BMG's parent company, Germany based media giant Bertelsmann, had a good year in 2002 despite a continuing downturn in the global media and entertainment industries. Net profits for the world's fifth largest media group were £630m and sales were £12.4bn – considerably up on 2002 and higher than pundits had been predicting. That said, borrowings also doubled during the year, mainly due to the Zomba acquisition. But bosses hope the intergration of Zomba and BMG's other music operations (principally RCA and Arista) will mean a quick return on the investment.
The news will please investors after what had seemed a turbulent year after chief executive Thomas Middlehoff left the group, and the real cost of Middlehoff's internet dabblings (in particular their unsuccessful takeover of Napster) became clear.
The good news will fuel rumours that BMG in particular is considering acquiring one of the other major labels said to be considering mergers – and that means EMI and Warners. Then again, as previously reported, EU officials have blocked past merger attempts by major labels. And while they seem to have softened their objections to industries consolidating into fewer major players, they may still block any BMG deal given the recent Zomba takeover, which gave Bertelsmann a considerable share of the pop market.