BMG, KKR to Partner on Music Rights Acquisitions
Music major BMG, part of German media giant Bertelsmann, and global investment firm KKR said on Wednesday that they were joining forces “to pursue recorded music, music publishing and other music rights acquisitions.”
The news of the joint approach comes amid a recent wave of music catalog deals, including London-based Hipgnosis Songs Fund‘s acquisitions of songs by the likes of Shakira, Michael Bublé, Metallica and Neil Young, and Universal Music Publishing Group’s takeover of Bob Dylan’s catalog of songs.
In January, KKR unveiled the acquisition of a majority stake in the music catalog of songwriter, musician, producer and OneRepublic lead vocalist Ryan Tedder. That same month, BMG announced it had acquired Fleetwood Mac co-founder Mick Fleetwood’s interests in the band’s recordings.
Targeting a position as “leading acquirers of music rights with world-class catalog management capabilities and the ability to invest in transactions of all sizes,” BMG and KKR vowed to “deliver a compelling solution for artists, songwriters and other music rights owners seeking to realize and grow the value of their music assets.”
Under the terms of their agreement, they plan to “source individual transactions to acquire music catalogs, bringing together BMG’s deep industry knowledge and global capabilities in maximizing value for its artists with KKR’s vast network, resources and deep experience as an investor in market-leading music, digital, media and content businesses.”
KKR has, for example, also invested in such music businesses as Gibson Brands and Alpha Theta, formerly known as Pioneer DJ. Its broader media, entertainment, sports and technology investments have also included TikTok owner ByteDance, Epic Games, UFC, German studio Leonine and Nielsen.
Bertelsmann chairman and CEO Thomas Rabe said that together with KKR, “we are ideally positioned to make attractive offers to rights owners.” And he recalled the two companies’ past collaboration, saying: “KKR was already the ideal partner and catalyst once before, following the reestablishment of our music subsidiary in 2008. We subsequently bought back all of the BMG shares held by KKR in 2013 and since then, BMG has developed into one of the most successful music companies of the streaming age, and one of Bertelsmann’s three global content businesses. Now we will ignite the next stage with KKR.”
Richard Sarnoff, partner at KKR and a former Bertelsmann executive, said: “BMG has become an innovative leader in the music industry by embracing digital trends early on, while always placing artists at the center of everything they do. We are delighted to reunite with BMG’s talented team to pursue future opportunities together, leveraging our complementary platforms.”
And BMG CEO Hartwig Masuch said: “This new relationship with KKR will offer artists and songwriters a well-funded, financially stable home for their music assets with the confidence that their songs and recordings will be managed both professionally and respectfully.”
Bertelsmann highlighted that BMG “has been among the music industry’s most prolific acquirers of music rights, concluding more than 100 significant deals between 2009 and 2017, many of them during the time of KKR’s shareholding in BMG from 2009 to 2013.” Transactions include music publishing investments in the Chrysalis, Crosstown, Cherry Lane, Bug and R2M catalogs, as well as deals involving the Sanctuary, Mute, Skint/Loaded and Strictly Rhythm recording catalogs, and the Infectious, Vagrant, S-Curve, Rise and BBR Music Group labels.
Bertelsmann also described the KKR alliance as “another milestone” in the expansion of its global content businesses following its deal to acquire U.S. book publishing giant Simon & Schuster from ViacomCBS for more than $2 billion. “The rationale behind it is the worldwide increase in demand for high-quality media content,” the company said.
Besides BMG, Bertelsmann’s content businesses include trade book publisher Penguin Random House and video production powerhouse Fremantle.