Exclusive: Music rights giant BMI in renewed talks to sell itself

NEW YORK, July 25 (Reuters) – Broadcast Music Inc (BMI), the music rights company representing top songwriters such as Lady Gaga, Taylor Swift and Rihanna, is once again exploring options including a sale after it ditched its non-profit model, people familiar with the matter said.

BMI has turned to Goldman Sachs Group (GS.N), the investment bank that also advised it on deal discussions last year, for guidance as it fields interest from potential acquirers, including private equity firms, the sources said, cautioning that the company may still decide not to sell itself.

The company also explored a sale last year when it was run as a non-profit and handed the vast majority of its profits to music artists and their publishers.

For interested parties who submitted offers last year, the fact that BMI did not keep more money for itself made it more difficult to justify the price tag of more than $2 billion that the company was seeking, the sources said.

BMI reported revenue of about $1.57 billion for the fiscal year that ended on June 30, 2022, and paid out about $1.47 billion to its songwriters, composers and publishers, according to its last annual report.

The company generates about $145 million in 12-month earnings before interest, taxes, depreciation and amortization, according to the sources.

The sources asked not to be identified because the matter is confidential. Spokespeople for BMI, which is controlled by several TV networks and radio broadcasters, and Goldman Sachs declined to comment.

In a memo to employees last year, BMI Chief Executive Mike O’Neill said it was important for the company to be more commercial going forward.

Since switching to a for-profit model, BMI has been investing the money it earns to accelerate growth in its business. For example, it has invested in upgrading technology, launching new offerings, while also setting aside money for partnerships and acquisitions.

Created in 1939, BMI represents the public performance rights in more than 20 million musical works created and owned by more than 1.3 million songwriters, composers, and music publishers. The songs are licensed to digital streaming services, radio and television stations and other music users.

Under an 82-year-old consent decree with the U.S. Justice Department, BMI is required to license to anyone upon request, with pricing disputes settled by a judge. The Justice Department undertook a review of its consent decree with BMI, as well as the American Society of Composers, Authors and Publishers (ASCAP), four years ago, but decided to leave the arrangements in place.

BMI and ASCAP jointly account for more than 90% of the music licensing market.

While the predictable royalties generated by these companies make them attractive to private equity firms, buyout negotiations for them have been fraught. Michigan’s retirement system explored a sale of its majority stake in Concord Music Royalties last year, but could not fetch the $6 billion valuation it was seeking.

Reporting by Milana Vinn and Anirban Sen in New York; Editing by Nick Zieminski and Sonali Paul

Our Standards: The Thomson Reuters Trust Principles.

Milana Vinn reports on technology, media, and telecom (TMT) mergers and acquisitions. Her content usually appears in the markets and deals sections of the website. Milana previously worked at GLG and PE Hub, where she spent several years covering TMT deals in private equity. She graduated from CUNY Graduate School of Journalism with Masters in Business Journalism.
Contact: 347-463-7957

Anirban Sen is the Editor in Charge for U.S. M&A at Reuters in New York, where he leads the coverage of the biggest deals. After starting with Reuters in Bangalore in 2009, Anirban left in 2013 to work as a technology deals reporter in several leading business news outlets in India, including The Economic Times and Mint. Anirban rejoined Reuters in 2019 as Editor in Charge, Finance to lead a team of reporters, covering everything from investment banking to venture capital. Anirban holds a history degree from Jadavpur University and a post-graduate diploma in journalism from the Indian Institute of Journalism & New Media.
Contact:+1 (646) 705 9409

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