The German media conglomerate Bertelsmann is in the final stages of negotiating with investment group KKR to take over BMG Rights Management, a source at Bertelsmann has confirmed to Billboard.biz. Reports earlier today claimed Bertelsmann intended to buy out KKR's majority concern.
A Bertelsmann spokesperson declined to comment on the report.
This is some speculation as to whether Bertelsmann will by out all or part of KKR's 51% shareholdings, or if the company will look to bring in a minority-partner to share in the risk of BMG Rights Management’s future investments. A source claimed that Bertelsmann's CEO Thomas Rabe will announce the buyout of KKR at an earnings press conference in Berlin scheduled for March 26th.
In an interview with German newspaper Süddeutsche Zeitung, Bertelsmann board member Thomas Hesse -- who is responsible for corporate development and Bertelsmann AG’s new business -- made it clear that BMG Rights is looking to expand its portfolio and that the company's situation would change. "It is our ambition that the music-business will again become a significant business for Bertelsmann," he told the paper. "With KKR we have a very good partnership. Over the long term the constellation will change. We will find a good solution."
KKR and Bertelsmann founded BMG Rights Management in 2008 and within a few years became the world’s fourth largest music- publishing business. Today the company's revenue is about over 200 million euro and has 300 employees, half of them at BMG Rights in Berlin. The company represents the rights of more than a million songs and recordings on Crosstown, Cherry Lane, Stage Three, Evergreen, Chrysalis and Bug.
Though the company was unsuccessful in its bid for EMI and Parlophone, it more recently picked up Sanctuary as part of UMG’s divestments.
Hesse told Billboard last year that he expected above-average growth in the digital music business in the years to come. “Different to the record-market the music-rights-business also in the digital era profits from the fact that worldwide music has never been listened to so much music as today. In the future Bertelsmann will continue to develop this most attractive business organically and with well chosen acquisitions."