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EMI to Report Results on Tuesday

May 19, 2003|From Reuters

If there is one thing music industry veteran EMI Group can be pleased about, it is seeing the back of 2002.

The limping music industry had one of its worst years as millions of fans turned to piracy, and some analysts fear that EMI's recorded music sales may be weaker than its worst-case scenario of a 6% decline when it reports results on Tuesday.

However, the world's third-biggest music company -- home to artists ranging from aging rockers the Rolling Stones to newcomer Norah Jones -- is expected to have preserved its profit by attacking costs, slashing jobs and dropping artists.

The backdrop is not pretty. Universal Music Group, the world's biggest music company, last week reported a staggering 19% decline in sales in the first quarter.

The decline in music sales has put increasing pressure on music companies to find a solution.

For the smallest three of the world's five big music companies -- EMI, Warner Music Group and BMG -- finding a solution has included a complex mating dance.

EMI has held talks with both BMG, owned by Bertelsmann, and with Warner Music Group, owned by AOL Time Warner Inc.

However, The Times reported last week that Bertelsmann and AOL Time Warner were discussing a possible merger of their music divisions. Such a merger would leave EMI out in the cold.

"If BMG and Warner merge, EMI would be left a great distance behind. They would be stuck with few possibilities to boost market share," said Simon Baker, an analyst at SG Securities.

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