KKR joins forces with Bertelsmann media group in music rights venture

KKR will own 51 per cent of the company and Bertelsmann 49 per cent. As part of the transaction, BMG Rights Management will be integrated into an equity fund set up by Bertelsmann two years ago and the company will be developed from there.

The financial details of the transaction were not disclosed, but the Financial Times estimates KKR’s investment to be around €250m.

According to a statement, KKR expects to provide substantial equity investment through its European private equity funds, which will go into a new holding company of BMG Rights Management. The partners hope to improve the company’s financial position and create new growth potential, as well as making a number of acquisitions.

Thomas Rabe, Bertelsmann CFO and chairman of the joint venture, added, “With access to meaningful investment capital, we expect the partnership with KKR to contribute significantly to accelerating the development of the business. 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.”

European head of KKR Johannes Huth added, “The music rights sector offers opportunities for significant growth across the globe. 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.”

The joint venture is set to benefit from BMG Rights Management's experience in licensing and administrating music rights, the established BMG brand, and its rights catalogue of over 200 artists including Kylie Minogue, Roy Orbison and The Beautiful South. CEO of BMG Rights Management Hartwig Masuch will continue as CEO of the new company.

The deal is expected to be completed in the next few months.

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