The already crowded music catalog acquisition business just got a terrific new player: Germany-based music company BMG and global investment firm KKR have announced they will join forces to pursue music recording, music publishing and other music rights acquisitions. “Working together, the companies will provide a compelling solution for artists, songwriters and other music rights owners looking to realize and grow the value of their music assets,” the announcement reads.
The deal is exceptional because it combines BMG’s music and industry knowledge and contacts – not to mention its recorded music and publishing operations – with the network, resources and experience of KKR as an investor in leading music, digital, media and content companies.
The announcement notes that the new relationship does not involve any transfer or sale of shares in BMG or the formation of a joint venture between KKR and BMG, which is part of international media, services and education company Bertelsmann.
The new alliance will need clout to succeed in a market that many believe is already overheated. Hipgnosis Songs has invested more than $2 billion in catalogs in just over two and a half years; in the final months of 2020, it acquired 50% of Neil Young’s catalog, as well as those of Fleetwood Mac veteran Lindsey Buckingham and producer/executive Jimmy Iovine, while Universal bought the entire catalog of edition of Bob Dylan for a reported sum of nearly $400 million. In addition to the above and other big deals, Buckingham’s longtime Fleetwood Mac companion Stevie Nicks sold her publishing catalog to Primary Wave for $100 million in December.
Since its inception in 2008, BMG has acquired several catalogs, many of them during KKR’s tenure in BMG from 2009 to 2013. The transactions include music publishing investments in the Chrysalis, Crosstown, Cherry Lane, Bug and R2M; in recordings from the Sanctuary, Mute, Skint/Loaded, and Strictly Rhythm catalogs; and the Infectious, Vagrant, S-Curve, Rise and BBR Music Group labels.
In addition to its earlier investment in BMG, KKR has invested in music businesses such as Gibson Musical Instruments and Alpha Theta (fka Pioneer DJ). The company also has extensive investment experience 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.
In January, KKR announced the acquisition of a majority stake in songwriter and OneRepublic frontman Ryan Tedder’s music catalog, including music publishing and recorded music rights. That same month, BMG announced that it had acquired Fleetwood Mac co-founder Mick Fleetwood’s interests in the band’s recordings.
Latham & Watkins LLP acted as legal counsel to KKR.
Thomas Rabe, Chairman and CEO of Bertelsmann, said: “BMG and KKR can now jointly pursue opportunities to acquire major catalogs of music rights. With KKR, we are ideally positioned to make attractive offers to rightsholders.
Richard Sarnoff, Partner at KKR and former longtime executive at Bertelsmann, said: “BMG has become an innovative leader in the music industry by embracing digital trends early on, while always putting artists at the center of everything. what theyre doing.
BMG CEO Hartwig Masuch said, “Our early partnership with KKR has helped us quickly become the first new international music company in the streaming era to earn the trust of artists and songwriters with excellent service. and 21st century levels of fairness and transparency.