Universal Music to buy BMG Music Publishing for $2.05 billion

Vivendi SA's Universal Music Group reached a tentative deal with German media company Bertelsmann AG to acquire BMG Music Publishing for $2.05 billion in cash, a person familiar with the deal said Tuesday.

The agreement was expected to be signed as early as Wednesday, according to the person, who spoke on condition of anonymity, citing the confidential nature of the negotiations.

BMG Music Publishing owns the rights to more than a million songs by recording artists such as Nelly, Maroon 5 and Coldplay, as well as classic hits by the Beach Boys, Barry Manilow and other entertainers.Universal edged out a slate of rival bidders for the publishing unit, including Warner Music Group, the person said.

Warner Music Group declined to comment. A call to a spokeswoman for BMG Music Publishing in New York was not immediately returned.

Universal is already the biggest recorded music company in the world. The BMG publishing unit is expected to be absorbed by Universal Music Publishing Group, making it the largest music publisher by catalog size.

Music publishers generate revenue by licensing songs for use in movies, TV shows, CDs, video games, ringtones and other media. The companies also collect performance fees when songs are played on the radio or in public venues such as clubs.

During the second quarter of this year, songs held by BMG Music Publishing accounted for 7.3 percent of the airplay on U.S. radio stations, or fifth overall, according to Nielsen Broadcast Data Systems.

In the same period, Universal Music Publishing had a 10.23 percent market share, or fourth behind No. 1 EMI Music Publishing's 19.75 percent share.

Bertelsmann put its music publishing business up for sale earlier this year to help finance a $5.8 billion bridge loan used to buy back a 25.1 percent stake held by Groupe Bruxelles Lambert.

The move, announced in May, freed Bertelsmann from the prospect of an initial public offering for the stake.

The BMG Music Publishing sale is subject to regulatory approval by U.S. and E.U. officials.