Broadcast Music Inc. (BMI), a prominent U.S. music licensing agency, has entered an agreement to be acquired by New Mountain Capital, with Alphabet (NASDAQ:GOOGL) Inc.'s investment fund CapitalG also purchasing a minority stake in the organization. The deal is anticipated to be finalized by the first quarter of 2024, pending shareholder and regulatory approvals.
BMI, alongside the American Society of Composers, Authors and Publishers (ASCAP), plays a crucial role in the U.S. music industry as performing rights organizations. These entities manage the legal rights for music played across various platforms, such as retail stores, and are responsible for distributing royalties from these licenses. Notably, BMI does not own the copyrights to the music it manages. In the fiscal year 2022, BMI collected $1.57 billion in licensing fees and distributed $1.47 billion in royalties to artists.
The transition of BMI from its nonprofit status since its founding in 1939 to a profit-oriented business last year has sparked discussions among songwriter groups. Concerns were raised that focusing on profitability could potentially reduce the royalties paid to songwriters. However, BMI's CEO Michael O'Neill has addressed these concerns by assuring that the move towards profitability will not impact royalty payments. Instead, he suggests that it will enable the organization to diversify its revenue streams and invest in technological advancements.
O'Neill is set to continue leading BMI's operations following the acquisition. New Mountain Capital aims to apply their financial advisory expertise—similar to their approach with Citrin Cooperman—to modernize BMI's infrastructure. This comes as they navigate through the complex regulatory environment defined by longstanding Justice Department consent decrees, which influence service offerings and pricing models within the performance rights sector.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.