iHeartMedia to receive $100m from sale of BMI

US radio large 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 stated that it expects, following the sale, to obtain “roughly” $100 million of proceeds “associated to its fairness curiosity in BMI, topic to approval of the transaction by BMI shareholders and customary regulatory approvals”.

The US broadcaster added that it plans to make use of the proceeds for “basic company functions, which can embody the reimbursement of debt”.

Final week we realized that personal fairness agency New Mountain Capital (NMC) will “lead a shareholder group” to acquire a majority stake in BMI.

We’d recognized for a while that the non-public fairness agency –  which has over $45 billion in belongings underneath administration – had been in talks to accumulate BMI, however the information was confirmed final Tuesday (November 21).

NMC’s ‘shareholder group’ additionally contains an arm of Google dad or mum Alphabet, and as a part of New Mountain’s funding, CapitalG – aka Google/Alphabet’s “unbiased progress fund” – will purchase a passive minority stake within the PRO.

BMI didn’t put a selected value on NMC’s takeover in its affirmation final week, however sources have beforehand put the acquisition value in NMC’s supply at round $1.7 billion.

BMI has up till now been owned by a consortium of radio and TV broadcasters.

Information {that a} radio broadcaster with an fairness curiosity in BMI is ready to obtain a sum of proceeds following a sale of the PRO won’t come as a shock to most trade observers.

Nevertheless, a query many within the music biz might be asking concerning the sale – and particularly now that iHeartMedia has revealed that it alone might be getting $100 million from the deal – is one raised by MBW in an evaluation final month:

How will the songwriter community feel concerning the US radio sector netting a ten-figure windfall from the sale of BMI, basically due to the monetary progress of the music publishing trade?

Particularly when the US radio trade isn’t precisely thought of essentially the most beneficiant payer amongst songwriting expertise or music publishers – and continues to refuse to pay a efficiency royalty for recorded music within the US. (BMI does accumulate and pay out US radio royalties on behalf of songwriters and publishers).

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BMI additionally stated in a press launch final week that its present shareholders will allocate $100 million of the proceeds of the proposed sale to songwriter, composer and writer associates “in recognition of [their] creativity” shortly after the transaction closes.

BMI says that the allocation of this $100 million “might be in line with [BMI’s] distribution methodologies, that are primarily based on efficiency ranges over a set time period”.

BMI added within the announcement that it “will work to finalize an equitable payout plan for this allocation within the coming months”.

The NMC transaction is topic to approval by BMI shareholders and customary regulatory approvals and is predicted to shut by the tip of Q1 2024.

Mike O’Neill, BMI’s President & CEO, will proceed to guide the corporate, alongside along with his management crew, following the closing.

“At this time marks an thrilling new chapter for BMI that places us in the absolute best place to remain forward of the evolving trade and make sure the long-term success of our music creators,”  O’Neill stated on Tuesday (November 21) when the information of the sale was introduced.

Added O’Neill: “New Mountain is a perfect companion as a result of they imagine in our mission and perceive that the important thing to success for our firm lies in delivering worth to our associates.

“We’re excited concerning the some ways New Mountain will speed up our progress plan, bringing new imaginative and prescient, technological experience and an impressive monitor file of strengthening companies, all of which is able to assist us construct an excellent stronger future for BMI and our songwriters, composers and publishers.”

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BMI’s non-public fairness sale comes a yr after the PRO revealed that its not-for-profit enterprise mannequin, underneath which it has operated for the reason that PRO was based in 1939, could be altering to a for-profit mannequin.Music Enterprise Worldwide