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BMG Continues Growth Spurt as Revenues Top $276 Million

BMG continues to post growth in both profits and revenues as the company reported 40 million euros in earnings before interest, taxes, depreciation and amortization, on revenues of 233 million euros…

BMG continues to post growth in both profits and revenues as the company reported €40 million euros ($47.4 million) in earnings before interest, taxes, depreciation and amortization (EBITDA), on revenues of €233 million ($276 million) for the period ended June 30, 2017. That represents a 25 percent increase from the €32 million ($38 million) in EBITDA it reported in the year earlier corresponding six month period, when revenues also grew by 28 percent to €233 million ($276 million) from €182 million ($215.6 million).

The growth was driven primarily by the recording and music publishing business in the United Kingdom and the United States, as well as music publishing in Australia, the company said.

During the year, BMG completed its most significant label acquisition when it acquired BBR Music Group (BBRMG), which gives it a Nashville presence and infrastructure. BBRMG includes the country music labels Broken Bow Records, Stoney Creek Records, Wheelhouse Records and Red Bow Records, as well as the music publishing company Magic Mustang Music. It also represents the rights to popular country music artists like Jason Aldean and Dustin Lynch. (Sources previously told Billboard that BMG paid about $125 million for the company.)

“The deal gives BMG a significant position in the country music capital of Nashville – and thus in the lucrative country music market,” said Bertelsmann CEO Thomas Rabe, in comments to Billboard. “In Nashville and around we will create the surroundings, the background and the possibilities to sign new artists.”

BMG also strengthened its portfolio in the recorded-music rights sector by signing a number of contracts with international artists including Avril Lavigne and Fergie in the United States, Kylie Minogue in the United Kingdom and Mando Diao in Germany. Its record label operation scored in the charts with Nickelback.

The company also achieved success in the publishing segment by renewing contracts with songwriters Hillary Lindsey and DJ Khaled. Notably, BMG partners achieved significant chart success with shares in international hits like “Despacito,” “I’m the One” and “Wild Thoughts,” along with Roger Waters “Is This the Life We Really Want?” album.

Rabe noted that the global expansion of publishing arm BMG will continue. “Last year we entered the Brazilian market and this year Canada,” he said. “Meanwhile we cover over 85 or even 90 percent of the worldwide music market and for the rest we have partnership-relations. That means that BMG is global and growing.”

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In an e-mail to BMG staffers BMG CEO Hartwig Masuch noted that other than the Broken Bow acquisiton, the company had achieved significant organic growth through its signings. Also, he said the key to the company’s success is its commitment to “fairness, transparency and service” to its clients.

“We have demonstrated that our new and distinctive, ethical approach to the music industry is also a financially successful business,” Masuch said in the e-mail. “We continue to pay out more of our revenue in royalties to artists and songwriters than any of the established players, while also generating a better return. That is a game-changer.”

Meanwhile parent Bertelsmann continues to display growth saying it made €502 million ($594.7 million) in net income on €8.134 billion ($9.6 billion) in revenues for the period ended June 30, 2017. That represents a 4.1 percent growth in group profit for the 482 million euros reported in the six month period ended June 30, 2016, during which revenues also increased 2.1 percent from €4.966 billion ($5.9 billion).

In the world of book publishing, Bertelsmann increased its stake in Penguin Random House to a strategic majority of 75 percent. The company also made sure to note that its TV conglomerate, RTL Group, and BMG are closely working together. BMG administers the music-rights for the RTL and for its London-based production company, FremantleMedia.