In just three weeks, Germany's rapidly expanding BMG Rights Management has reached an agreement on what must be its biggest deal to date: a £107.4 million ($168.6 million) offer - already accepted by 73.4% of shareholders - for British music publisher Chrysalis. The terms of the Cherry Lane acquisition in March 2010 were not disclosed but it was reportedly around $100 million.

Chrysalis was launched in 1968, having been renamed from the Ellis-Wright Agency which opened a year earlier. It was founded by Chris Wright and Terry Ellis; Wright is currently chairman. He confirms to he will take the non-executive chairman role at the BMG-owned operation. He is selling his 27.53% of Chrysalis.

Chrysalis has interests in songs recorded by Michael Jackson and its roster includes Bat For Lashes, Crowded House, Bon Iver, David Bowie, Cee Lo Green, Sheryl Crow, Gossip, Fleet Foxes, Outkast, Laura Marling, Scott Weiland and Rumer.

Wright and BMG CEO Hartwig Masuch spoke with on (Nov. 26) a few hours after the deal was confirmed.

Chris how does it feel to be selling up to BMG after more than four decades?

Chris Wright: It's clearly a day of extremely mixed emotions. It's a very poignant day, there's obviously an element of sadness and elements of relief to some extent. And a degree of excitement about what the opportunity presents and to be part of a group that's got the resource to do the things that we at Chrysalis never had the ability to do, being a pretty small company as we were, without the backing of huge people like Bertelsmann or KKR [BMG's joint venture partners] behind us. It's very hard to say what I will feel like until I've had time to let the dust gather for a few days.

Have you had any reaction from your songwriters who have an association with Chrysalis?

CW: We had a staff meeting earlier at [London HQ] Bramley Road and I discussed the whole deal and the reasons for it. One of the people there said: what do we tell our writers and artists? And I just said you can tell them that the company is not for sale any more. Because one of the problems we've had since we were in the last sales process two and a half years ago is that when you're signing a major writer or major artist, the opposition can always say 'oh I wouldn't sign with Chrysalis because the company's for sale.' So I think from the standpoint of the talent, I think it's a fantastic situation because they are now part of an extremely well financed group that's going to have much more resource with an even greater international infrastructure to be able to do an even better job on them, and know the company is not going to be sold.

So the speculation had got in the way of making deals with talent?

CW: I think hopefully we signed most people that we wanted to sign because we've got the people at the company who are very, very good at attracting the talent. But if we were in a fight with somebody else, it's pretty clear that that somebody else - if it was a Sony [Sony/ATV] or a Universal [Universal Music Publishing Group] - would say, 'well why would you sign with Chrysalis, they're going to be sold, they're on the block.' And we always had to defend that when we were in signing battles.

Hartwig, why is Chrysalis a company you were keen to acquire?

Hartwig Masuch: It's definitely the best catalog in the market. There's nothing that is more exciting that you can buy than the catalog of Chrysalis: 40 years of excitement in youth culture and Anglo-American music culture. But there's more to it because we decided to relaunch the [BMG publishing] business and come back with a different philosophy in relationships with the creative community, and there obviously Chrysalis is a benchmark of the last 40 years with a consistent approach to fair relationships, respect to the creative community.

Will the Chrysalis name be around for years to come? The agreement says three years at least.

HM: We will use this name and that is very important because it is the entrepreneurial music brand in the U.S. and the U.K., no doubt about it.

Billboard's Publishing Airplay chart in Q2 2010 put your combined airplay at 10.9%, which would have made you No. 4 in that quarter. Where do you think you are in the global market?

HM: At the end of the day statistics are very inconsistent between the European territories. Billboard has a pretty good grip on market shares in the U.S., it's very hard to say in other countries. I think we come up closer to the No. 4 among the publishers. Obviously we know we are not [so] big that we can say we will consistently be No. 4 for the next six months. But we have the ambition to be there and we will make use of the brand, [the] team and resources to achieve it.

And you believe you are the No. 1 independent now?

HM: Yes, very much so we are the No. 1 independent publisher. I think we will come very close to the No. 4 major publisher in some areas and we feel very comfortable we are the No. 1 [independent].

We have a very strong schedule of new releases and it's very important to say this is not about merging a couple of catalogs - it is a living company. Chrysalis has a tremendous success with Rumer right now, there will be the Josh Groban record out, we [BMG] will have Black Eyed Peas out there, we are having success with Steve Robson writing for James Blunt.

