BMG plotting ‘2 or 3’ more acquisitions before the end of summer

The ink on the contract confirming BMG’s acquisition of Rise Records is barely dry, but the global rights company tells MBW it is confident of swooping for more significant buyout targets before the summer is through.

BMG confirmed its purchase of independent label Rise yesterday afternoon, in what is believed to be a multi-million dollar deal.

Rise, best known for hard rock and metal music, was founded 24 years ago by Craig Ericson, who will continue to lead the company under BMG’s ownership.

Hartwig Masuch, CEO of Berlin-born BMG, told MBW that he hoped to be able to maximise the potential of Rise’s catalogue – including recordings from the likes of Of Mice & Men and Memphis May Fire – outside of the US.

Around 95% of Rise’s income is currently derived from North America, where it can tap into a strong metal community. The label boasts 1.4m subscribers on its YouTube channel.

It’s a very important part of our strategy right now to bring our recorded music interests up to match our strength in publishing,” said BMG’s Masuch.

“There are segments like rock and metal we find particularly interesting, and Rise fits into that. It’s a company with a very strong track record in keeping fans loyal and building catalogues.

“They have focused on the US market, but we know heavy metal is a very global phenomenon, so there is a lot of potential… we can leverage our presence massively.”

Masuch isn’t kidding when he says BMG is trying to bring its master recordings business up to the size of its publishing operation.

Before the purchase of Rise, BMG was in control of 1.9m publishing copyrights and around 600,000 recordings.

Since ‘new’ BMG was founded in 2008 as an independent, backed by German media giant Bertelsmann, it has bought up a string of independent publishers to become the world’s No.4 in the field – behind Sony/ATV, UMPG and Warner/Chappell.

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“Our ambition is to make two or three significant steps before the summer break. The big acquisition opportunity right now is in recordings.”

Hartwig Masuch, BMG

These publishers included Crosstown Songs (2009), Cherry Lane (2010), Stage Three (2010), Chrysalis Music (2011) and Bug Music (2011) as well as Primary Wave (2013) and Talpa Music (2014).

Two years ago, as a result of enforced divestments following Sony/ATV’s acquisition of EMI Music, BMG also picked up the Virgin and Famous Music publishing catalogues.

BMG’s master recordings buyouts have been less seismic but no less important. They have included the catalogues of Mute and Sanctuary Records (2013), Skint/Loaded, Infectious, Union Square Music and Vagrant Records (2014).

BMG also inherited thousands of recordings from the old Sony BMG after it sold its stake in the partnership.

With so many companies bought up since Masuch’s company began operating, is there still an exciting acquisition market out there for BMG?

Masuch tells MBW: “Definitely. We see interesting movements right now in the currency and capital markets that are turning buyers into sellers.

“We have a very positive view of the long-term development of the music market, but that will only materialise if we invest heavily.

“There are experienced investors out there – let’s not forget there are a lot of assets owned by financial institutions – who don’t have an appetite to invest, and are asking themselves whether currency and interest rates can really get better in the next few years, and some of them will probably look at a sale very soon.

“They look at it and say: is it very likely, from a US standpoint, that the shifts between Euro and Dollars mean I can generate a higher return than I can right now?’

“That will trigger a lot of decision making. A year ago, you were able to generate 20% more in Dollars [from a Euro sale] than you do now on a given income basis. That’s significant if a third of your revenues are generated in Europe.”

So when can we expect BMG’s next acquisition to be announced, and what form will it take?

“We’re working on a couple, but we’ve learned – specifically at the end of last year – that the outcome might be different from what we expected,” replies Masuch – likely referring to BMG’s attempt to acquire Imagem just before Christmas.

“Our ambition is to make two or three significant steps before everyone leaves for the summer break.

“In general we think the big opportunity right now is in recordings. We have had a positive experience so far: every single label we have acquired substantially outperforms our expectations.”

 Music Business Worldwide

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