A New York-based investment firm that says it emphasizes “business building and growth, rather than debt, as it pursues long-term capital appreciation” is confirming its lead role in a shareholder group that seeks to acquire Broadcast Music, Inc., the music rights group known as “BMI.”
Taking the lead investor position in the shareholder group is the New Mountain Capital investment firm, which boasts upward of $45 billion in assets under management.
Headquartered in the City of New York, and the world’s largest performing rights organization, BMI protects the rights of and advocates for more than 1.4 million songwriters, composers and music publishers, working closely with broadcast radio for years.
BMI secures royalties for its affiliates by offering licenses to businesses for the performing rights in 22.4 million musical works.
Once the sale of BMI is complete, with a shareholder-to-shareholder deal engineered, President/CEO Mike O’Neill will remain in his role, along with his leadership team.
New Mountain says it has also reserved additional capital to fund growth investments, new ventures and technology enhancements. This, it says, is designed to help accelerate BMI’s long-term plan “to maximize distributions for its affiliates and improve the service it provides to songwriters, composers and publishers.”
As part of the agreement, “and in recognition of the creativity of the songwriters, composers and publishers they have had the privilege to represent,” BMI’s current shareholders will allocate $100 million of the proceeds of the sale to affiliates shortly after the transaction’s closing.
“The allocation of those funds, while not a distribution of royalties, will be in keeping with the company’s distribution methodologies, which are based on performance levels over a set period of time,” said BMI, which will work to finalize “an equitable payout plan for this allocation” in the coming months.
O’Neill said, “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. 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.”
BMI was founded in 1939. Speaking for New Mountain, Managing Director Pete Mascucci said, “BMI has been a trusted guide and champion of music creators from the beginning, and we are privileged to work with the company and its 1.4 million affiliates to build on that incredible legacy. There are numerous growth opportunities ahead for BMI with significant potential to generate more value for the work of its songwriters, composers and publishers. We look forward to working together alongside Mike and his team to capitalize on those opportunities for the benefit of all BMI stakeholders.”
Fellow Director Mike Oshinsky added, “While the music industry has undergone a technology-driven transformation over the past two decades, music infrastructure, including the performing rights ecosystem has been slower to transform. There is tremendous opportunity to modernize this critical part of music infrastructure and ensure that long term royalty collections for songwriters, composers and publishers continue to grow. With our support, BMI is ideally positioned to drive this transformation as the only PRO in the world to combine an open-door policy to all music creators with the innovation and commercial drive of a for-profit business.”
New Mountain’s investment does not change the distribution targets previously communicated, which is the same approach the company followed in calendar year 2023 and which it will follow moving forward. For the calendar year, BMI targeted a payout of 85% of its licensing revenues and delivered 11% growth in cash distributions to affiliates over 2022’s distributions, which were reflective of the company’s prior not-for-profit model.
For Radio, the key word in the last sentence above is “prior.” BMI announced its shift to a for-profit model over a year ago, in October 2022.
The transaction is subject to approval by BMI shareholders and customary regulatory approvals and is expected to close by the end of March 2024.
Goldman Sachs & Co. LLC served as financial advisor to BMI and Fried, Frank, Harris, Shriver & Jacobson LLP served as its legal advisor. Moelis & Company served as financial advisor to New Mountain, and Simpson Thacher & Bartlett, LLP served as its legal advisor. As part of New Mountain’s investment, CapitalG will also invest a passive minority stake in BMI.
