It looks like somebody called this one just right. I can't find the thread now, but someone suggested that if a merge happened, they'd probably use the Sony hardware and the Toshiba software that way both parties get a "win" as it were. Check this out from The Digital Bits about the format unity talks.

The deal could be finalized as early as this week and announced shortly thereafter, ahead of meetings with manufacturers scheduled for May 16th (where industry approval for the format would presumably be solicited). The technology compromise would reportedly see the new format utilizing Sony's planned disc structure (originally designed for Blu-ray Disc) with Toshiba's software for data transfer and copyright protection (developed for HD-DVD).

Bill was paraphrasing from some online articles. Check it out! Exciting stuff!