The already-crowded music-catalog-acquisition business just got a formidable new player: Germany-based music company BMG and global investment firm KKR have announced they will join forces to pursue recorded music, music publishing and other music-rights acquisitions. “Working together, the companies will deliver a compelling solution for artists, songwriters and other music rights owners seeking to realize and grow the value of their music assets,” the announcement reads.
The agreement is exceptional because it combines BMG’s music and industry knowledge and contacts — not to mention its recorded-music and publishing operations — with KKR’s network, resources and experience as an investor in market-leading music, digital, media and content businesses.
The announcement notes that the new relationship does not involve any transfer or sale of equity in BMG or the formation of a joint venture between KKR and BMG, which is part of the international media, services and education company Bertelsmann.
The new alliance will need heft to succeed in a market that many feel is already overheated. Hipgnosis Songs has invesedt more than $2 billion in catalogs in just over two and a half years; in the last months of 2020, it acquired 50% of Neil Young’s catalog, as well as those of Fleetwood Mac veteran Lindsey Buckingham and producer/executive Jimmy Iovine, while Universal bought Bob Dylan’s entire publishing catalog for a reported sum of nearly $400 million. Along with the above and other big deals, Stevie Nicks, Buckingham’s longtime bandmate in Fleetwood Mac, sold her publishing catalog to Primary Wave for a reported $100 million in December.
Since it was founded in 2008, BMG has acquired multiple catalogs, 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; in recordings the Sanctuary, Mute, Skint/Loaded and Strictly Rhythm catalogs; and the Infectious, Vagrant, S-Curve, Rise and BBR Music Group labels.
In addition to its prior investment in BMG, KKR has invested in music businesses such as Gibson musical instruments and Alpha Theta (f.k.a. Pioneer DJ). The firm also has broad experience investing in the digital media and content sectors, including investments in ByteDance (TikTok), Jio Platforms (JioSaavn), Epic Games, AppLovin, OverDrive, RBmedia, WebMD, UFC, Leonine, Next Issue Media and Nielsen.
In January, KKR announced the acquisition of a majority stake in the music catalog of songwriter and OneRepublic frontman Ryan Tedder, including music publishing and recorded music rights. In the same month BMG announced it had acquired outright Fleetwood Mac co-founder Mick Fleetwood’s interests in the band’s recordings.
Latham & Watkins LLP served as legal advisor to KKR.
Bertelsmann Chairman & CEO Thomas Rabe said: “BMG and KKR can jointly pursue opportunities for acquisitions of major catalogs of music rights from now on. Together with KKR, we are ideally positioned to make attractive offers to rights owners.”
Richard Sarnoff, Partner at KKR and previously a longstanding executive at Bertelsmann, 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.”
BMG CEO Hartwig Masuch said, “Our early partnership with KKR helped us rapidly become the first new international music company of the streaming age winning the trust of artists and songwriters with great service and 21 st century levels of fairness and transparency.”
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