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BMI Hires Goldman Sachs as Outside Advisor to Explore Growth Opportunities

In an email to staffers, president and CEO Mike O'Neill said BMI is "looking at all our options" to advance the organization's mission.

BMI has hired outside advisors to explore strategic opportunities, according to an e-mail BMI president/CEO Mike O’Neill sent to the staff of the performance rights organization.

“Our industry is changing and growing rapidly, and music has never been more valuable,” O’Neill said in the e-mail. “There is so much happening in our space, and we are in an unprecedented time full of opportunity. It’s important that we evaluate what this could mean for BMI, both now and into the future.”

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Consequently, BMI has hired Goldman Sachs to advise the company on which road it should follow going forward, according to a source.

“While it’s too early to speculate on what might happen, we’re looking at all our options as long as they advance this mission,” which is to explore “growth for our members, songwriters, composers and publishers…[which] has always been our top priority,” O’Neill continued in the email.

Typically, such a move can result in any number of outcomes, including a refinancing, a merger with a strategic company that would make the two companies stronger than the sum of their parts or even an outright sale.

While an outright sale would likely reward the radio companies that own BMI with a one-time payoff, as currently structured, it would be hard to operate BMI as a for-profit entity seeking to maximize profits given that the consent decree often constrains rates. So, a BMI with fewer paths to profitability for a new owner likely would cut down on the number of bidders willing to try to finesse those types of circumstances.

That said, while BMI is one of the two U.S performance rights organizations operating under a consent decree, its agreement isn’t as restrictive as ASCAP’s. For example, BMI and ASCAP currently only license songwriters’ performance rights, but unlike ASCAP, BMI could pursue offering mechanical licenses should it so choose. That’s why, sources say, it has looked at purchasing other licensing entities, including the Harry Fox Agency when it came up for sale. (The Harry Fox Agency was ultimately acquired in 2015 by SESAC, which was itself acquired by The Blackstone Group in 2017.)

Moreover, unlike ASCAP, which is a non-profit entity, BMI is a corporation that runs like a non-profit in that it pays out most of its revenue, save for a reserve and covering overhead expenses. So it likely has more leeway in seeking opportunities.

Besides the type of licensing it handles, BMI has also in the past privately considered how it could expand beyond the US. territory, sources have told Billboard, and this might once again be a factor in its thinking.

Additionally, with so many industry players betting on the metaverse to become a big economic factor for music in the future, it will likely open the door to new licensing opportunities and requirements that will also need administration one day.

Since 2014, BMI has grown from $977 million in collections to $1.409 billion (or $1.361 billion per ASC 606 accounting guidance) in 2020. Its current fiscal year ends June 30.