Offers to be narrowed to three or fewer.

The auction process for BMG Music Publishing is now entering its third phase as firm bids from about 12-15 invited bidders are due before midnight tonight (Aug. 31) Central European Time. During the next several days, Bertlesmann will be reviewing the offers to whittle the final contenders down to three or fewer.

Sources say that even the current bidders are not privy to the names of the others competing for the company; but as previously reported, Sony Corp. is not one of the bidders. Those believed to be bidding include Viacom, which owns Famous Music; Universal Music Group; Warner Music Group; EMI Group backed by Kohlberg Kravis Roberts; a management buyout led by BMG chairman/CEO Nicholas Firth backed by Bear Stearns; industry veteran Charles Koppelman backed by GTCR Goldner Rauner; BC Partners working with former Sony/ATV worldwide president Richard Rowe and former Sony Music U.K. chairman Paul Russell as advisors; and Apollo Management with former BMG chief Strauss Zelnick.

Formal presentations with the invited bidders began the week of July 24. Since then, the groups reviewed information about BMG Music Publishing in order to prepare formal offers. It is unlikely that all information about BMG was made available to this larger group of bidders since proprietary and sensitive financial information would then land in the laps of competitors who may not make the final cut. Loeb & Loeb in the United States has been representing BMG during this process.

As previously reported, the Bertelsmann annual report shows that its publishing unit in 2005 generated €372.4 million ($464.6 million). The net publisher's share (NPS)—the amount the company retains after paying songwriters and other publishers—was about €170 million ($212 million), with net earnings (EBITDA) of almost €86 million ($107 million). BMG Music Publishing owns or controls more than 1 million copyrights.