BMI Stops Potential Billion Dollar Sale

Broadcast Music Inc., which represents the rights of thousands of songwriters, including Ed Sheeran, Sam Smith and Rihanna, is no longer on the market, reports Bloomberg.

A sale “is no longer an avenue we are considering,” the company said in a statement Friday, adding “we’ve been clear from the start that as we explored strategic opportunities for BMI, we were going to evaluate all options that would support our affiliates and grow the value of their music.”

BMI hired Goldman Sachs Group Inc. earlier this year to explore strategic options, including a sale. With revenue of more than $1.4 billion in 2021, executives thought it could sell for at least $1.5 billion. They asked some bidders for as much $2 billion or $3 billion, according to people familiar with the talks. The company is a powerhouse in the music business. Any time a bar, restaurant, radio station or streaming service wants to play Rihanna’s “Work” or Sheeran’s “Shape of You,” they must pay BMI.

The company is the latest in a series of major music entities that hasn’t convinced a buyer to pay what it wanted. Concord, one of the largest independent music companies in the world, ended its sale process after rejecting every offer as not big enough. Other companies that have explored a sale, including Round Hill Music, Anthem Entertainment Group and Tempo Music, have yet to find a buyer -- though they have not publicly ended the hunt.

These aborted sales signal a major shift in the market for music assets. The value of music copyrights has skyrocketed in recent years as new investors flooded into the market. Music has always appealed to finance types who want to go to awards shows and hang around pop stars. But these assets became even more intriguing in recent years as a proliferation of streaming services boosted industry revenues. Investors saw them as a stable alternative to the stock market.

Two of the three major music companies, Universal Music Group and Warner Music Group, went public, while many of the most famous musicians of the last century sold their catalogs in deals that collectively generated billions of dollars.

Yet that market has started to slow down this year due to rising interest rates and the shrinking supply of available assets. 

Many competitors and potential buyers never understood how BMI could sell itself. Owned by a consortium of radio and TV broadcasters, the company has long operated as a nonprofit. But it would need to start making money to justify the valuations it sought.