BMG Keeps Rolling With Revenue Up 29 Percent This Year
German media group Bertelsmann has reported record revenue increases of 29 percent for its music unit BMG in the first nine months of 2017.
German media group Bertelsmann has reported record revenue increases of 29 percent for its music unit BMG in the first nine months of 2017. Bertelsmann chairman & CEO Thomas Rabe noted in a statement on Thursday that BMG’s busy year has included a number of acquisitions and catalog purchases, including the takeover of movie production music producer Immediate Music, and the signings of rock legends John Fogerty and Chrissie Hynde.
BMG, founded by Bertelsmann in 2008, combines the traditionally separate worlds of music publishing and recording rights off the same international platform. “BMG is already the world’s fourth biggest music publisher and the first new global player in the recordings business in decades,” said BMG CEO, Hartwig Masuch, to Billboard. BMG’s 14 offices across 12 core music markets now represent over 2.5 million songs and recordings, including the catalogues of Chrysalis, Bug, Virgin, Mute, Sanctuary, Primary Wave and Talpa Music.
“For the first nine months of 2017, Bertelsmann posted a positive business performance, with revenue growth and record operating EBITDA (earnings before interest, taxes, depreciation and amortization) and group profit,” said Rabe. The international company increased its revenues slightly by 1.3 percent year-on-year to €12.1 billion ($14.04 billion) (previous year: €12.0 billion, or $13.92 billion). Bertelsmann’s strategic growth businesses were particularly instrumental in this development: RTL TV-Group’s digital activities continued their dynamic growth, increasing by around 30 percent to €560 million ($649.8 million); the Bertelsmann Education Group recorded growth of 38 percent. Overall, the share of total revenues contributed by the high-growth businesses increased to 32 percent (previous year: 29 percent).
While Bertelsmann didn’t specifically break out BMG revenues by euro amounts, Billboard estimates that BMG finished its third quarter with 360 million euros ($424 million), up from $330 million in the corresponding nine month period in the prior fiscal year. In addition to acquisitions, BMG has also benefited from organic growth in both its record label and music publishing operations.
The latter operation, publishing, for the first time came in third in the Billboard Top 10 Music Publishing rankings, with 8.9 percent. On the record label side, while not a part of the period reported in its financials, BMG currently has four Top 10 Billboard 200 chart hits in the U.S., with Big K.R.I.T.’s 4eva Is A Mighty Long Time (BMG) at No. 7; Hollywood Undead’s FIVE (BMG) at No. 22; while its January 2017 acquisition, BBR Music Group, has Granger Smith‘s When The Good Guys Win (Wheelhouse Records/BMG), at No. 29; and Hanson’s new Christmas album Finally It’s Christmas (S-Curve/BMG) debuts No. 80, but will likely pick up steam as the Holidays draw closer.
Commenting on BMG’s chart success, BMG US President Repertoire & Marketing Zach Katz noted “significantly they are all in quite different genres. What started as a concept to be the solution for modern day recording artists has grown into a proven ecosystem where artists are partners in their own success.”
Meanwhile, parent Bertelesmann’s financial results show overall operating EBITDA improved to a record €1.64 billion ($1.9 billion) (previous year: €1.63 billion, or $1.89 billion), despite a positive special item in the amount of €43 million ($49.9 million) at RTL TV-Group in the previous year. The EBITDA margin remained on par with the previous year’s high level at 13.5 percent (previous year: 13.7 percent). In the first nine months, start-up losses for digital and new business amounted to €54 million ($62.6 million) for RTL Group and the Bertelsmann Education Group alone.
Group profit increased to €694 million ($805.28 million) as of Sept. 30, surpassing the previous year’s figure by 6.4 percent (previous year: €652 million, or $756.5 million). The result before sale of investments was therefore at a record level. With capital gains of €69 million ($80 million), the Bertelsmann Asia Investments (BAI) fund once again made a high contribution to earnings.
Rabe added: “The 2017 financial year continues to be very gratifying for Bertelsmann. We have stepped up our growth dynamic again, after nine months. The good business performance is accompanied by progress in the implementation of our strategy. With the share increase in Penguin Random House in U.S.A. completed, we now own strategic majorities in all our divisions: 75 percent in RTL Group and Penguin Random House, 100 percent in all other divisions. Bertelsmann is increasingly becoming a faster-growing, more digital, more international, and more diversified company. We will continue on this path.”