BMG-KKR Stories Grow

Rumours that a disagreement over whether to bid for Parlophone might split the alliance between Bertelsmann and KKR gathered strength with a New York Post story saying the German media giant has already found a replacement for its U.S.-based financial partner.

The American paper was following up an earlier story that said the partners were at loggerheads over how far their joint venture would go to secure the former EMI label.

It reckoned that Bertelsmann wants to take a punt at buying Parlophone, while KKR – its private equity partner – was nervous about the likely cost of such an acquisition.

The Post’s update says there’s no news on exactly who would step in if KKR decides to step out, but claims “sources” say that Bertelsmann has talked to “Ronald Perelman, Apollo, and even Access Industries” – which owns Warner Music Group – about becoming its new partners in BMG Rights.

Five years ago, when Bertelsmann was looking to set up BMG Rights, several UK business papers reported that it saw Apollo as a potential partner.

Bertelsmann isn’t commenting on the Post’s story, although it is acknowledging that the Parlophone rift has put pressure on its relationship with KKR.

A company representative admitted as much, although he also said that any split wouldn’t come “anytime soon.”
A KKR rep told the paper: “We continue to be pleased with BMG and our partnership with Bertelsmann,” and said the Post story was “simply inaccurate.”

BMG Rights, which has the rights to 1 million songs, has racked up nearly $700 million in acquisitions in the past four years. They include Chrysalis and Bug Music.