An investor group led by private equity outfit New Mountain Capital has agreed a deal to buy US collecting society BMI. The society says that $100 million of the money generated by the deal will be distributed to publishers and songwriters allied to the organisation.
“Today marks an exciting new chapter for BMI that puts us in the best possible position to stay ahead of the evolving industry and ensure the long-term success of our music creators”, reckons BMI boss Mike O’Neill. “New Mountain is an ideal partner because they believe in our mission and understand that the key to success for our company lies in delivering value to our affiliates".
"We are excited about the many ways New Mountain will accelerate our growth plan, bringing new vision, technological expertise and an outstanding track record of strengthening businesses, all of which will help us build an even stronger future for BMI and our songwriters, composers and publishers", he goes on.
Most of the music industry collecting societies are not-for-profit organisations owned by their members. The other big song rights society in the US - ASCAP - operates on that model. BMI was also not-for-profit until last year, although, unusually, it was actually owned by a group of broadcasters.
The society undertook a review of its operations last year, including considering whether or not to seek a buyer. Initially it decided not to sell, but still decided to move to a for-profit business model. Then, earlier this year, it emerged that the society was working with the bankers at Goldman Sachs once again to sound out entities that might be interested in acquiring the organisation. New Mountain Capital was rumoured to be the likely buyer in August.
O'Neill insists that moving to a for-profit model and seeking a new owner will help the society to invest in new technologies to better administer the rights of the songwriters and publishers it represents, to boost the payments they receive, while also allowing it to pursue other opportunities in the rights management space.
However, the changes have caused some concern among the songwriting community, with questions being asked about the impact the introduction of a profit margin will have on payouts to writers and publishers, and who exactly will profit from the sale.
BMI has generally done a very good job of not answering any of the questions that have been posed, further raising concerns about the direction the society is taking. Perhaps getting a share of that $100 million will placate concerned writers, although it's not clear what will happen to the rest of the money generated by a deal that was reported to be worth $1.7 billion.
The deal is still to be approved by BMI's current shareholders and is subject to regulatory approvals. The official statement on the deal also confirms that CapitalG - an investment fund owned by Google parent company Alphabet - will "invest a passive minority stake in BMI" as part of the transaction.