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Mergers, Acquisitions and Takeovers Case Study

Case Title:

Sony’s Music Business: Would Buying out BMG in its Joint Venture Help?

Publication Year : 2010

Authors: M Desai, K Suresh

Industry: Entertainment


Case Code: MAA0212IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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On 1 October 2008, Sony Group and Bertelsmann AG decided to end their four-year joint venture, SonyBMG, due to various management conflicts. Since its formation in August 2004, the joint venture faced a constant power struggle as well as cultural differences. Bertelsmann decided to exit from the music industry, thereby giving Sony full control. Sony bought out the 50% stake of Bertelsmann in the joint venture for $1.2billion and renamed the music company as Sony Music Entertainment Incorporated. The case focuses on the conflicting priorities of both Sony and Bertelsmann which caused the partnership to turn sour. The case, most importantly, brings forth the perils of an equal partnership when control does not lie in one hand.

Pedagogical Objectives:

  • To understand the dynamics of the global music industry.
  • To analyse the reasons for Sony and Bertelsmann's joint venture.
  • To explore the factors responsible for the break up of the 50-50 joint venture.

Keywords : Global music industry, Sony Music, Bertelsmann AG, Competitiveness, Music industry mergers, Conflicts of interest, Management style, European Union, Antitrust laws, Digital rights management (DRM), Culture, Buying out, BMG (Bertelsmann Music Group), Joint venture, Corporate governance

Contents : 
Sony BMG: Discordant Notes
US CD Sales Decline
Sony Music Sales Pre- and Post-Merger
List of Record labels and Artist of Sony BMG after Merger

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