BMG, EMI Close to Music Merger

Tuesday, January 30th 2001, 12:00 am

By: News On 6

FRANKFURT, Germany (AP) â€” The music division of German media giant Bertelsmann AG is still on track to sealing a merger with Britain's EMI Group PLC, a Bertelsmann spokesman said Tuesday, adding new hope for a breakthrough despite a report that the merger was bogged down.

Merger talks originally stalled when European Union competition authorities complained that a combination of Bertelsmann Music Group and EMI would reduce the number of major record companies from five to four.

A combined BMG-EMI would be the world's largest recorded music company with a market share of 26 percent. EU authorities have said that one solution would be both companies selling off units in order to make it a smaller player.

The world's five major record companies â€” BMG, EMI, Vivendi Universal's Universal Music, AOL Time Warner Inc.'s Warner Music and Sony Corp.'s Sony Music â€” capture about 75 percent of global music sales.

But Bertelsmann spokesman Oliver Hergesell said the companies are still working to get the deal past regulators, adding that ``negotiations are continuing on track.''

His comments contrasted a report in Tuesday's Financial Times Deutschland that cited BMG chief Rolf Schmidt-Holtz as saying negotiations could last into February and that the chances of a successful merger had not improved over the last few weeks.

EMI is currently under an exclusivity agreement with Time Warner that prevents the British company from approaching other companies with merger proposals. But this clause expires Tuesday, making EMI free to make overtures.

In December, Bertelsmann chairman and chief executive Thomas Middelhoff hinted that there would be no news on the progress of merger talks until after Jan. 31.