BMG Back In The Auction To Buy Warner Music Group, Sources Say
BMG Back In The Auction To Buy Warner Music Group, Sources Say

BERLIN- The Bertelsmann Media Group is planning further investments in the global music market in the coming year, according to Bertlesmann CEO Thomas Rabe who spoke at the company's annual press conference in Berlin on Wednesday.

"Our primary goal is to grow the company faster, and to make it more digital and international," Rabe said before laying out four new initiatives to reshape Bertlesmann, which included: consolidating and strengthening Bertelsmann's portfolio; accelerating its transformation to digital; creating new growth platforms and expanding into new geographic growth regions.

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Thomas Hesse, a member of Bertlesmann's board responsible for corporate development and Bertelsmann AG's new businesses, reported that BMG Rights Management has established a successful international music rights business. For 2011, Hesse said total revenue for BMG Rights Management, which employs a workforce of 300 in nine countries, came to €200 million euros (about $267 million) . "This is why we wish to continue the partnership with KKR in the future." According to Hesse, KKR had put an innovative finance model in place that limited the risk for Bertelsmann, but increased the funds for BMG.

BMG Rights Management is a joint venture between Bertelsmann, which owns 49 percent of the company and the investment group KKR, which owns a 51%.

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Hesse added that since 2008 BMG had acquired more than one million titles by such successful artists as Aerosmith, David Bowie, Blondie and Cat Stevens as well as major music catalog aquisitions.

"The integration of major catalogs such as Bug Music and Chrysalis," Hesse said, "has resulted in substantial synergistic benefits and positive effects on earnings. In the future we intend to continue acquiring selected interesting catalogues." The Bertelsmann manager referred to catalogs which may soon come onto the market as a result of the planned merger of EMI and Universal.

Hesse also said he expected above-average growth in the digital music business in the years to come. "Different from the recorded music market, the music rights business also profits from the digital era based on the fact that worldwide music has never been listened to so much as it is today.

In 2011, Bertelsmann's revenues from continuing operations rose 1.2 percent to €15.3 billion ($20.4 billion). Operating EBIT reached €1.75 billion ($2.3 billion; previous year: €1.83 billion - $2.4 billion). The return on sales was 11.4 percent (previous year: 12.1 percent).

Commenting on the outlook for the current year, Rabe said that, "Bertelsmann is off to a good start in 2012. If economic growth in our key markets is stable or slightly positive, we expect a moderate increase in revenues for 2012."

Bertelsmann is planning to change its legal financial status from Aktiengesellschaft (stock corporation) to Kommanditgesellschaft auf Aktien (KGaA; partnership limited by shares). This move is intended to denote the international orientation of the Bertelsmann group. Kommanditgesellschaft auf Aktien is an often-used legal term for businesses with a family-style ownership structure.

At the end of the fiscal year, the group employed 100,626 employees worldwide up from 97,528 last year.