Private equity firm New Mountain Capital has completed its acquisition of US collecting society BMI, resulting in a $100 million pay day for the organisation's songwriter and music publisher members. Although many of America’s broadcasters will also get a big pay day as the previous owners of the rights organisation, including iHeartMedia and Audacy.
Audacy is currently being restructured after filing for bankruptcy protection last month and this actually held up the acquisition while legalities around the broadcaster’s restructuring and stake in BMI were settled. That involved getting sign off from the bankruptcy courts for an agreement between Audacy, BMI and an affiliate of NMC.
Previously known as Entercom, Audacy is the third largest radio group in the US and owns over 200 radio stations across the country. In 2017 it merged with CBS Radio, rebranding as Audacy in 2021. In January this year it filed for bankruptcy protection with a reported $1.9 billion in debts.
Audacy’s stake in BMI is valued at at least $25.4 million. Simultaneously, BMI claimed that - based on a multi-year audit - the radio firm owed it $10.9 million in unpaid royalties. Under the court-approved agreement, Audacy will pay $550,000 to solve part of the unpaid royalties dispute and then commit to “work in good faith to settle, compromise and resolve" the rest of it.
With that agreement reached and signed off by the bankruptcy courts, NMC was able to complete its big BMI acquisition, which was first announced last November.
The society’s previous owners - that group of American broadcasters - previously ran the organisation on a not-for-profit basis. However, following a review of its operations in 2022, BMI announced it would shift to a for-profit business model. Then last year it started working with the bankers at Goldman Sachs to find a buyer.
Most of the music industry's collecting societies are not for profit organisations owned by their members, ie artists and record labels, or songwriters and music publishers. BMI's shift to a for-profit model and subsequent sale to private equity has not been without controversy within the music community. The society is trying to placate its critics by committing to distribute $100 million of the proceeds of the sale to the writers and publishers that it represents.
Though the fact the radio companies will also receive big payments adds to the controversy around the deal, especially given that American broadcasters have a long history of doing everything they can to keep as low as possible the royalties they pay to the music industry. iHeart, as the biggest radio company in the US, last year said it alone would make $100 million from the sale.
BMI boss Mike O'Neill didn’t acknowledge any of that controversy when hailing the completion of the big takeover deal yesterday.
“Our partnership with New Mountain charts an incredibly exciting new course for BMI and our songwriters, composers and publishers”, he said. “New Mountain shares our vision to build value for our affiliates and invest in their future success. With their support, advanced level of innovation and resources, we are now in the best possible position to accelerate our growth plan and explore new opportunities to benefit our creative community".
As for how senior management at NMC feel now that their acquisition of BMI is complete, well, they're obviously "THRILLED".
“We are THRILLED to officially begin our partnership with BMI", says MD Pete Masucci. "We believe in BMI’s mission and the music creators they represent, and we are looking forward to helping BMI build on their momentum to deliver maximum value to their affiliates".