Bertelsmann CEO Thomas Rabe on BMG Rights Mgm't, EMI Acquisitions, Getting Back Into the Record Biz

BERLIN - Bertelsmann, Europe's largest media group, which controls European broadcaster RTL Group and production powerhouse FremantleMedia, maker of "American Idol" and "The X Factor" and co-owns BMG Rights Management with Kohlberg Kravis Roberts & Co, today issued its first half of 2012 earnings report which showed its net profit up 31.2% year-over-year. But the company has made headlines in recent days as Bertlesmann's legal status changed from joint stock company to a partnership with limited shares in order to attract new investors and reports that Bertelsmann is planning to invest considerable sums of money to buy up publishing catalogs that may hit the market if the EMI and Universal Music deal is approved. And, according to sources from within the company, there is talk of Bertelsmann returning to the recorded music business. Bertelsmann CEO Thomas Rabe answered Billboard.biz's questions in a conference call from Bertelsmann HQ in Guetersloh.

Bertelsmann H1 Earnings Rise, Interested In EMI Assets

 

Billboard.biz: How is the development of BMG Rights Management coming?
Thomas Rabe: BMG's development is good. BMG has over a million of copyrights. This year the revenues will reach 250 million euros and we're only three years in since the business started. We sold the BMG publishing business to Universal in 2006 and had revenues of about 370 to 380 million euro. At that time BMG publishing still had a high share of classical music. Today revenues are made with the pop/rock repertoire. So we are nearly approaching the size of the then sold publishing business.
 
What new acquisitions are you planning at BMG?
Acquisitions will of course play a major role in the expansion strategy. There will be organic growth, but we also need growth through acquisitions. In the first half year 2012 BMG did further acquisitions and signed new artists and songwriters. BMG CEO Hartwig Masuch today confirmed and I can also underline that we will of course consider the possibilities to take over catalogues from the EMI/Universal merger. We are certainly interested in the acquisition of catalogues that fit into our business-profile. Apart from that I do not want to speculate on possible acquisitions.
 
What is your timetable for purchasing divestments from the EMI/Universal merger?
At EMI the timetable is mainly influenced by the talks Universal is having with the European Commission. I assume that these talks will come to an end within a few weeks. Usually the European Commission grants a certain time for possible sales of parts of EMI Universal. But I cannot judge how long it will take.

Last year Bertelsmann announced it would by a 51% share of the investment-group KKR. Do you still intend to do this?
Our partnership with KKR is doing extremely well. We have the same interest in the development of BMG. But on the other hand it is clear that KKR, as a private equity investment company, is only a temporary investor. We will probably contintue speaking with KKR abot this but for the time being there are no such talks going on.    

Is Bertelsmann getting back into the record business?
Our main interest is in music-rights, primarily-publishing rights but also in master catalogue-rights. Whether we will start actively in the label-business again and to what extent will have to be discussed. Our primary interest is in rights, but also in the whole recorded music-business.