Bertelsmann finds possible buyers for music publisher (FT)

Bertelsmann is holding first talks with selected potential bidders for its BMG Music Publishing unit, FT Deutschland, the FT’s sister paper has learned.

Europe’s largest media company had announced the intention to sell its music publishing division last week.

Among those interested are Charles Koppelmann, the long-standing music manager, and the former Warner Music chief executive Roger Ames, who is currently advising EMI, the UK music company.

The sale of BMG is part of Bertelsmann’s effort to raise the €4.5bn ($5.7bn) it needs to buy back the stake held by Groupe Bruxelles Lambert. The buy-back, planned for the start of July, will give back full control to the founding Mohn dynasty, which owns 75 per cent of the TV, books and music company.

GBL acquired a 25 per cent stake in the German media group five years ago when it gave Bertelsmann control of TV company RTL. It was looking to make use of its right to float the stake after the end of May, but the Mohn family wanted to stop a listing.

Bertelsmann’s speed in starting talks signals the group’s determination to pay back the necessary loan as early as possible. According to the group, which is expecting to raise more than €1bn through the sale of BMG, the debt resulting from the buy-back should already be “diminished substantially” during the next 12 to 18 months.

Last year, BMG’s net publisher share – turnover minus the licences that are paid to artists and authors – was above €170m, according to industry insiders, while the unit’s earnings before interest and tax were €80m. Unlike the music business, music publishing businesses benefit from steady incomes and profit margins of more than 20 per cent.

There is no shortage of interest in BMG, as the move comes in a period of general turmoil in the music publishing industry. Besides industry figures and rival music groups, such as Universal Music Group, financial investors, such as Europe-based Permira and US-based Elevation Partners, have voiced their interest.

There is speculation another big music publisher could go up for sale in the future, which could be built into a dominant player in the publishing business.

Speculation has been fired by the ongoing merger talks between the two music companies EMI and Warner.