Bertelsmann wants to sell its half of the Sony BMG joint venture music label, and Sony wants to buy the 50% it doesn’t own for about $930 million. Our suggestion to Sony’s Howard Stringer: Offer less. You can use your earnings release today as leverage, but the reality is you could have picked nearly any quarter from the last 5 years or so:
[Sony BMG’s] sales for the quarter ended June 30, 2008 decreased by 6% year-on-year primarily due to the continued decline in the physical music market worldwide not being fully offset by growth in digital product sales.
You’ve even got a handy chart (right) in your release to make your case (though in truth the earnings drop isn’t as dramatic as it looks — last year’s results included some one-time gains).
Owning big catalogues of popular music is certainly worth something, and there may even be a viable business for people who are trying to create new music (though we’re not sure about that one). But trying to figure out what those values are, as CD sales continue to plummet, is real catch-a-falling-knife stuff.
Sony recorded a $24 million loss on its half-stake in the JV this quarter — that’s nothing for a business that generated sales of $18.6 billion during the same period. So even if it owned the whole thing, it could stomach the loss. But why bother at all? Sony has its hands full selling TVs and video games. No need to expend energy on an asset that’s going to keep declining for years to come.
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