BMG and KKR reunite to enter music rights business with big investments in major catalogues

BMG and KKR reunite to enter music rights business with big investments in major catalogues

BMG and global investment firm KKR will join forces to pursue recorded music, publishing and other music rights acquisitions.

According to today’s announcement, the companies will “deliver a compelling solution for artists, songwriters and other music rights owners seeking to realise and grow the value of their music assets”.

BMG has reunited with its former investment partner on a bold entry into the booming rights business. As well as big moves by Hipgnosis, Primary Wave, Round Hill and Irving Azoff’s Iconic Artists Group, the majors are also spending big money on catalogues from legends such as Bob Dylan.

Under the terms of the agreement, BMG and KKR will join forces to source individual transactions to acquire music catalogues, bringing together BMG’s industry knowledge and global capabilities in maximising value for its artists with KKR’s network, resources and experience as an investor in market-leading music, digital, media and content businesses. 

The agreement means that BMG and KKR are set to be leading acquirers of music rights, as well as providing catalogue management capabilities and the ability to invest in transactions of all sizes. 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.

Bertelsmann chairman & CEO Thomas Rabe said: “BMG and KKR can jointly pursue opportunities for acquisitions of major catalogues of music rights from now on. Together with KKR, we are ideally positioned to make attractive offers to rights owners.”  

Rabe recalled the two companies’ successful collaboration in the past.

“KKR was already the ideal partner and catalyst once before, following the reestablishment of our music subsidiary in 2008,” he said. “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.”

This new relationship with KKR will offer artists and songwriters a well-funded, financially stable home for their music assets

Hartwig Masuch

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. We are delighted to reunite with BMG’s talented team to pursue future opportunities together, leveraging our complementary platforms.”

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 21st century levels of fairness and transparency. 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.” 

Over the last decade, 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; in recordings the Sanctuary, Mute, Skint/Loaded and Strictly Rhythm catalogues; and the Infectious, Vagrant, S-Curve, Rise and BBR Music Group labels.

In addition to its prior investment in BMG, KKR has invested in well-known music businesses such as Gibson Brands and Alpha Theta (formerly 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. 

BMG and KKR have recently completed transactions to acquire music rights from leading artists. In January 2021, KKR announced the acquisition of a majority stake in the music catalogue of songwriter, musician, producer and lead vocalist of OneRepublic, Ryan Tedder, including music publishing and recorded music rights. In the same month BMG announced that it had acquired outright Fleetwood Mac co-founder Mick Fleetwood’s interests in the band’s recordings.

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