Sony buys out Bertelsmann’s stake in Sony BMG

Beyonce and Justin Timberlake(Updates earlier post to clarify deal terms)

After four years of recriminations and in-fighting between executives from Sony Music and executives from BMG Music Entertainment, Tokyo-based Sony Corp has decided to end the mutual pain of a controversial merger and take full control of Sony BMG.

Artists like Beyonce, Bruce Springsteen and Justin Timberlake will now record under a new banner: Sony Music Entertainment Inc.

The FT had reported in June that Bertelsmann was looking for $1.2 billion-$1.5 billion for its 50 percent stake in Sony BMG, but it looks like the German media company settled for $600 million-$900 million — the exact sum depends on how you do the math.

Basically, Sony said it is paying $600 million cash to Bertelsmann, which will also get half of another $600 million in cash on Sony BMG’s balance sheet for a grand total of $900 million. The deal values Sony BMG at $1.2 billion. (UPDATE: You can argue that half of Sony BMG’s cash belonged to Sony, so its total cost was $900 million but Sony says it hadn’t consolidated Sony BMG’s cash. Bertelsmann adds that the value to it was higher than $1.2 billion, after taking into account tax breaks)

Will full ownership by Sony give the record label a new lease on life? According to Music & Copyright research, Sony BMG ranks second in the music industry with a 20.1 percent market share, behind Universal Music’s 28.8 percent. Here’s what some analysts told our correspondents in Tokyo and London:

The Clive is dead! Long live The Clive!

Clive Davis with Alicia Keys (l.) and Whitney Houston (r.)Clive Davis is one of those legendary music industry executives who, like some of the artists he has nurtured, is known by just one name, like Miles, Whitney or Santana.

But even legends have off days. Davis, most recently CEO of BMG Label Group – has been bumped up, pushed sideways, demoted, depending on your view – to the position of Chief Creative Officer for Sony BMG Worldwide, the label’s parent company.

Most media outlets and blogs are reading this as a demotion of sorts for the great man, who shaped the careers of acts from Janis Joplin to Alicia Keys.