Bertelsmann On Track For BMG Music Sale

Bertelsmann AG is getting closer to sealing a deal to sell its music publishing business, saying Thursday (Aug. 3) it expects to have a short list of potential suitors by month's end.

Last month, the German media giant narrowed the bidders for its BMG Music Publishing division for its BMG Music Publishing division to 15. By month's end, the company said it plans to have whittled that number down to a mere handful.

In addition to private equity groups, the bidders are expected to include such music firms as Vivendi's Universal Music Group, EMI Group and the Warner Music Group.BMG Music Publishing is the world's third-largest music publisher. It generated €370 million ($468.5 million) in revenue last year from the copyrights to songs from artists including Coldplay, Robbie Williams, Christina Aguilera (pictured) and Justin Timberlake.

Some have put the likely price tag at about €1.5 billion ($1.9 billion). In an interview published Aug. 3 in Germany's Borsen Zeitung, Bertelsmann chief financial officer Thomas Rabe declined comment on that figure.

Rabe said he did not think the sale would be influenced by last month's surprise European Union ruling that tossed out the 2004 merger between Bertelsmann and Sony Corp.'s recorded music divisions (HR 7/14).

"Music publishing is a different business entirely and is not part of the (EU) ruling," he said.

Rabe added that he thought the Sony-BMG deal would be supported by the EU Commission in the fall after the companies' resubmission of the merger blueprints.

Bertelsmann is selling its music publishing unit, which accounts for 17.5% of its music business revenue, to help raise cash for a €4.5 billion ($5.7 billion) deal to take back the 25.1% stake held in Bertelsmann by Belgian investor Groupe Bruxelles Lambert.

Bertelsmann said Aug. 3 that it is setting up a bond issue to cover part of the cost of the buyback. Rabe signaled that it likely will amount to €500 million ($638 million) or more.

Source: http://billboardradiomonitor.com