Media analysts have been tipping the company because of its recent aggressive takeover activity - including buying Chrysalis at the end of last year - and its ability to tap into ready sources of funding. It would work closely with private-equity company KKR, which has a 51% stake in BMG, on any bid.

BMG might have some competition with other names believed to be in the running including Warner Music Group (see box), and private-equity group Apax, which owned a ...