EMI revives TimeWarner talks

MUSIC group EMI has confirmed it has reopened talks to buy Warner Music from AOL Time Warner amid reports that it has raised its offer for the business.

The company's head of recorded music, Alain Levy, met executives from the US media group last week. He is said to have improved an offer EMI made earlier this year. Then, EMI proposed a deal including $1bn (£610m) in cash, with AOL Time Warner taking a 25% stake in a combined Warner-EMI.

A tie-up would combine EMI's stable of artists, which includes Robbie Williams and the Rolling Stones, with a Warner Music line-up led by Madonna.

EMI, in a statement, said the non-exclusive discussions were in the early stages. 'There is no assurance that they will result in an agreement,' the company said.

AOL Time Warner has been talking to German media group Bertelsmann about forming a 50-50 joint venture with their recorded music arms. But the talks have been bogged down and an exclusivity agreement has now expired.

AOL Time Warner, soon to be renamed Time Warner, decided not to extend the exclusivity agreement after reviewing the talks at a board meeting late last week.

EMI, the world's third-biggest record company, has tried previously to merge with Warner Music and Bertelsmann's music arm BMG, but hit anti-trust problems.

However, there are signs that this time the authorities may look on the deal more favourably. EMI would combine Warner Music's recorded music business with its own recorded music business.

The combination would have a global market share of 24% and rank number two behind Universal Music.

There was no immediate indication by EMI, which is saddled with about £860m of debt, how it would finance a deal. The shares fell 6 1/2p to 151 3/4p.

AOL Time Warner had been eager for a deal with BMG because of the two companies' strength in the US, the world's biggest music market. The two combined would have dominated the market there.

Warner Music has some 1,000 artists on its books, including Madonna and Red Hot Chilli Peppers.

Its long history has resulted in an impressive back catalogue including Led Zeppelin, Jimi Hendrix and the Eagles.

BMG, through the purchase of the independent music group Zomba last year, has struck gold with acts such as Britney Spears.

Many industry observers say the fit between EMI and Warner will be more complementary. EMI is weaker in the US - a market it is hoping Williams can crack - but in Britain the group has a bluechip portfolio of artists.