Broadcast 5th October 2000

	Listen to the interview with Hamish Champ

The $20 billion merger of EMI and Warner Records is off, at least for now. The two withdrew their application to the European Commission apparently anticipating a European block.

This deal appears to have got tangled up in an even bigger story, the merger of Warner Records parent TimeWarner and the internet group AOL.

For a reaction to the news our reporter Roger White spoke to Hamish Champ, European editor of Music Business International:

"It does leave open the question of what happens firstly to EMI and also to deals of this sort in the future. The industry is consolidating at a fairly fast pace and this kind of thing could get blocked in future by other people. So one does wonder why they are saying they are still talking.

"It is difficult to see what kind of deal in the short term they could do to satisfy the European Commission and the shareholders."

Roger White asked Hamish Champ if the Commission really did have a point in saying that having four record companies in Europe was just too few?

"The independent sector, the small record companies that are non-aligned, would definitely argue that the consolidation leads to anti-competitive practices. I think the Commission has bared its teeth, rightly or wrongly, and they have seen that the consumer will be the party that loses out.

"EMI has been thinking first and foremostly of its shareholders and the Commission has wanted to address what it sees as the needs of consumers throughout Europe. I think what the Commission was concerned about first and foremost, was market dominance and secondly, the new media angle which was of concern to many with AOL having the kind of coverage it does have."

EMI has been thinking first and foremostly of its shareholders and the Commission has wanted to address what it sees as the needs of consumers throughout Europe. Hamish Champ

Roger White asked what he meant by concern about the new media angle?

"Basically there was concern that AOL would, with Warner and EMI, be able to tie-up music distribution through its network subscribers and freeze out smaller labels or other major record companies who are at the same time setting up their own online services.

"In a statement a few weeks ago, all the interested parties in the TimeWarner-EMI deal said that there would be a five year open season whereby they would not preclude any other record label on their service."

So did this have any implications for the bigger deal, the AOL TimeWarner deal? asked Roger White.

"There have been rumours in the United States for some time that AOL TimeWarner would consider selling this deal down the river if it meant continuing with it would block the AOL TimeWarner deal, which is currently being looked at by regulators in the United States and in Europe.

"As analysts have pointed out, they regarded this as a smaller prize not to be continued if it meant that deal (AOL TimeWarner) was going to fall by the wayside."

There have been rumours in the United States for sometime that AOL TimeWarner would consider selling this deal down the river if it meant continuing with it would block the AOL TimeWarner deal. Hamish Champ