BMG Music Publishing sale to start soon -sources

today.reuters.co.uk/news/newsArticle.asp...IA-BMGPUBLISHING.xml

Fri May 19, 2006 6:05 PM BST
By Jeffrey Goldfarb, European media correspondent

LONDON (Reuters) - Bertelsmann AG is in the final stages of preparing to auction its music publishing arm, people familiar with the plans said, with a process to start as soon as early June in a sale that could fetch as much as 900 million pounds.

The proceeds from the sale of BMG Music Publishing, which owns the rights to songs by Nelly, Christina Aguilera and Coldplay, could be used by Bertelsmann to avert an unwanted IPO of the German media conglomerate by a minority shareholder.

Bertelsmann (BERT.UL: Quote, Profile, Research) also continues to explore the possibility of selling its half of the Sony BMG recorded music business, but it is proving a far more complex and time-consuming process, said the sources, who requested anonymity to avoid harming their relationships with the company.


Two people said financial information about BMG Music Publishing will be sent to prospective buyers in the next few weeks, while a third person cautioned it could take longer.

"Portfolio management is a normal business," a Bertelsmann spokesman said on Friday, declining to comment further.

Music publishers earn money from CD and download sales, in what is known as mechanical revenue, but because they are also paid when songs are performed live or used in films and TV programmes, publishers have been shielded from some of the piracy problems that have plagued the music industry.

"The publishing market has seen more robust growth with only 40-60 percent of revenues linked to recorded music," Goldman Sachs analysts wrote in a note last December. "The weakness in mechanical revenues has been offset by growth in performance and synchronization."

The primary figure on which suitors will be basing their offers is net publishers share (NPS), a key cashflow indicator for the sector. Analysts and industry executives estimate that BMG Music Publishing has a net publishers share roughly around $100 million. Continued...