Fifteen suitors have been sent financial information about BMG Music Publishing, including four music majors and a number of private equity firms, with first bids due in about a month, the parent company's chief executive said.
Gunter Thielen, the CEO of German media conglomerate Bertelsmann AG, also told Reuters that despite reports to the contrary, there are no plans to restructure its joint venture music company Sony BMG with partner Sony Corp. He added that Belgian financier Albert Frere was a reluctant seller of a 25 percent stake back to Bertelsmann last month.
Bertelsmann, based in Guetersloh, Germany, is selling its music publishing arm, which owns copyrights to thousands of songs including those by Coldplay and Nelly, to help finance a deal reached last month to buy back the rest of the company from Groupe Bruxelles Lambert for 4.5 billion euros.BMG Music Publishing, which Bertelsmann is selling to help pay for that stake, is expected by industry executives to fetch at least 1.5 billion euros ($1.89 billion).Thielen said he believes it will take about three months to strike an agreement with a buyer.
"I think four weeks from now we'll have an indication, and then by the end of September maybe we complete a deal," Thielen said in Cannes, France, where he received the media person of the year award from the advertising industry on Tuesday night.
BMG Music Publishing's key cashflow measure, net publishers share (NPS), was about 170 million euros last year, people familiar with the situation have said. Bertelsmann reported that music publishing generated 372.4 million euros in 2005, but it did not disclose the unit's NPS.
Vivendi's Universal Music, Sony Music, Warner Music Group and EMI Group are all among those interested in the business, Thielen said.
BMG Music Publishing CEO Nicholas Firth, also said he would explore a management buyout with some of his colleagues if a "qualified financial sponsor" was interested.
According to Thielen, Frere did not want to exit Bertelsmann, but a 50 percent partner in GBL's parent company, the Desmarais family of Canada, forced him to do so.
"He regrets that a lot because the asset was so sexy, and the people were so nice and he liked the management and the Mohns," Thielen said, referring to the Mohn family, which controls Bertelsmann.
GBL's dividend from Bertelsmann also would have been sharply cut after a five-year agreement that paid it 120 million euros a year, which was another motivating factor, Thielen said.
The company looked at other options besides selling its music publishing arm to help pay to buy back GBL's stake, but it did not consider floating more of its pan-European television broadcaster RTL Group.
"That's a strategic asset and at the end of the day we need 100 percent of it, and therefore it doesn't make sense to float only because we need some money," Thielen said.
Bertelsmann owns about 89.8 percent of RTL, and the rest is publicly listed. It also owns magazine publisher Gruner + Jahr, book publisher Random House and a global book, CD and DVD club business.
The company considered borrowing against its 50 percent stake in Sony BMG, the world's second largest music company, but Thielen said there are no longer any plans that would see Bertelsmann restructure the joint venture.
"We want to stay in Sony BMG," he said.
Meanwhile, Thielen said the German advertising market has softened in June, despite an expected bump from the World Cup soccer tournament, after 5-8 percent growth in television and print during the first five months of the year.
"The month of June is weak. I don't know why," he said. But he added: "I'm optimistic. I think at the end of the year we will have an increase of 3-6 percent in advertising in Germany. That's nice, and the first time in five years."
Source: http://in.today.reuters.com
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