EMI in talks to buy Warner Music

EMI, the world's last major independent music company, is holding renewed talks to buy Warner Music for between $3bn (£1.9bn) and $4bn, it emerged today.

The Wall Street Journal reported that EMI, long considered to be a takeover target, has taken the initiative to buy rather than be bought at a time when the music industry is struggling with declining sales.

EMI, one of the weakest of the large music groups, tried to merge with Warner Music three years ago, but the move was blocked by European regulators.

At that time, competition authorities did not want to see the world's five biggest media companies reduced to four. But, because of the weak state of the music business, they may be more willing to accept a merger now.

AOL Time Warner could be tempted to sell Warner Music as it seeks to cut its huge debt load under new chief executive Richard Parsons.

A Warner-EMI combination would create a company with about one-fifth of the US market, well below Vivendi Universal's Universal Music unit. Globally, however, a combination would match Universal.

EMI's star names include Robbie Williams and Norah Jones, while Warner has Madonna and Missy Elliott. Their combined catalogue would include past musical giants such as the Beatles (EMI) and the Eagles (Warner).

EMI shares have fallen by two-thirds over the past year, as a combination of piracy, illegal internet downloads and a weak selection of releases has depressed revenues in the global music market.

The stock rallied briefly before Christmas as rumours that Warner Music and BMG, owned by Germany's Bertelsmann, were looking at ways to revive merger talks. At the time, EMI executives said that they were committed to restoring the company to health as an independent.

EMI has axed 1,800 jobs and dumped 400 fading acts in a bid to revive its fortunes. Although most of the world's five-largest music companies have had to slash costs, EMI has been one of the worst hit after failed merger talks in 2000 and 2001, first with Warner Music and then with BMG.

As part of the attempt to get back on track, EMI appointed Alan Levy as head of recorded music in 2001. He replaced Ken Berry, who was credited with signing the Spice Girls.

Last year, EMI completed its exit from the music store HMV by selling its remaining 14.5% stake in the company. In morning trading, EMI was up 1.3% at 109.75.