The combined company is expected to
reap cost savings of $300 million-$360 million a year, according
to industry insiders.
The European Union's antitrust division
is expected to announce approval of the merger as soon as
Tuesday. The international restructuring of Sony BMG is expected
to be complete by June 2005 and will mostly affect back-office
operations, sources said.
Representatives from Sony and BMG
declined comment Friday. Sony's artist roster includes Jessica
Simpson, Destiny's Child and Audioslave. BMG acts include recent
U.S. chart-toppers Usher, Avril Lavigne and Velvet Revolver.
The board of directors of the combined
Sony BMG will comprise members of both companies. Andrew Lack,
chairman and CEO of Sony Music Entertainment, will helm the
merged company as CEO, with BMG chairman and CEO Rolf
Schmidt-Holtz serving as the chairman of the board.
News that EU antitrust chief Mario
Monti would approve the merger leaked last month. The EU's main
concerns, according to the antitrust office's sealed 51-page
statement of objections, have been fixed pricing on CDs and
market collusion. Only four years ago, the EU opposed a deal
between EMI and Warner Music Group for the same reasons.
Insiders said Monti's decision to allow
the union of Bertelsmann AG and Sony Corp.'s music divisions
came after the commission concluded that the evidence of price
collusion and market dominance was not solid enough to justify
blocking the merger.
If the merger is passed by U.S.
regulators, the combined Sony BMG would be the world's
second-largest music company, behind Universal Music Group.
The new entity will be 50%-owned by
both groups and based in New York. The merger includes both
companies' recorded music businesses but not music publishing,
physical distribution or manufacturing operations. Sony's
recorded music business in Japan also would be excluded.
