Time Warner's merger deals with America Online and EMI were hatched separately, but they both help advance a common goal: bringing music to the Internet.
Time Warner's chairman and CEO, Gerald Levin, has been saying for months that the music business would be the first big winner from opportunities in promotion and distribution offered by the Internet.
He repeated that mantra yesterday in announcing the merger between his company's Warner Music Group and EMI of Britain, which would create the world's largest music company with $8 billion in annual revenues. Seagram's Universal Music Group had been No. 1 with $6.3 billion.
``Music, out of all our businesses, is the one that will benefit most from the Internet and the digital revolution,'' Levin told a London news conference via satellite from New York.
To be sure, Time Warner's blockbuster merger with Internet leader AOL, announced just two weeks ago, is expected to be a far greater catalyst in bringing music and other elements from Time Warner's media warehouse online. AOL's 22 million subscribers offer a giant market to be exploited.
The addition of EMI will create a massive stable of 2,500 artists and a large music catalog of albums and songs to be delivered over the Internet or shipped via CD to consumers.
``It can only help'' accelerate a digital music push, says James Penhune, an analyst with Yankee Group. ``It certainly isn't a cataclysmic event like the AOL merger, but it adds fuel to the fire.''
Other analysts pointed to other, more conventional rationales behind bringing Warner and EMI together: cutting costs by eliminating overlapping operations.
The companies say they would save $400 million a year by the end of three years. As part of that drive, 3,000 jobs are being cut, or 13 percent of the company's combined work force of 23,000.
Ken Berry, who heads EMI Recorded Music and would be chief operating officer of the merged company, said the cuts would most likely come in manufacturing, distribution and back office areas
The deal doesn't solve one problem faced by both companies - a dearth of hot new music acts.
Warner has a big stable of well-known artists such as Cher, Eric Clapton, Phil Collins, Madonna, Metallica and REM, but its fortunes have been declining in recent years as its acts have grown older.
EMI boasts names like the Spice Girls, Van Morrison, the Beatles, Rolling Stones and Frank Sinatra, but it too has been slumping recently.
Unlike the AOL-Time Warner deal, which combined two fairly different companies, the Warner-EMI union could face tighter scrutiny from antitrust regulators since it reduces the number of major record companies from five to four. The others, besides Seagram's Universal, are BMG, which is part of the German media conglomerate Bertelsmann, and Sony.
The board of the new company, which would be called Warner EMI Music, will sell one of every four CDs bought in the United States. Its board will be comprised of six Time Warner representatives and five from EMI. Eric Nicoli, chairman of EMI, and Time Warner president Richard Parsons will be co-chairmen.
The back-to-back mergers come just as the music industry is coming to terms with the Internet. The major labels initially opposed distributing music digitally out of fear of piracy, but several have been experimenting with ways to distribute music securely.
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