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To: puborectalis who wrote (38146)	1/23/2000 9:46:00 PM
From: Captain Jack	Read Replies (1) \| Respond to of 41369

NEW YORK, Jan 23, 2000 (AP Online via COMTEX) -- Time Warner, which just two weeks ago announced a $145 billion merger with America Online, is expected to reveal plans today to merge its music division with EMI Records, which has rights to stars such as the Beatles and the Rolling Stones. The deal would be worth some $20 billion, a source familiar with details told The Associated Press. The formal announcement will be made in London, said the source, who spoke on condition of anonymity. London-based EMI confirmed Sunday that it is in the final stages of negotiations and said an announcement is forthcoming. Time Warner in New York also acknowledged the talks, but spokesman Edward Adler said, 'No deal has been signed.' The deal, if approved by regulators and shareholders, would likely be a boost for music sales over the Internet. Both Warner and EMI have been testing ways to let customers digitally download music via their computers. The new company would have a very captive audience with America Online's 20 million subscribers. The merged company, to be called Warner EMI Music, would be the second-largest music company with more than $8 billion in annual sales. Only Seagram's Universal Music would be bigger. The announcement could draw fire from critics who worry that lack of competition will diminish diversity and put too much control in the hands of the four industry titans: Universal Music, Warner-EMI, Sony and Bertelsmann. EMI brings to the deal the Virgin, Priority and Capitol record labels -- including names like the Spice Girls, Van Morrison and Frank Sinatra. Time Warner contributes its Atlantic, Elektra and Warner Brothers labels that include Cher, Eric Clapton, Phil Collins, Madonna, Metallica and REM. According to the source, the negotiations between Warner and EMI started before powerbrokers discussed Time Warner's deal with America Online. Roger Ames, chairman of Warner Music Group, approached his longtime friend Ken Berry, head of EMI's music division, in the fall. The two structured a deal in which Warner will pay EMI shareholders about $1 billion, or about $1.65 a share, in exchange for 50 percent ownership in the combined company, the source said. Warner also will have six seats on the new board of directors, and EMI will have five. The merger is expected to close in about a year. This 'represents an opportunity to establish the world's premier music group and to create very considerable value for shareholders of both companies,' EMI said in a statement. Ames will be the chief executive officer and Berry will be chief operating officer. Time Warner President Richard Parsons and EMI Group's Chairman Eric Nicoli, will be co-chairman. The merger comes at a crucial time for Warner and EMI. Warner Music's earnings fell from $288 million in the first nine months of 1998 to $279 million for the same period in 1999. EMI has been recovering from difficulties of its own, but in the six months ending in September last year, profits were up by 61 percent to $108 million compared to the same period the year before. By linking their operations, Warner EMI will shave $400 million in costs over three years, the source said. Copyright 1999 Associated Press, All rights reserved.