BMG Back For More

The seemingly endless competition issues caused by its merger with and subsequent split from Sony don’t look to have soured Bertelsmann’s taste for the music business.

The UK’s Financial Times reported the German publisher is looking to BMG Rights Management, the joint-venture it founded with private equity firm Kohlberg Kravis Roberts & Co in 2009, to snap up some of its rivals and become a dominant music rights manager alongside Universal and Sony.

KKR has committed to investing about euro 250 million into the business in which it owns a 51 percent stake. Bertelsmann owns the remaining 49 percent.

Having tied up some U.S. deals including the acquisition of some Nashville-based publishing companies, BMG chief executive Hartwig Masuch said there could be “two or three larger acquisitions” in the coming months.

“We’ve positioned ourselves in the U.S. and now we want to do the same kind of thing in the UK,” he told the FT, saying the company was looking at “something like 50” potential deals.

Although Masuch didn’t provide any details of his hit list, he did rule out any near-term bid for debt-laden EMI – currently at the centre of an ownership tussle between parent Terra Firma and Citibank. He said “no one knows” which of the two will be controlling EMI in the future.

In its first 18 months, BMG has signed individual artists and bought rights catalogues, expanding a roster of 200 European artists – hand-picked from Bertelsmann’s old music units – to one with about 100,000 song rights.

While record labels still battle the effects of declining CD sales, music publishers are doing well as more music is played on electronic gadgets.

BMG Rights Management is still a minor player compared with majors like EMI, which has 1.3 million songs in its catalogue, but Masuch is confident that one day it will compete with the biggest.

He did hint that his company may benefit from EMI’s troubles, which have already led to Paul McCartney shifting his back catalogue.

“We can already see that artists are taking away their catalogues from some of the big companies,” he said, adding that if rights owners did want to switch publishers, they would surely “also start talking” to BMG.

He said the UK is “the hottest music market in the world” and finding talent there is more important than “speculating about the future of EMI.”