losses from their books. That brings higher stock values, which means more money for executives with stock options and when stock options are exercised that is a payroll deduction which means they could be increasing revenues and having more expenses with less income and less taxes paid on that income. Stock options are what drive the dot com revolution until it collapsed. As long as the stock goes up and employees cash options that is a built-in tax shelter.

 

[John Kotches]

Look at the history of mergers between two companies that were losing money. Historically, they haven't done well.

Besides, without wholesale changes to the way they do business I see no way they can reduce costs by $200 million dollars or more. No amount of synergy and combination will make up for the deficit. Never mind that many jobs will likely be lost where the efforts are combined.

In terms of "getting it off the books", that's a nice accounting trick. The red ink is still there, and no amount of accounting magic can change this. Eventually that red ink has to be reconciled.

Cheers,

 

[Danny Tse]

Looks like the EU has approve of the Sony/BMG merger....

http://story.news.yahoo.com/news?tmp...c&sid=95616301

My dream of a Samantha Fox SACD is one step closer

 

[Lee Scoggins]

My dream of a Samantha Fox SACD is one step closer

The cover art may be better than the music.

There was a story in The Wall Street Journal on the EU'd approval likely as well. Hopefully we will see more BMG Super Audios from this event.

 

[Danny Tse]

Don't know if this was coincidental....

Sarah Brightman just finished touring Hong Kong/China, and we get the Sarah Brightman SACDs from HK EMI.

Whitney Houston is about to tour Hong Kong, maybe....and HK Arista/BMG already has a track record of releasing SACDs.

 

[John Milton]

Samantha Fox? Now there's a blast from the past. Is she still recording or are you hoping for her Touch Me album?

 

[John Milton]

Samantha Fox? Now there's a blast from the past. Is she still recording or are you hoping for her Touch Me album?

 

[Danny Tse]

No one mentioned this? Sony/BMG merger approved by the Federal Trade Commission!

http://www.avrev.com/news/0804/10.merger.html

http://story.news.yahoo.com/news?tmp...c&sid=95616301

 

[Lee Scoggins]

Yes, Danny I saw this also and thanks for updating the thread. I think this will bring additional stability to the music world overall.