Bertelsmann-owned music company BMG and global investment firm KKR have joined forces for the acquisition of music (publishing and recording) catalogues and other music rights.
“BMG and KKR can jointly pursue opportunities for acquisitions of major catalogues of music rights from now on," said Bertelsmann Chairman & CEO Thomas Rabe. "Together with KKR, we are ideally positioned to make attractive offers to rights owners.”
The two partners did not disclose how much they have bookmarked for acquisition but said they have the ambition be "leading acquirers of music rights with world-class catalogue management capabilities and the ability to invest in transactions of all sizes."
Grow the value of music assets
"Working together, the companies will deliver a compelling solution for artists, songwriters and other music rights owners seeking to realise and grow the value of their music assets," said BMG in a statement.
Under the terms of the agreement, BMG and KKR will join forces "to source individual transactions to acquire music catalogues" by combining BMG’s industry knowledge with KKR’s network, resources and experience as an investor in market-leading music, digital, media and content businesses.
The agreement re-unites BMG with KKR as the investment company was the initial partner chosen by Bertelsmann when it relaunched its music operation. KKR owned 51% of BMG between 2009 and 2013, when it sold all its shares to Bertelsmann, making BMG a wholly-owned subsidiary of the German conglomerate. BMG CEO Hartwig Masuch recalled that the early partnership with KKR "helped us rapidly become the first new international music company of the streaming age winning the trust of artists and songwriters with great service and 21st century levels of fairness and transparency."
A financially stable home
Reflecting on the new agreement with KKR, Masuch said: "This new relationship with KKR will offer artists and songwriters a well-funded, financially stable home for their music assets with the confidence that their songs and recordings will be managed both professionally and respectfully.”
Richard Sarnoff, Partner at KKR and previously an executive at Bertelsmann, added: “BMG has become an innovative leader in the music industry by embracing digital trends early on, while always placing artists at the center of everything they do. We are delighted to reunite with BMG’s talented team to pursue future opportunities together, leveraging our complementary platforms.”
BMG and KKR have recently completed transactions to acquire music rights from leading artists: KKR acquired in January 2021 a majority stake in the music catalogue (publishing and recording) of songwriter, musician, producer and lead vocalist of One Republic, Ryan Tedder; BMG acquired Fleetwood Mac co-founder Mick Fleetwood’s interests in the band’s recordings.
[Analysis:
It's interesting to see Bertelsmann reuniting with KKR, which helped the German conglomerate re-launch its music operations in 2009. The two partners have a history together and have performed quite a few transactions between 2009 and 2013.
At the time, BMG had a big chequebook and did buy what was believed to be above normal prices. What they did was just anticipating the current craze for acquiring music assets.
However, what has changed is that there are far more companies in the field and prices have gone up and up. In addition, while there are still catalogues to be acquired, a lot of them from "heritage" acts have already changed hand. Think of Bob Dylan (Universal), Neil Young (Hipgnosis) and now Paul Simon (Sony).
This new venture might a bit to late for music assets, but if its purpose is to also invest in digital, media and content businesses, then we could see some strategic moves that could position BMG at the centre of a complete digital eco-system which would be quite groundbreaking.
Emmanuel Legrand]
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