"The acquisition of EMI Music Publishing would have been an interesting deal for us," Hartwig Masuch, CEO of BMG Rights Management in Berlin, told Billboard.biz following the company's sale to a Sony-led group of investors last week. "But on the other hand, we will nevertheless reach our goals within the next three years. Therefore, EMI Music Publishing was not urgently necessary." Masuch declined to comment further.
Insiders say that BMG and the investor KKR aren't too disappointed at losing the battle for EMI Music. The company, which sources say bid 1.9 billion, bailed out of the auction when competitors offered a price that was reported to be $300 million more. BMG Rights Management is anxious to maintain the two-digit net return mark, a company executive told Billboard.biz. "We are not gamblers," he said.
Several months ago, Thomas Rabe, then-CEO designate of the Bertelsmann Group and present CFO, confirmed to Billboard.biz that they would not be taking big risks in the music business. "It is important to be realistic and to pass on expensive deals," he said. "We must be very careful in today's economy. We would rather invest in middle-sized catalogues that guarantee us a good net return."
"Our strategy remains the same with all acquisitions: buying at the right time and at the right price, or we skip it," Bertelsmann's CEO Hartmut Ostrowski similarly told Billboard.biz a few weeks ago. "We believe in BMG and will develop it within the coming years." KKR and Bertelsmann are committed for a long period, and the partnership is working out well, he added.
The strategy seems to be working out for the publisher. In September, BMG announced the acquisition of the Spanish copyrights owned by the leading Spanish independent music publisher Ediciones Musicales Clippers (also known as Clippers). The purchase includes all Spanish-owned catalogue assets signed by Clippers until end of September 2010. Since October 1, 2010, Clippers in Madrid has signed more than 1,000 new Spanish copyrights.
At BMG, the expansion continues. BMG Rights Management represents the rights of more than 300,000 songs and recordings, including those from Crosstown Songs, Cherry Lane Music Publishing, Stage Three Music, Evergreen Copyrights and Chrysalis Group - and it recently acquired Bug Music. And Masuch told Billboard.biz that he expects the company to close more catalogue deals before the end of the year that will further signal that BMG Rights Management is still aggressive, "but with all realism about the business."