dead cat bounce

The corporate saga of Warner Music Group took another twist yesterday with the revelation that EMI are also keen to acquire the record company. EMI have of course been here before only to fall foul of European anti-competition regulation. This time round they are preparing what one would assume they consider to be a compelling case for the regulatory bodies. What should stand in their favour this time round is the fact that the music industry is in dire straights. It is likely the merger will be positioned as a way of safeguarding European jobs rather than with the express intention of creating of music powerhouse.

Whether BMG or EMI actually ever end up tied to WMG, the fact that serious negotiations are occurring at all illustrates, on the one hand, the need for consolidation in a shrinking market place. But on the other it is the dead cat bounce of the cross media synergy doctrine that drove the creation of the media megaliths of the Internet boom. Labels are learning that if there are such things as synergies then they are more likely to be found within another record label than, say, an ISP. EMI of course sailed through the choppy waters of the Internet boom and bust without being picked up by a big media family and may well end up the better for it. Acquiring WMG would give them that ever elusive US footprint giving them strong global reach as a basis to grow their way out of the music industry slump.

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