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Record Company News

August 05, 2008 | Other
Two updates on Elvis - former - record companies Sony / BMG and SUN Records. Sony Corp. Agreed To Buyout BMG Sony Corp. has agreed to buy the 50% stake in Sony BMG held by German media giant Bertelsmann in a deal valued at $1.2 billion. Sony BMG will initially pay Bertelsmann approximately $600 million in cash. Sony Corp. of America will then purchase the remaining interest for approximately $600 million. As a result, Bertelsmann will receive approximately $900 million in value for its 50% stake plus $300 million of its share of cash on Sony BMG's balance sheet. Sony views this as an approximate $600 million net cash cost as it does not consolidate Sony BMG’s cash. The music company, to be called Sony Music Entertainment, will be a wholly owned subsidiary of Sony Corp. of America.

The world’s second-largest music group boasts artists such as Pearl Jam, Elvis Presley, Barry Manilow, Alicia Keyes, Bruce Springsteen, Justin Timberlake and Bob Dylan, and includes the labels Columbia, Epic, RCA, Arista, J Records and Jive Records.

Bertelsmann will keep a toe in the European music marketplace. It takes over a limited amount of music catalog assets from Sony BMG in Germany, the U.K., France and Italy. Bertelsmann chairman and CEO Hartmut Ostrowski told employees in a memo that "will form the basis for reentry into the music rights business."

The parties will continue to share the company’s manufacturing and distribution requirements between Sony’s manufacturing subsidiary, Sony DADC, and Bertelsmann’s services company, Arvato Digital Services, by extending agreements with Arvato for up to six years.

The sales agreement ends a joint venture that began in 2004 when Sony and Bertelsmann merged their respective music divisions amidst declining record sales.

Move reflects Sony's efforts to beef up its own content production capacity as the Japanese conglom seeks synergies between its software and hardware businesses, such as linking music and mobile phones.

“This acquisition will allow us to achieve a deeper and more robust integration between the wide-ranging global assets of the music company and Sony’s products, operating companies and affiliates,” said Howard Stringer, Sony chairman and CEO. “It enables us to offer a total entertainment experience to consumers.”

Stringer added that Sony BMG has in the past four years restructured, streamlined its operations and developed digital partnerships “that ensure it will continue to be a leader in the creation and distribution of music worldwide.”

In his memo to staff, Ostrowski wrote "the proceeds from the sale of our stake in Sony BMG create new latitude for us to make targeted investments and grow again, including and especially in North America."

No specifics were mentioned in the memo, but one potential target could be U.K. pay TV company BSkyB's 17.9% stake in Blighty’s leading commercial web ITV. Bertelsmann-owned RTL is reportedly eyeing the stake, which is likely to come on the market in the near future following a ruling by the U.K.’s competition commission.

Last year the BMG unit saw revenue fall 27% to $2.25 billion while operating profit dropped 46% to $144 million

Deal remains subject to regulatory approval.

Update on the Proposed Reorganization of Sun Entertainment Holding Corp.

Sun Entertainment Holding Corporation (the "Company") (TSX: SED.V) (OTC: SETHF) wishes to
provide an update on the proposed reorganization of the Company to change its corporate jurisdiction from the Province of British Columbia to the State of Nevada, as disclosed in the Company's news release dated December 3, 2007.

On May 19, 2006, the Company received shareholder approval to reorganize the Company, including approval to effect a continuance to any state jurisdiction in the United States and to delist from the TSX Venture Exchange. As the Company's assets, shareholder base, and majority of its
directors and officers are based in the United States, management and the board of the directors determined that it is in the best interests of the Company to effect the proposed reorganization.

Prior to effecting the reorganization, the Company intended to file a registration statement in the United States with the United States Securities and Exchange Commission (the "SEC") to register its common shares under the Securities Exchange Act of 1934 (the "Exchange Act").

Following such registration, the Company intended to quote its common shares on the OTC Bulletin Board and delist from the TSX Venture Exchange.

Subsequent to receiving shareholder approval, the Company has decided to postpone the reorganization in order to determine the costs associated with registering a class of shares under the Exchange Act, particularly the compliance costs to the Company under the Sarbanes - Oxley Act and the requirement to obtain an auditor attestation report on the internal controls of the Company. The SEC has postponed the auditor attestation report requirement for Smaller Reporting Companies such as the Company until it files an annual report ending on or after December 15, 2009. Due to the high compliance costs with the auditor attestation report, and due to the uncertainty of whether the SEC will require the report in the future, the Company has determined to postpone the reorganization until a definitive compliance date is provided. The Company intends to continue to seek shareholder approval of the reorganization at future shareholder meetings so that it may quickly proceed with the reorganization in the event the SEC eliminates the auditor attestation report.

About Sun Entertainment Corporation

Sun Entertainment Corporation (SEC), based in Nashville, Tennessee, is a wholly owned subsidiary of Sun Entertainment Holding Corporation (SEHC), a publicly traded entity. SEHC/SEC owns the trademarks associated with the legendary Sun Records label that originated in Memphis, Tennessee with producer Sam Phillips. The Company, internationally recognized for rock-n-roll and the evolution of rockabilly is involved in merchandising and management of its vast catalog of approximately 8000 master recordings, with artists including Johnny Cash, Jerry Lee Lewis, Carl Perkins, Roy Orbison, Conway Twitty, Elvis Presley and others.
Greg Nolan wrote on August 05, 2008
It's kind of sad that it's all "SONY" now. Phooey.
Harvey Alexander wrote on August 05, 2008
Don't worry too much, Greg. It'll always be Sun and RCA Victor to me. Nothing else matters a damn.
Jumpin Jehosaphat wrote on August 06, 2008
Does this mean Ernest gets shown the door and Tokyo Rose starts to spin some New Platters.?