Bertelsmann will sell its stake in Sony-BMG if the price is right, according to chief financial officer Thomas Rabe.
The Gutershoh-based company, which also owns broadcaster Five and publisher Random House, says joint venture partner Sony would need to offer a valuation to what Guy Hands paid when he bought out EMI for £2.1 billion last year.
Given the two companies’ size and respective market shares, Bertelsmann looks to be hinting that its half-share of Sony-BMG is worth about £1 billion.
"What we will do depends on price. Of course the EMI price is a good price for a seller, but we would not be interested in selling if we were offered a figure based on the current valuation of Warner Music. The market is undervaluing music assets," Rabe told the U.K.’s The Times.
Presenting his first set of results since being upped to chief executive in January, Harmut Ostrowski said the company’s businesses "were growing weakly or not at all" and conceded that the 0.4 percent improvement was "not sufficient."
He promised to create a euro 5 billion acquisitions coffer in the next five years, furthering speculation that the sale of what remains of its music business – now that it’s hived off its publishing to Universal – could be used to start the fund.
Rabe told Financial Times it would have no more than euro 500 million to spend this year unless it makes disposals.
Net income for 2007 plummeted from euro 2.46 billion (US$3.9 billion) to euro 405 million, largely due to a writedown of its North American book and music clubs assets, the costs of settling litigation over the Napster digital music service and the absence of 2006’s gains from selling BMG Music Publishing to Vivendi-Universal.
Two weeks ago The Times said Bertelsmann had been hawking the business around private equity groups, given that Sony would have first refusal on it.
Despite the collapse in sales, Bertelsmann’s half of Sony-BMG earned euro 93 million in 2007, up by euro 3 million, largely thanks to cost cutting and strong album sales from Avril Lavigne’s The Best Damn Thing and Alicia Keys’ As I Am.
The companies also announced that Thomas Strauss, a former editor of Guetersloh regional paper Die Glocke, is taking over the running of Bertelsmann’s corporate communications.
In 1989 Strauss worked as an intern on the Oelde-based daily, where he eventually worked as an editor and later as a business editor.
Ten years later he left to join Arvato AG, a Bertelsmann subsidiary, where he’s risen to senior VP of corporate communications.