Will Chrysalis remain an autonomous operation or will there be major consolidation?

HM: We will obviously look at and bring these two companies together but clearly it is not a synergy discussion we are having, it's a growth discussion. We want to become one of the majors, there is a lot of [Chrysalis] managerial talent that we'll want to keep in the company. If you look at the stellar performance of Chrysalis in something that we really consider critical, which is the ability to proactively [drive business] for synchs for TV and film, it's a dream for us to be involved with that team.

I think next year once we have a clear view how we structure our companies you will see the resources come in to play big time, because it will be a fantastic management team, it will be highly motivated people who share the same values. And there is a motivation for our shareholders not to stop halfway. This will come into play next year and I think there are a lot of opportunities. I am absolutely sure the combined BMG-Chrysalis will make a lot of relevant writers think about what their best home could be in this industry, and we will do everything to advertise it and promote and create trust in this discussion.

Will the headcount at Chrysalis remain the same?

HM: From the BMG side there will be a growing team in place. This is a growth story and we need the time to really set up the company going forward.

What is clear is BMG will be a much bigger team at the same time next year than it is right now, and that is triggered by our ambition to become one of the top companies. We are completely clear about it, that the quality and dedication in employees and the right number of employees will be critical in our industry because a lot of writers just won't take it any more that they work with under-resourced players who can't deliver on the contractual promises.

The Chrysalis operation is bigger than BMG in London - so will BMG move over there?

HM: We haven't looked at it yet but we are very open to that discussion. We have a very small [London] office.

And will there be further acquisitions by BMG soon?

HM: Obviously if there are opportunities we will move forward. We think there will be opportunities, I think right now we will communicate that actually this is a fantastic home for everybody [talent].

Three years ago the Chrysalis auction process took some months and was eventually called off. Chris, how do you feel about this offer price of 160 pence a share compared to the one of 155 pence from EMI rejected in April 2008?

CW: Well, it's a little bit higher, and I think that reflects to a large extent that the company has performed extremely well in the last two and a half years. But the last process was not instigated by myself, it was instigated by the institutional shareholders who felt that, following the sale of our radio division, that the company was slightly sub-scale to be a public company, and that's why we went into the sale process when we did. The timing of that was quite bizarre in a way because when we started [autumn 2007] it the world was in a pretty healthy state financially, and when we finished [spring 2008] the world was on the brink of collapse.

There was an offer of 155 pence from EMI. I think genuinely it's unlikely that deal would have closed. By the time EMI would have been ready to have closed that deal I don't think that that they were in a position to close it. And I think anyway that the BMG tie-up is a much better situation. We're stronger in markets that they're not so strong - it's just a much better fit. I think it's going to provide a much better opportunity for our writers and for our management to have an ongoing role. And the EMI situation two and a half years ago would have provided none of that.

You sold the main Chrysalis label to Thorn EMI in 1991, though you still have some recorded music within your business. What do think is the outlook for the music industry, is it going to move more towards a rights management business?

CW: The sustainable business going forward is music publishing and rights management. The old traditional style record company is almost not sustainable any more. In terms of the record companies, yes we have record rights at Chrysalis and we've got some quite good record rights, and we have used our Echo label as an incubator label for talent which is signed to the publishing company, like Ray LaMontagne and Bat For Lashes and Feeder. I think there's always a role to play in that respect.

But when people talk about the term 'rights management,' which is a name associated with BMG Rights [Management] from the word go - and I know EMI are using that title 'rights management' - it does give you a sustainable view on the record business if you just look at the catalog you own and see it as rights to manage and rights to exploit, rather than just as a means of manufacturing CDs and vinyl and putting them into the marketplace and hoping people buy them. So if you were going to start a music company right now I think you would start as a music publishing company and the rest would spin off from that.

Frankly I've been in the music business long enough that in the 1960s it was the music publishing companies that were the dominant companies, and the record companies that were ancillary. It was only in the '70s that the record companies took over, and then with the CD explosion and so forth they became pretty much everything. Well, where we're at now is really only going back to where we were maybe 40, 50 years ago. It just shows really that the sustainable part of the music business has always been the music publishing rights and that's the way it's going to be going forward.