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BMG Revenues Grew 7.5 Percent in 2018 On Strength of Recording Biz, Publishing

BMG saw its 2018 revenues increase by 7.5 percent to €545 million, up from €507 million in 2017, which Bertelsmann CEO Thomas Rabe attributes to "organic growth," as opposed to acquisitions, in core…

Bertelsmann, the parent company of BMG, announced on Tuesday it raked in revenues of €17.7 billion ($20 billion) in 2018, its highest tally since 2007. Music subsidiary BMG saw its revenues increase by 7.5 percent to €545 million ($615 million), up from €507 million ($572 million) in 2017, which Bertelsmann CEO Thomas Rabe attributed to “organic growth,” as opposed to acquisitions, in core markets of the U.S., the U.K. and Germany.   

“After years of growth mainly through acquisition, the focus increasingly shifted to organic growth,” Rabe said. “BMG benefited in particular from the expansion of its recordings business, which grew strongly during the reporting year; the music publishing business also recorded continuing growth. BMG artists and songwriters had numerous hits in the single and album charts in 2018.”

Operating EBITDA rose disproportionately by 17.3 percent to €122 million (previous year: €104 million), boosted by the increase in revenues. The EBITDA margin rose to 22.5 percent (previous year: 20.5 percent). In the recording business, where market growth is being driven by streaming, BMG found success with Lil Dicky, Jason Aldean, Kylie Minogue, The Prodigy and Kontra K, all of whom had No. 1 albums or singles. Over the course of the year, BMG signed new contracts with artists including Dido, Marianne Faithfull, Lenny Kravitz and Adel Tawil. Rolling Stones icon Keith Richards, whose publishing interests have been represented by BMG since 2013, signed a worldwide contract for his solo recordings.


While the focus is being put on organic growth, the company did make some big moves in the second half of the year. In September, BMG acquired Los Angeles-based RBC Records, home to Chief Keef, Flippa, Waka Flocka Flame and Big L. A month later, it scooped up World Circuit Records, home to Buena Vista Social Club, Ali Farka Touré and Orchestra Baobab.

On the music publishing side, world tours by artists including Roger Waters and the Stones contributed to higher collections, as did BMG’s administration of the Fremantle music catalog. Successful releases of works by songwriters including Jason Evigan, Bebe Rexha, George Ezra, Jess Glynne and The BossHoss added to business growth. Among the most prominent music publishing signings were Ringo Starr and JuiceWRLD, while Yusuf a.k.a. Cat Stevens renewed his contract with the company. 


The company also seen growth in its BMG Production Music unit, which now has a presence in eight territories and new offices in Singapore and Hong Kong. Highlights included Magnolia Pictures acquiring North American rights to BMG’s first major film production, Bad Reputation, a documentary about Joan Jett. In the books business, the number of titles published by BMG doubled compared to 2017, and included the illustrated books Johnny Cash at Folsom and San Quentin and Dreaming of Dylan.

As for Bertelsmann’s overall growth, the main drivers were RTL Group, Penguin Random House (home to Michelle Obama’s blockbuster memoir, which has sold over 10 million copies, the company said), BMG, Arvato and the Bertelsmann Education Group. The Group’s growth platforms — in particular the digital activities of RTL Group and Gruner + Jahr, Fremantle, BMG, Arvato SCM, Arvato Financial Solutions, and Bertelsmann Education Group — grew  by 10 percent.  

At €2.59 billion, operating EBITDA almost reached the record level of the previous year (€2.64 billion), when Bertelsmann benefited from gains on real estate sales. Operating profit increased by 4.5 percent or €112 million.

Marc Schneider contributed to this report.