BMG and Concord have reached a “definitive agreement” to merge, creating what they describe as “the leading independent music company in the world”.
The combined entity will be called BMG and will be majority owned by BMG’s German parent company Bertelsmann. However, it will be run by Concord boss Bob Valentine out of Nashville, with the merged company’s recordings division operating as Concord Records.
On the merger, Valentine says “we are excited to begin working together to build something truly exceptional”. The “greater scale” enjoyed by a combined BMG and Concord, he adds, will “allow us to invest more in creative talent, global reach, accretive acquisition opportunities and technology, while preserving the nimble, entrepreneurial spirit that artists and songwriters value most”.
Reports that BMG/Concord merger talks were underway first circulated in January. While major label-led acquisitions in the music industry are usually controversial, the bringing together of BMG and Concord, and last month’s merger of Kobalt and Primary Wave, are much less so.
Not least because those people concerned about the dominance of Universal Music, Sony Music and Warner Music in the music rights business generally see the existence of larger indie players competing with the majors as a positive.
Valentine is keen to stress that BMG/Concord will still be very much independent and distinct from the major label system, even though both BMG and Concord have distribution partnerships with Universal.
“This is not about replicating the major label model”, his statement continues, “it’s about using scale to strengthen independence”. Together, he adds, “we will build a company that gives artists more reach and more flexibility – all designed to support their distinct visions”.
Current BMG boss Thomas Coesfeld is already due to move on from the music company at the start of next year when he becomes CEO of Bertelsmann itself. He will take the role of Chair of the combined BMG/Concord business, and BMG’s Berlin base will be the new company’s European headquarters.
Coesfeld says of the merger, “we believe this is a truly one-of-a-kind opportunity to bring together two world-class teams and rosters at the right moment, as scale in rights ownership becomes increasingly critical to long-term growth".
The merger is a cash-and-stock transaction, Bertelsmann will own a 67% stake in the new enlarged company, while Concord’s shareholders will get a 33% stake and a one-time cash payment of $1.16 billion. The deal is subject to customary closing conditions including regulatory approvals, but both parties hope that the transaction will complete in the second half of the year.
We don’t yet know what the merger will mean for the various brands owned by BMG and Concord, or the current teams and divisions at both companies. However, the plan is that the publishing side of the combined business will be called BMG Publishing, while the recordings division, which is smaller, will be called Concord Records.