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BMG’s First-Half Revenues Surge 25% on Strong Streaming

The company tripled its investments in song catalog acquisitions in the six months leading up to June 30.

BMG said on Wednesday that its first-half revenues grew by 25% compared to last year, despite tripling its investment in song catalog acquisitions during that time.

The record label and publisher saw its biggest uptick in first-half organic growth in BMG’s 14-year history, helped by strong streaming revenues, according to a mid-year financial report from German parent company Bertelsmann.

“The big news in these results is our 25% growth,” BMG chief financial officer Thomas Coesfeld said in emailed comments. “That’s good news not just for us, but also for our artist and songwriter clients.”

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BMG’s revenues jumped 25% to 371 million euros ($405.7 million based on an average exchange rate over the first six months) for the year ended June 30. That’s compared to 296 million euros ($350 million) in the first half of 2021.

Strong performances from established artists like Bruno Mars, Blondie and Kurt Cobain helped drive the company’s 60% of revenues that come from publishing, while hit records from 5 Seconds of Summer, Jason Aldean and others were behind the 40% of revenues attributed to recordings.

BMG’s operating earnings before interest, taxes, depreciation and amortization (EBITDA) rose 46% to 73 million euros ($79.8 million), with the company’s EBITDA margin — a closely watched metric of profitability — up nearly 20%, an all-time high.

BMG’s Coesfeld emphasized that all this occurred while the company was dramatically increasing its spending on catalog acquisitions. In the first half of the year, BMG acquired rights packages from John Lee Hooker and Primal Scream, and expanded global partnership deals with the George Harrison estate and Dark Horse records.

Last March, BMG announced it was partnering with private equity firm KKR to help boost its buying power, but Coesfeld said the company still has a lot of dry powder.

“When we announced our alliance with KKR last year, it was about amplifying our firepower in the market,” Coesfeld said. “In reality, because of the support of Bertelsmann, we have needed less outside [financing] than expected and have done most deals alone. Naturally, we still value our relationship with KKR and other financial partners and expect to do further deals with them in the future.”

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