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Universal Music to buy DreamWorks

Universal Music Group, the world’s largest record label, has reached deal to buy DreamWorks Records, the companies said Tuesday in a joint statement.
/ Source: The Associated Press

Universal Music Group, the world’s largest record label, has reached a deal to buy DreamWorks Records, the companies said on Tuesday.

TERMS OF THE deal were not disclosed but a person familiar with the negotiations said late last month the transaction was worth an estimated $100 million.

The deal was the second music merger in a week and comes as the industry grapples with a protracted slump in CD sales, online file sharing and fierce competition with other forms of entertainment.

DreamWorks was formed in 1994 by Steven Spielberg, David Geffen and Jeffrey Katzenberg. It was initially envisioned as a broad-ranging entertainment conglomerate but has more recently focused on film production.

Its record label’s roster of recording artists includes country star Toby Keith, pop singer Nelly Furtado and rock acts such as Papa Roach and Alien Ant Farm.

Sony Corp’s Sony Music, the second-largest music company, and Bertelsmann AG’s BMG last Thursday announced plans to merge in a 50-50 joint venture to create a powerhouse that would rival Universal Music in size.

DreamWorks has also enjoyed deep ties to Universal Music parent, Vivendi Universal , and the two sides also said that they had extended a film and home video and DVD distribution partnership until October 2010.

Under the terms of that deal, Vivendi Universal Entertainment, which is being merged with General Electric Co’s

entertainment arm, has international theatrical distribution rights to DreamWorks’ movies and worldwide rights for DVDs and home video.

DreamWorks and Vivendi Universal co-produced Academy Award-winning movies “Gladiator” and “A Beautiful Mind” and blockbusters such as “Shrek.”

Their film and video distribution partnership, which dates back to 1995, had been renewed once before in 2001, the companies said.

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