BMG may unload Zomba, 19 Songs for merger


BRUSSELS - In a concession to the European Commission's merger concerns, Universal Music has offered to drop Zomba Records and 19 Songs when it buys Bertelsmann's BMG Music Publishing, industry sources tell

Vivendi, Universal Music's parent, suggested offloading parts of its catalog after the Commission -- the European Union's antitrust authority -- indicated that the merged entity might hold an overly powerful position in the music publishing entity.

The Commission has already begun market testing the planned proposal, and will shortly send questionnaires to rivals and customers about their likely responses.

Both 19 Songs -- a unit of Simon Fuller's 19 Entertainment -- and Zomba are currently part of BMG Music Publishing. The Commission is due to rule on Universal's (euro 1.63 billion) $2.09 billion bid for BMG Music Publishing by June 1.

BMG and Universal each have more than 10% of the market and have the world's world's third and fourth biggest music publishing catalogs. If approved, the merged company will have a combined market share of about 22%, about two points more than the market leader, EMI.

EU clearance is the last regulatory hurdle for the takeover, which was cleared in November in the United States by the Federal Trade Commission and the Justice Department. Commission officials say their investigation is concentrating on whether cutting the number of major publishers would push down fees for publishing rights or hurt conditions for European song writers.

Vivendi beat off rivals EMI Music Publishing and Warner/Chappell Music last September to purchase BMG Music Publishing, whose archive of more than a million songs includes works by Coldplay, Britney Spears and Robbie Williams. BMG Music Publishing's catalog includes song by U2 and Elton John.