The merger could also help bolster online music ventures, many of which are based in L.A., in the booming business of providing downloadable music.
"When the Universal-PolyGram merger went down, or even during a number of the various downsizings that have taken place, companies like ours got a heightened level of inquiries," said Marc Geiger, chief executive of ARTISTdirect, a music-focused Web company. "For companies like ours that are growing very rapidly, when enlightened executives get let go, there's clearly a need for experienced management and talent."
Representatives from Warner and EMI said no decisions will be made until the merger is approved, a process that could take six months.
"Until this meets regulatory and shareholder approval on the EMI side, no contemplation of (job cuts) will happen. So it's premature to speculate and have any of those discussions," said Warner Music Group spokesman Will Tanous.
Executives at Warner and EMI have good reasons for keeping quiet; they learned some powerful lessons from the recent merging of Universal and PolyGram.
"PolyGram and Universal officials were quoted as saying they were in business to sell music and wouldn't want to keep any (artists) who couldn't sell half a million copies," said Lou Mann, president of media properties for House of Blues Inc. and former general manger of EMI's Capitol Records. The result, Mann said, is that some artists left the combined company's labels a few of them promising musicians who might have been big sellers if their talent had been allowed to develop.
Warner fell from first in total U.S. album market share in 1997 to fifth in 1999, with only EMI lagging behind it, according to SoundScan, which tracks music sales. The combined company would be the largest based on overall sales, with $8 billion in annual revenues, but would be second to Universal in record sales. Warner and EMI take in additional revenues from their music publishing and other divisions.
The decision comes during a prolonged industry downturn. Because of its declining sales, EMI has been considered a likely takeover target for the past several years.
EMI's Capitol and Virgin labels and Warner Music Group's Warner Bros. Records are considered the weakest labels at the combined company because they have had few successes cultivating new artists, and they have all suffered internal problems.
Capitol was plagued by morale problems after a series of management changes that included the sudden departure of Chief Executive Gary Gersh in 1998. Gersh had been making headway in reviving the label by signing new acts, including the Foo Fighters.
Morale at Virgin also has been faltering. In one highly publicized incident in 1997, employees complained when EMI's Ken Berry appointed his wife, Nancy, as vice chair of Virgin Records America and Virgin Music Worldwide. Nancy Berry was previously executive vice president at Virgin, and critics asserted that she won the job through nepotism.
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