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Sony has moved to consolidate their position in the content market by buying out for $600M the share of Bertelsmann they did not already own.

Sony has moved to consolidate their position in the content market by buying out for $600M the share of Bertelsmann they did not already own.
This will give Sony control of the world’s second largest record company. They already own CBS and Sony Pictures and will shortly roll out a global content site for music games and music.

They are also set to introduce several new products including Hi Fi recievers, TV’s and playstation gaming consoles that will allow users to easily access online content. 

According to the Financial Times the move ends a joint venture formed in 2004 by merging Sony Music and Bertelsmann’s BMG as a response to the shock of the internet and digitisation that spread the power of recording and distributing music from the old hands to all comers.

Howard Stringer, Sony chief executive, said the reborn Sony Music would give the group “far more flexibility” to use music in its film and television units, and in electronics such as Play-Station and the Sony Ericsson Walkman mobile telephone.

Hartmut Ostrowski, Bertelsmann chief executive, said the move was “consistent with our new growth strategy” to reposition the company as a media-services group, possibly buying in to the growing educational market.


However, people close to Bertelsmann stressed a “transaction value” of $1.5bn. This figure includes a tax break in the US and the value of a six-year CD-pressing contract. The Germans also receive some European music-rights catalogues, which are meant to be the core of a new music-rights business.

A person familiar with Bertelsmann said the Sony BMG deal – which is subject to approval by various cartel authorities – marked the end of portfolio pruning instigated by Mr Ostrowski when he became chief executive in January.

 

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