The merger match-up - is this the final rally?

Warner edges ahead in merger battle with a little help from Impala

By Robert Ashton

Impala is looking to redress the balance of power in the music industry, after giving the seven-year struggle between EMI and Warner Music to gain control of each other a surprising - and radical - new spin by joining forces with the US major.

As Warner removes a huge regulatory obstacle in its quest to acquire EMI by getting Impala on its side, the independent group is eyeing a huge "pay-back" for its support that it hopes will ultimately result in a stronger independent sector that can compete on an equal footing with the majors. Impala's preferred blueprint seems to be for three "strong majors" - Universal and (pending clearance) Sony BMG and Warner EMI - and a redress of the industry's balance of power, which it believes presently rests outside of it with groups like Apple and its iTunes service.

But, for all the altruistic talk, one fact remains: Warner boss Edgar Bronfman seems determined to capture EMI.

Warner made its initial, private approach to EMI on January 24. However, this time it had the indie group in its pocket. Bronfman has spent the past couple of months hammering out what Impala chairman Martin Mills calls a "pretty comprehensive" and binding agreement to deliver some fairly significant "remedies" or concessions to buy that support in the EC. It is also a landmark move.

"It's the first time one of the parties [who want to merge] has come to us and accepted that remedies are necessary and accepted that a healthy indie sector is good for the industry," adds Mills. "Three strong majors and a strong indie sector are best."