Strong Reaction To European Union’s Annulment Of Sony BMG Merger

"Nobody expected this," one Sony BMG executive who requested anonymity told the LA Times. "If we had to, we could split the company. But it would be enormously expensive."

"We may very well re-approve the Sony BMG merger," commission spokesman Jonathan Todd said. "But it’s also possible that we’ll reach different conclusion. We have more data about the merger now."

"For the next two years, Sony BMG is going to be distracted by defending its merger and coming up with restructuring plans in case they are forced to break up," said Steve Gottlieb, president of large indie TVT Records, (that) "will give us a chance to capture their sales."

On the possible EMI/WMG merger/buyout: "Everything is completely on hold now," said one Warner insider who asked for anonymity. "Overnight, the chances of this deal happening anytime soon just plummeted."

From Martin MIlls, Chairman of indie label trade group Impala who brought the suit and Chairman of indie Beggar’s Banquet: "This is an incredible result, especially considering the inequality of arms between IMPALA and the Commission and Sony Corporation and Bertelsmann Group…The fight for market access and diversity will go on. And politics and theories apart, this is a great result for music."

HYPEBOT COMMENTARY – This court action is sure to cool the urge to merge at EMI, WMG, and elsewhere and bring shouts of joy from those in the industry who have long viewed these label titans as pariahs.  But it would be a mistake to think that this means the end of major label dominance. This is is the first time that EU courts have made this kind of ruling and it was more about the quality of the deliberations that led to allowing the merger than about the merger itself.  After all, Sony BMG have actually lost 4% of their market share since the merger. 

It is more likely that after a more careful review the EU Commission will re-allow the merger than rule to split the companies apart. Save the champagne for now…

– Read the full Hypebot story here. Sources & Additional Reading: LA Times, Impala, Hypebot