Sony Buys Out Bertelsmann in Music Venture

August 5, 2008 World Screen

NEW YORK, August 5: Sony
Corporation is buying Bertelsmann’s 50-percent stake in Sony BMG, the music company
the two partners formed in 2004, for an undisclosed sum.

The venture will be
renamed Sony Music Entertainment Inc. (SMEI) and will become a wholly owned
subsidiary of Sony Corporation of America.

"Music has been a
vital and vibrant part of Sony's culture for over 20 years,” said Sir Howard Stringer, the chairman and CEO of Sony Corporation. “This
acquisition will allow us to achieve a deeper and more robust integration
between the wide-ranging global assets of the music company and Sony's
products, operating companies and affiliates. It enables us to offer a total
entertainment experience to consumers. Over the past four years, Sony BMG has
undertaken a very successful restructuring, streamlined operations and
developed innovative digital partnerships that ensure it will continue to be a
leader in the creation and distribution of music worldwide. It is an
organization rich in talent, ideas and enthusiasm, and is a strong fit with our
overall business strategy."

Hartmut Ostrowski, the
chairman and CEO of Bertelsmann, said the move was “consistent with our new
growth strategy and will enable us to focus on our defined growth areas. Sony
has been an excellent partner, and they are the right company to take this
business to the next step and ensure that it realizes its full value and
potential.”

Once the transaction is
completed, SMEI will be comprised of labels such as Arista Records, Columbia
Records, Epic Records, J Records, Jive Records, RCA Records and Zomba, with an
artist roster that includes Celine Dion, Alicia Keys, Yo-Yo Ma, Bruce
Springsteen and Justin Timberlake.

As part of the
transaction, the parties have also agreed to continue to share the music
company’s manufacturing and distribution requirements between Sony DADC and
Bertelsmann's Arvato. In addition, Bertelsmann will be taking over selected
European music catalogue assets from Sony BMG.

—By Mansha Daswani