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Universal, BMG in venture
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April 7, 1999: 8:35 p.m. ET
Getmusic.com eyes online music biz, as Bronfman shuffles Seagram again
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NEW YORK (CNNfn) - Universal Music and BMG Entertainment, the nation's top two record producers, Wednesday unveiled a joint venture to sell music and promote their artists on the Internet.
The link-up marks the latest deal-making by Edgar Bronfman Jr.'s Seagram Co., the owner of Universal Music, which also on Wednesday said it would sell its newly acquired PolyGram film unit to affiliate USA Networks Inc. for about $300 million.
The BMG-Universal venture centers on BMG's site getmusic.com that sells CDs and cassettes from the companies' labels as well as from other major and independent companies.
In an interview with CNN's MoneyLine with Lou Dobbs, Bronfman said Seagram, a spirits company that is transforming itself into a media titan, hopes to boost its cyberspace presence without harming the retail-store music market.
"This is going to expand the music market," said Bronfman, chief executive and president of Seagram. "Internet consumers -- particularly music consumers on the Internet -- are people who generally don't go into retail stores."
Besides marketing, the sites will offer video clips, live concert Webcasts, artist information, interviews and other fan-oriented features.
The companies said the venture will be based on sites built by BMG in 1996, and will be re-launched as the joint venture later this year. The sites are Peeps Republic, which features R&B and hip-hop artists; BUGjuice, an alternative music channel; Twang This! for country-music lovers; Rock Universe, a rock- music channel; and Connect2Music, an adult- contemporary section.
The venture, which regroups two firms that control nearly half of the U.S. music market, will challenge the Web-based music vendors Amazon.com, and would-be merger partners CDnow and N2K, owner of Music Blvd.
Universal Music Group consists of such labels as Geffen, MCA, A&M and Dreamworks. Its artists include Vince Gill, Cheryl Crow, Elton John, U2 and Herbie Hancock.
BMG's labels include Arista, RCA, Windham Hill and Elektra Nonesuch. Its artists include Whitney Houston, the Dave Matthews Band, Clint Black and pianist George Winston.
Seagram sells PFE to Diller
And in its latest portfolio shake-up Wednesday, Seagram said it will sell its PolyGram Filmed Entertainment Inc. and October Films studio to Barry Diller's USA Networks Inc. for $300 million in cash, debt and stock.
"We don't feel Universal belongs in the independent movie business," Bronfman told CNNfn.com, referring to a "indie" movie niche that October has carved out.
In the accord, USA Networks (USAI), which is 45 percent owned by Seagram, will create a new division called USA Films, made up of October Films, plus the USA Gramercy Pictures and USA Home Entertainment units.
October Films produced films such as "The Apostle," "Breaking the Waves" and "Secrets and Lies." Scott Greenstein, co-president of October Films, will become chief executive officer of USA Films.
Seagram's Universal Pictures is not part of the USA deal. PFE had been slated to be rolled into Universal Pictures.
American depositary receipts of Toronto-based Seagram (VO) added 4-1/16 to 59 on Wednesday. BMG is owned by the German media and publishing giant Bertelsmann AG.
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