BMG unlikely to get $2.8 bil for Sony stake

Split of the merger virtually a done deal, sources say

LONDON -- The split of the Sony BMG merger is virtually a done deal, has learned.

Well-placed sources said a Bertelsmann supervisory board meeting was convened Friday to examine the sale of the German media giant's 50% stake, with a final decision on a deal expected to be revealed by month's end, following a meeting of the Sony board.

But Bertelsmann's executives ought to brace themselves for the reality of the credit crunch, insiders claim, as its 1.8 billion euro ($2.8 billion) target price is seen as nearly unreachable in today's economic climate. Insiders say a 1 billion euro ($1.5 billion) sale is more realistic.

Speculation that Bertelsmann wanted to walk away from the 50-50 joint venture has gathered steam in recent months. The joint venture agreement on Sony BMG, struck in 2004, is set to expire in August 2009, and rumblings from within the Guetersloh-based Bertelsmann camp have suggested new CEO Hartmut Ostrowski wants to pull the trigger on a deal as soon as possible.

Ostrowski, who took over as Bertelsmann CEO in January, did little to douse heated speculation when he told Billboard in March: "We might take over 100%, or sell our 50% to Sony so that they have 100%, or we might continue the joint venture. All three outcomes are possible."

Any spinoff also would have to be approved by regulators in Europe and the U.S., a process which would take about three months.