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BMI reportedly considering acquisition offer from New Mountain Capital

By | Published on Thursday 24 August 2023


US collecting society BMI is reportedly considering an acquisition offer from private equity firm New Mountain Capital, which is one of a number of investment outfits interested in buying the rights organisation.

Sources have told Billboard that the deal would be worth around $1.7 billion, though it’s not currently entirely clear how close the deal is to being done.

Most of the music industry’s collecting societies are not-for-profit organisations owned by their members, so usually a combination of artists, songwriters, music publishers and/or record labels. However, some are privately owned for-profit businesses.

In the US, ASCAP follows the member-owned model. However BMI is actually owned by a group of broadcasters, it having been established by the US radio sector in the 1930s in order to provide a rival to the already established ASCAP.

However, it nevertheless operated on a not-for-profit basis until last year. The decision to become a for-profit entity followed a review of the society’s operations, which also involved approaching possible buyers. It was initially decided not to sell, but the BMI board concluded that going the for-profit route would allow them to secure investment in order to grow the business.

It was then reported by Reuters last month that BMI was again working with Goldman Sachs to sound out potential acquirers. Sources say that talks have since been underway with Apollo Global Management, Brookfield Asset Management and RedBird Capital Partners, as well as New Mountain Capital, the bid from which is now seemingly progressing.

The shift to being a for-profit business and those new rumours about a sale motivated a letter last week from various organisations representing American artists and songwriters which asked BMI boss Mike O’Neill an assortment of questions.

They wanted to know how the introduction of a profit margin is affecting the commissions and fees that BMI charges on the royalties that it processes on behalf of its songwriter and music publisher members. They also wanted to know who would benefit from the profits of any sale and what impact private equity ownership might have on the organisation.

Although yet to respond to the specific questions contained in that letter, O’Neill did send a speedy reply insisting that the changes occurring at BMI are in the interests of the society’s members.

Of course, while the majority of the music industry’s collecting societies are member-owned not-for-profit organisations, not all of them are, and the two smaller societies representing the performing rights in songs in the US – SESAC and GMR – are both privately owned. And, O’Neill would possibly argue, the writers allied to those privately owned societies seem happy enough.

Plus, of course, if writers really felt that the introduction of a profit margin – or the influence of a new private equity owner – was negatively impacting on the management of their rights or the distribution of royalties, they could always switch allegiances to ASCAP. Which, presumably, provides a strong incentive for BMI’s management and any future owner to ensure that any changes and new policies are in the interests of songwriters.

Although, not necessarily all songwriters. One of the concerns expressed in last week’s letter is that a privately owned society might be more likely to skew things in favour of the big-earning superstar writers, whereas in the past both BMI and ASCAP – like most collecting societies elsewhere in the world – have traditionally operated with an ethos of “any songwriter is welcome”.

“BMI is required to provide a home to any writer who wants to join”, the letter noted. “Can BMI confirm that they will not seek to drive writers away from BMI or discourage writers from joining BMI?”

We now await to see if any deal goes through and – if so – how BMI will seek to convince its members that all these changes are definitely in their interest.