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July 25, 2005 - Times Online

Warner and Disney unit end alliance
By Nic Hopkins

WARNER Music International has ended a potentially lucrative licensing deal with the Walt Disney Company’s Hollywood Records, the record label whose acts include the teen star Hillary Duff, The Times has learnt.

The five-year-old deal has fallen apart after Disney and WMI, the international division of Warner Music Group, the world’s fourth-largest record company, failed to agree terms for a new agreement that would begin early next year.

The negotiations, which lasted about six months, are understood to have fallen apart after Disney insisted on removing the right to distribute read-along children’s CDs and books. WMI is also thought to have balked at multimillion- dollar advances demanded by Hollywood on new releases, which it would prefer to spend on developing its own artists.

The record company is understood to have been frustrated by difficulties in selling some of the biggest artists because they did not make promotional tours to Europe.

“There was no way WMI could justify doing the deal that was offered by Hollywood,” said one person familiar with the situation.

However, Hollywood is likely to be courted by rival record majors, including EMI and Universal Music Group.