Possible Snag Appears In Time Warner–EMI Deal

EMI denies British newspaper report of counter-offer.

A snag has appeared in the impending bid by Time Warner's music division to gobble up British-based EMI Group, a deal that would bring under one roof a huge roster of artists as diverse as pop singers the Spice Girls and Madonna, country superstar Garth Brooks and jazz pianist Herbie Hancock.

The emergence of a possible counter-offer by a consortium of three unnamed U.S. companies was reported in London's Financial Times on Friday (June 23), just days before EMI shareholders are to vote on the joint venture Monday.

EMI released a statement Friday saying it has not received or has been approached by any such consortium.

"There is no other bid, and we're urging our shareholders to vote on Monday for the deal," EMI spokesperson Dawn Bridges said.

A Financial Times spokesperson could not be reached for comment.

Also on Friday, Time Warner and America Online shareholders agreed to the $120 billion merger of those two companies.

The Warner–EMI merger would combine EMI's record labels, including EMI, Virgin, London, Capitol and Blue Note, with Warner Music Group's lineup, which includes the Elektra, Atlantic, Reprise, Maverick, Rhino and Sire labels.

Artists on these labels include the Beatles, Beastie Boys, Brooks, Enya, Faith Hill, the Rolling Stones, R.E.M., Queen, the Spice Girls, Art Blakey, Sting, Cassandra Wilson, David Bowie, Lenny Kravitz, Busta Rhymes, Joshua Redman, Joni Mitchell, Hancock, Madonna, Frank Sinatra, Neil Young and Massive Attack.

Some EMI shareholders are believed to be dissatisfied with the Time Warner deal for various reasons, including the June 14 announcement that the European Commission — the 20-member regulatory body of the European Union — would be launching a four-month antitrust probe before the deal could go through.

The European Commission cited three problematic aspects of the deal: the overt concentration of power in the recorded music business, the fact that Time Warner/EMI would control the largest number of music copyrights in the world and that the combined company would dominate digital downloading.