BMI is being sold to a shareholder group led by a private equity company, New Mountain Capital. A private equity firm is one that manages private equity funds which are pooled investments.
It is anticipated that the sale will be consummated by the end of March, 2024. Regulators and the broadcast shareholders who have owned BMI will still have to approve the deal. The sale price has not been disclosed but estimated range from 1.3-1.5 billion dollars.
BMI is a performing rights organization (“PRO”) which is a company that collects royalties on behalf of songwriters and publishers when a song is publicly broadcast or performed. Some examples of public performances of songs are on radio or TV, in clubs, restaurants, and websites. After a PRO’s collects the license fees for the usage of the song, they pay the songwriters and publishers. The PRO’s take a small fee for their service.
New Mountain’s announced that 100 million dollars from the sale price will be allocated to songwriter and publisher affiliates in recognition of their creativity.
BMI’s announcement stated:
“The allocation of these 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. BMI will work to finalize an equitable payout plan for this allocation in the coming months.”
Pete Masucci, the managing director of New Mountain stated:
“BMI has been a trusted guide and champion for music creators from the beginning, and we are privileged to work with the company and its 4 million affiliates to build on that incredible legacy... We look forward to working together alongside Mike and his team to capitalize on those opportunities for the benefit of all BMI stakeholders.”
Publishers and songwriters had been very much opposed to BMI becoming a for-profit organization. BMI announced that it would lower the amount it distributes in annual royalties from 90% to 85% of what it collects.
New Mountain’s announcement also stated: “New Mountain’s growth investment in BMI will accelerate the company’s ambitious value creation plan.”
New Mountain indicated that its plan included 3 core tenants:
1. To increase cash distributions to its affiliates.
2. To invest in new technologies
3. To add new revenue streams.
New Mountain director Mike Oshinsky said in a statement:
“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.”
Only time will tell if New Mountain will accomplish its goals.
