(Reuters) (11/11/03)

By Jeffrey Goldfarb

Edited By Michael Bennett

NEW YORK - Two would-be songwriters turned media moguls are tuning up a possible bid for Warner Music, even as Time Warner Inc. tries to negotiate a deal with one of its music-industry rivals.

Billionaire Haim Saban and former Seagram CEO Edgar Bronfman Jr. are exploring a potential bid for Warner Music, home of Madonna, Metallica, and Matchbox Twenty, people familiar with the situation said. Private equity firm Thomas H. Lee may help finance a deal, these people said.

Spokesmen for Saban, Bronfman and Thomas H. Lee all declined to comment.

Saban and his group are interested in both Warner Recorded Music and Warner Chappell, the music publishing arm of the business, one person said. Other private equity firms also are eyeing Warner Chappell, other people have said.

Warner Music had been in exclusive talks with Germany's Bertelsmann AG, but they faltered, leading to its current discussions with EMI Group Plc.

Such a combination could yield huge cost savings, but also likely would face regulatory hurdles, analysts have said.

EMI remains Time Warner's preferred partner, sources say, but other investors are circling in case the talks reach the same fate as those with Bertelsmann.

Saban's roots are in music. He got his start in show business pretending to be a band manager and a bassist, and later composed music for TV shows, including the cartoon "Inspector Gadget" and the sitcom "Punky Brewster."

He eventually made his fortune on children's programming, turning a library of shows into a half stake in a cable network that he sold to Walt Disney Co.

Saban recently acquired Germany's largest commercial television group, which includes ProSiebenSat.1 .

Bronfman is no stranger to the music business himself. His family once controlled Universal Music, which was part of Seagram. He tried to buy some of the Universal assets back earlier this year but lost out to television network NBC.

He also penned songs, including "Whisper in the Dark" for Dionne Warwick and "To Love You More" by Celine Dion.

Time Warner already has disposed of its CD and DVD manufacturing business, and is believed by media bankers to be readying a full-fledged auction for the other parts of the business so it can further pare its debt.

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