BMG Posts €182 Million in Half-Year Earnings

Bertelsmann chairman and CEO Thomas Rabe

In the first year that Bertelsmann is breaking out the financial results of its music division since 2008, BMG has posted operating earnings before interest, taxes, depreciation, and amortization (OIBDA) of 32 million on revenues of 182 million for the six month period ended June 30, 2016, representing year-over-year gains of 6.7 percent and 4.6 percent, respectively.

​Bertelsmann CEO Thomas Rabe projects BMG to generate sales of about 400 million this year thanks to acquisitions made during the first quarter, which included a stake in the ARC music catalog -- which boasts songs by Chuck Berry and John Lee Hooker -- as well as big publishing signings like Pink Floyd's Roger Waters.

Moreover, Rabe is projecting that BMG may well achieve 100 million euros in OIBDA for the full year. Companies typically bring in bigger operating profits in the fourth quarter, which is why the CEO predicts margins more than double the first half's.

"Since the commencement of activities in 2008 [BMG relaunched as a music concern that year], we have been seeking to continue expanding BMG in order to be present in 80 percent of the global music market in terms of sales,” Rabe tells Billboard. “Following our entry into the markets in China, Australia and Brazil, we have now largely achieved this.” 

Rabe says that BMG has achieved the distinction of being the fourth-largest music company in the world in its eight years of its existence. BMG was previously the fifth-largest, before it divested its publishing operation to Universal Music Publishing Group and its record label operations in two stages to Sony Music Entertainment.

 “BMG has joined the champions league,” Rabe says.

Earlier this year, BMG did an almost  global deal with Alternative Distribution Alliance and the Warner Music Group, which allows it to hold back some acts and some markets for deals with other distributors.

The company has 550 employees worldwide, and added 50 earlier this year

BMG parent company Bertelsmann's results posted a net profit of 482 million euros, on revenues of 7.97 billion, a 21.1 percent growth in profit year-over-year.

Rabe labeled the company’s financial results for the first half of the year “the best operating result in Bertelsmann's history. The high profitability of our businesses, and significantly improved Group profit of nearly a half billion euros give us confidence for the full year. We recognize that our growth profile has further improved through a series of strategic measures; our new Group structure with eight divisions introduced at the beginning of the year makes this transparent.”

Additional reporting by Ed Christman.