Bertelsmann, KKR Align for Music Rights Business

GÜTERSLOH: Bertelsmann, the parent company of the RTL Group, is teaming with the private-equity firm Kohlberg Kravis Roberts & Co. (KKR) for a joint-venture music-rights management business.

Bertelsmann is contributing its BMG Rights Management unit to the venture, in which it will hold a 49-percent interest, with KKR holding the majority 51-percent interest. Hartwig Masuch, currently the CEO of BMG Rights Management, will continue as CEO of the new company. KKR expects to contribute to BMG’s development by providing substantial equity investments through its European private equity funds. BMG Rights Management launched in October 2008 with about 200 artists; since then, another 100 contracts with songwriters and other rights owners have been signed.

“KKR shares our views on future business models for the music industry," said Masuch. "I am excited to work with such a partner. With many high-visibility contracts and the foundation of an international organization in six European countries, it has taken BMG Rights Management only nine months to position itself successfully in the market. Songwriters and performers respond very well to our service oriented approach."

“With access to meaningful investment capital, we expect the partnership with KKR to contribute significantly to accelerating the development of the business," said Thomas Rabe, Bertelsmann CFO and chairman of the joint venture. "We complement each other perfectly for this venture. We both want to broaden BMG’s global reach faster than originally anticipated. In this way we will be able to actively participate in the expected market consolidation."

“The music rights sector offers opportunities for significant growth across the globe," added Johannes Huth, the European head of KKR. "BMG has proven leadership and a strong track record of organic growth. Our financial strength combined with BMG’s sector expertise will create a unique platform for building up a global music rights management business."