Music merger may cause rock and roll

By DITA DE BONI

The $20 billion merger of media giant Time Warner's Music Group and Britain's EMI Group has drawn mixed reactions from the music industry in New Zealand.

It has also drawn the attention of the Commerce Commission, which will investigate local implications when it returns to work today after Wellington Anniversary Day.

Spokesman Vincent Cholewa said yesterday the commission would look into the deal to see if the merged entity "acquired or strengthened dominance" in the domestic music market.

But Jerry Lloyd, sales and marketing director for Warner Music New Zealand, said he did not expect a commission veto.

"Universal and Polygram now have 26 per cent of the New Zealand market after merging," he said, referring to the $10.2 billion purchase of Polygram by Universal Music Group, a unit of Canada's Seagram, in late 1998.

"They had no problems with that here."

He said Warners had a market share of around 16.5 to 17 per cent and "hundreds" of international and national artists, including Kiwi bands Shihad, The Feelers and Ardijah, and international acts including Cher, Madonna and Phil Collins.

EMI had a slightly higher market share at between 17 to 19 per cent, and represented equally high-powered artists such as the Spice Girls, Robbie Williams and the Beatles catalogues.

Mr Lloyd said speculation had been circulating about a possible takeover of EMI for several months, with most commentators picking an acquisition of the company by German media group Bertelsmann.

EMI had been widely seen as vulnerable to takeover as the world's largest major independent music group, and had once before broken off merger talks with Seagram in 1998.

A merger in the New Zealand offices of EMI and Warners - which share the same home in Baycorp House in Ponsonby - would obviously mean efficiencies, said Mr Lloyd.

"It's hard to say if there will be [local] job losses because most staff working for the two companies multi-task as it is."

Worldwide, the EMI-Warner merger is expected to yield $US400 million in savings and an undisclosed number of job cuts.

Wildside Records owner Murray Cammick said the merger of major label groups globally meant less opportunities for New Zealand artists here and abroad.

Mr Cammick signed Shihad to Warners, and with links to the giant player said the merger would have no immediate effect on his own business.

But he worried that new bands in the United States and in countries like New Zealand would be offered fewer distribution options with just four international players dominating the industry.

"Even if a New Zealand artist gets a successful release here with a major label, it will now be harder for that label to achieve a foreign release for the band if US recording companies are reducing staff and artist numbers."

But Mr Lloyd said mergers such as Warners-EMI increased the chances of local music finding distribution.

"When Universal and Polygram joined together, they had international artists coming out of their ears.

"They didn't have to pick up local acts, but they have worked their butts off to promote acts like [Kiwi duo] Deep Obsession, and I take my hats off to them."

"We will continue to do the same - championing New Zealand music as we have done. We have a company and a managing director [James Southgate] who totally believe in it."

Marbecks co-owner Roger Marbeck agreed, saying without efficiencies between companies such as EMI and Warners "New Zealand music wouldn't be being made."

"Those large companies put large amounts of money into New Zealand music and probably just break even most of the time. Despite what people say, they work hard to support local acts.

"With more efficiencies and better systems they have more horsepower to give bands better promotion."

EMI and Time Warner confirmed details of the merger last night.

The combined entity will be called Warner EMI Music and will have one-fifth of global music sales, topping the market share of Universal.