Later this month Investment Canada is expected to approve the merger of the Canadian units of two of the world's largest recording companies, Sony Music and Bertelsmann Music Group, better known as BMG.
The integration will put such well-known Canadian performers as Leonard Cohen, Celine Dion, Chantal Kreviazuk, Avril Lavigne, Ryan Malcolm, Our Lady Peace and Three Days Grace under one roof. Whether it will also result in one big happy family remains to be seen: Worldwide, the new company reportedly wants to realize annual savings of $350-million (U.S.), and to help accomplish this, it intends to lay off 2,000 full-time employees.
The 50-50 merger, announced earlier this year, has already gotten the go-ahead from regulators in other territories in which Sony and BMG operate, most notably Europe, the United States and Australia. Since Investment Canada has rarely squelched such mergers in the past, Canada's recording industry is confident that the review currently being undertaken in Ottawa will result in the same approval granted elsewhere.
In 2003, Sony's share of the Canadian market, valued at almost $900-million, was 14.9 per cent while BMG Canada claimed 11.5 per cent, according to the International Federation for the Phonograph Industry. Once the merger goes ahead and if market shares hold somewhat steady, the Canadian division could easily come to rival the dominance of the current leader, Universal Music Canada, which currently enjoys about 25 to 28 per cent of the domestic market.
Full integration of both companies, into an entity called Sony BMG Music, won't be completed until mid-2005, but the companies have been working hard in the last three months to set up a new executive structure.
Late last month the new entity's integration review committee announced that it had chosen Lisa Zbitnew, 41, as president of Sony BMG Canada. Named president of BMG Canada in 1998 -- at that time the first, youngest and only woman to head a major Canadian record label -- Zbitnew will report at the international level to Timothy Bowen who will oversee the new company's operations in Britain, Australia, New Zealand, South Africa as well as Canada. Unsurprisingly, one of Zbitnew's main jobs initially will be the creation of a streamlined work force. Sony Canada currently has about 130 full-time employees, BMG about 105, and of these, some have estimated that as many as 60 will lose their jobs over the next six months.
One individual who will not be part of the integrated unit is Denise Donlon, 48, who has been president of Sony Music Canada since December, 2000. The selection of Zbitnew over Donlon to head Sony BMG caught some by surprise, but not necessarily industry insiders. As one long-time industry observer noted on condition of anonymity, "there was nothing Machiavellian about it. We're talking a merger here. You can only have one president in these sorts of things, and they went for Lisa. I don't think there's much of a story beyond that fact of corporate life."
Donlon, of course, has a much higher public profile than Zbitnew, having been an on-air personality with MuchMusic starting in the mid-eighties, marrying singer-songwriter Murray McLauchlan in 1990, then becoming vice-president and general manager of Much in 1997. Zbitnew, by contrast, has been very much a behind-the-scenes "record-company baby," starting in the business at 17 with a small indie label, then zig-zagging her way through significant jobs at Alert Records (Holly Cole, Kim Mitchell, Gino Vannelli, The Box), Sony, EMI and finally BMG.
Interviewed shortly after Zbignew got the nod, Donlon said that Sony BMG had "made a great decision with Lisa. She's passionate, committed, smart and has tons of energy." Donlon wouldn't say if she was "surprised" by the choice but since "this merger is happening all over the world, decisions have to be made. The world is changing.
"For me, I look at it as a bit of a gift," she added, saying that she had been "working on high speed for 25 years." As the mother of a 12-year-old son, she now has "time to rethink and breathe a little, so I'm grateful."
No one expects Donlon to be out of the entertainment business for very long. Indeed, she herself said "there are very real [employment]opportunities" at hand, "but I'm not going to consider them until I've taken a moment for myself for a change. All is well."
One distinct possibility involves her returning to CHUM Ltd., the Toronto-based parent company of MuchMusic. Earlier this year Jay Switzer, the company's CEO, announced "an ongoing review" of the management structure and operations of its TV division. In early August, Switzer announced the departure of Stephen Tapp as CHUM's executive vice-president, television, and said "a new management structure" for that division would be announced "in the near future."
"Jay and Denise know each other and respect each other," a TV insider said recently. "They really loved Denise at Much, so it wouldn't be all that astonishing if she pitched up with CHUM."