Music sections of Sony, Warner are thinking globally

January 16, 1994|By Barry Layne | Barry Layne,Hollywood Reporter

Warner Music Group and Sony Music Entertainment, the world's two largest music companies, are in advanced stages of negotiations to create a global music-based entertainment and retailing television service.

The channel is expected to be offered on a global basis, sources said, with U.S. distribution packaged as a basic cable service.

The content is expected to feature artists and groups from both companies' extensive collection of performers -- from both owned and distributed record companies -- as well as retailing components that include prerecorded music, merchandise and

videos.

That talent collection covers virtually every genre and area of the music business, ranging from megastars Barbra Streisand, Tony Bennett, Billy Joel, Michael Bolton, Rod Stewart, Michael Jackson and Madonna to newer stars such as Pearl Jam, R.E.M., Alice in Chains, Dwight Yoakam, Stone Temple Pilots, Eazy-E, Kris Kross, Cypress Hill, Mariah Carey, Tevin Campbell and Sade.

"Think of it as MTV meets QVC or the Home Shopping Network," said an insider at one of the companies. That is much the same description that was offered last year when cable giant Tele-Communications Inc. announced plans to launch a similar-formated service with German media giant Bertelsmann Music Group.

No Sony executives could be reached for comment. WMG chairman Robert Morgado, who is said to be working directly with his counterpart at SME, Tommy Motolla, in assembling the service, acknowledged that talks were under way, saying through a representative that he "can confirm that no agreement has been reached."

The TV service would mark the continuation of major relationships between Sony and Warner Bros., two of which are germane to this venture. Both, for example, are partners in Viva, a German music TV channel. And, in a relationship that appears to be at the crux of this deal, music and video direct marketing giant Columbia House is a 50-50 joint venture between the music industry powerhouses.

The WMG-SME Columbia House partnership is a relationship that began as a business combination borne of necessity. Then-Time Warner chairman Steve Ross demanded and received a half-interest in the direct marketing giant from Sony in exchange for allowing Peter Guber and Jon Peters to exit their Warner Bros. contracts to assume the reins of Sony's film units.

Columbia House, the sources said, is expected to play a primary role in the new service's future. A giant, state-of-the-art entertainment marketing company, Columbia House already operates a global advertising, marketing, promotion, sales, research, fulfillment, warehouse and distribution organization that can provide something of a turnkey back-office operation.

What's more, with the digital future just about knocking on the door, insiders said this service marks a key element in WMG and SME's long-term plans for Columbia House, which could face a bleak future if it remains locked into the direct mail business. Sources indicated the WMG-SME channel was not created specifically for Time Warner's developing Full Service Network incubator in Orlando, which is set to begin its baby steps to the future in April, apparently indicating that the service's interactive elements will, initially at least, be traditional, telephone-based ordering.

Looking at the competitive landscape, sources also said SME and WMG executives are planning their service to be non-exclusive, meaning they will continue to make their music video product available to other services, including MTV, VH-1 and other, smaller operations.

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