Warner Music Group struck a deal with European indie group IMPALA to overcome any objections the group may have to a WMG acquisition of EMI.

Last year, IMPALA successfully challenged the European Commission's approval
of the Sony and BMG Music merger by filing an action with the European Union's Court of First Instance. The court annulled the merger. Sony and Bertelsmann, parent company of BMG, are currently seeking another review by
the EC for approval.

In an attempt to avoid a similar situation if WMG is successful in acquiring EMI, WMG and IMPALA began talks before an acquisition. In a statement released by WMG today (Feb. 20), WMG said it obtained an agreement with the indie trade group to "provide full and complete support for the acquisition" if and when applications for approval are submitted to the EC and other regulatory authorities.

If WMG makes an offer for EMI, WMG has agreed to implement certain measures including:

* Providing specified funding for (but taking no equity participation in) the recently announced Merlin initiative, the new global digital rights licensing platform established by the independent music labels to represent the world's independent music sector;
* Ensuring the divestiture of certain recorded music assets to reinforce the
market power of the independent sector; and
* Pursuing various other behavioral commitments which have the aim of
benefiting the recorded music market as a whole and, in particular, the
independent music sector.

The deal is expected to set a new framework for the relationship between a
combined WMG and EMI and the independent music sector. The parties to the
deal believe the measures would enhance competition across the industry and
improve the prospects for regulatory approval of a combined WMG and EMI.

The agreement does not require IMPALA to change its positions objecting to the Sony BMG merger or to Universal Music Group's acquisition of BMG Music Publishing.

The WMG statement noted that its approach to EMI "remains in the preliminary
stages."

In a separate statement today, IMPALA confirmed the deal. It described the agreement to include:

* Behavioral undertakings to ensure competition and broad licensing;
* Recorded music divestitures to reduce market share and enhance the
competitive scale of the independent music sector; and
* Substantial assistance to build the capacity of the independent music
sector through industry bodies and the recently announced Merlin initiative.

WMG is the only major label to work with IMPALA to create a comprehensive framework of solutions to its concerns in relation to previous mergers, the statement noted.

"The agreement between IMPALA and WMG proves to what extent there can be a future for music if the independents and the majors work together for a vision of the market which is long term," said Patrick Zelnik, president of IMPALA and president/CEO of Naïve. "We have been consistent since 2000 in stating that we will oppose mergers without strong remedies."

"We have never been anti-major," added Martin Mills, chairman of IMPALA and
president of Beggars Group. "We understand their issues. Full market access
for the independents, whether large or small, is what we have always sought,
and what this agreement helps to deliver. We hope to get the support of
Commissioner Kroes to this innovative market-led solution that we believe
will benefit musicians and fans alike, and which sets a crucial precedent."

WMG declined to provide further comment.

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