US radio giant iHeartMedia is lined up for a USD $100 million windfall from the sale of BMI to a shareholder group led by New Mountain Capital.
On Monday (November 27), iHeart said that it expects, following the sale, to receive “approximately” $100 million of proceeds “related to its equity interest in BMI, subject to approval of the transaction by BMI shareholders and customary regulatory approvals”.
The US broadcaster added that it plans to use the proceeds for “general corporate purposes, which may include the repayment of debt”.
Last week we learned that private equity firm New Mountain Capital (NMC) will “lead a shareholder group” to acquire a majority stake in BMI.
We’d known for some time that the private equity firm – which has over $45 billion in assets under management – had been in talks to acquire BMI, but the news was confirmed last Tuesday (November 21).
NMC’s ‘shareholder group’ also includes an arm of Google parent Alphabet, and as part of New Mountain’s investment, CapitalG – aka Google/Alphabet’s “independent growth fund” – will acquire a passive minority stake in the PRO.
BMI didn’t put a specific price on NMC’s takeover in its confirmation last week, but sources have previously put the acquisition price in NMC’s offer at around $1.7 billion.
BMI has up until now been owned by a consortium of radio and TV broadcasters.
News that a radio broadcaster with an equity interest in BMI is set to receive a sum of proceeds following a sale of the PRO might not come as a shock to most industry observers.
However, a question many in the music biz will be asking about the sale – and especially now that iHeartMedia has revealed that it alone will be getting $100 million from the deal – is one raised by MBW in an analysis last month:
How will the songwriter community feel about the US radio sector netting a ten-figure windfall from the sale of BMI, essentially thanks to the financial growth of the music publishing industry?
Especially when the US radio industry isn’t exactly considered the most generous payer amongst songwriting talent or music publishers – and continues to refuse to pay a performance royalty for recorded music in the US. (BMI does collect and pay out US radio royalties on behalf of songwriters and publishers).
BMI also said in a press release last week that its current shareholders will allocate $100 million of the proceeds of the proposed sale to songwriter, composer and publisher affiliates “in recognition of [their] creativity” shortly after the transaction closes.
BMI says that the allocation of this $100 million “will be in keeping with [BMI’s] distribution methodologies, which are based on performance levels over a set period of time”.
BMI added in the announcement that it “will work to finalize an equitable payout plan for this allocation in the coming months”.
The NMC transaction is subject to approval by BMI shareholders and customary regulatory approvals and is expected to close by the end of Q1 2024.
Mike O’Neill, BMI’s President & CEO, will continue to lead the company, along with his leadership team, following the closing.
“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,” O’Neill said on Tuesday (November 21) when the news of the sale was announced.
Added 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.”
BMI’s private equity sale comes a year after the PRO revealed that its not-for-profit business model, under which it has operated since the PRO was founded in 1939, would be changing to a for-profit model.Music Business Worldwide
