Bertelsmann, which owns BMG Rights Management and Arvato, posted a net profit of 353 million euros ($443.95 million)on revenues of 7.6 billion euros ($9.6 billion) for the six month period ended June 30. That performance represented a 31.2% increase over the 269 million euros in profit the company posted in the first half of 2011, when revenues were 7.2 billion Euros.
Within that, the company's corporate investment center--which includes revenues from BMG Rights Management and revenue from investments in Inmediaone, the direct sales company which includes its book club, the BDMI fund for global digital investments--reported first half revenues of 227 million euros and produced a 43 million euros loss before interest and taxes. Before depreciation and amortization are subtracted, that red ink is reduced to 18 million euros loss while in the prior year its EBITDA was in the red by 49 million euros.
Meanwhile, Arvato, a business-to-business services company which includes supplying manufacturing, managing the distribution pipeline, and music digitalization for Sony Music Entertainment in Europe, produced 83 million euros in EBIT on revenues of 2.1 billion Euros. That's up slightly from the 80 million Euros in EBIT produced in the first half of 2011, when revenues were 1.95 billion.
During a conference call with investors, Bertelsmann CEO Thomas Rabe reaffirmed the company's interest in acquiring EMI assets, which will have to be divested by the Universal Music Group in order to appease the European Commission and win approval for its proposed acquisition. Sources say that the divested package includes the global rights of Parlophone.
While BMG Rights Management CEO Hartwig Masuch told the Financial Times that he was very interested in adding to its collection of music copyrights by buy EMI's catalogues of master recordings, he didn't expand on whether BMG would get into the record label business full throttle, i.e. releasing new records and developing new artist; or stick with its old plan of just buying master rights catalog and shy away from developing new artists. In addition to buying masters, BMG has shown it is willing to put out new music by heritage artist as earlier this summer it released an album by the late Joey Ramone.
If UMG has to sell assets, Masuch predicted that it likely won't take a loss on the resale of some of the EMI assets it hopes to acquire. The EU is expected to make a decision of the EMI acquisition sometime within the next week, although what decision it makes may not be known for a few weeks after that because the decision will still have to be written up after the vote.
Next week, representatives from the EU 27 member states are expected to vote on the UMG proposed remedies package of divestments, in a development first reported by Bloomberg.