Co. to finance deal with cash reserves, credit
BMG has completed its Jive lessons.The major label group said Tuesday it has closed its acquisition of Zomba Music Group, home to teen-pop label Jive Records, paying more than $2.74 billion to acquire the stakes in the group it didn’t already own. Bertelsmann already held 20% of Zomba’s record labels and 25% of its music-publishing portfolio. Deal, which got rolling in June after Zomba owner Clive Calder triggered a long-standing “put” option to sell his interest, gives BMG full access to Jive’s roster of pop megastars, including ‘N Sync, Britney Spears and the Backstreet Boys. But the price — while slightly short of the expected $3 billion tag — is high, particularly as skepticism grows over Jive’s ability to repeat its past success. BMG parent Bertelsmann will finance the deal with a combination of cash reserves and existing lines of credit, though the company didn’t specify in what proportions. Privately held Bertelsmann has been lauded in the past as one of the few media congloms that has been able to keep its debt levels under control as rivals went deeply into the red with aggressive acquisitions. Calder to leave One asset that doesn’t come with the purchase price is Calder himself. The revered exec, who started Zomba more than 30 years ago, will ankle his post, although he will remain in an unspecified advisory role for the BMG brass. Calder’s No. 2, well-respected Jive prexy Barry Weiss, is remaining with the company under the new BMG regime — though it’s unclear how long he will stay in the fold. Contrary to broad speculation in recent months, sources inside BMG say it’s unlikely Zomba will be combined with another label within the German-owned major. Reports had circulated that BMG would merge Jive’s roster with either RCA or Arista after the deal was done. Jive countered some of that naysaying with a strong bow for “Justified,” the solo debut by ‘N Sync alum Justin Timberlake, earlier this month. Album bowed at second place in the album charts with just under 440,000 units sold. Staff cuts expected BMG won’t reveal its plans for the structure of the newly absorbed Zomba, which in addition to Jive includes sister labels Silvertone, Volcano and Verity and a formidable library of music-publishing assets. However, some staff cuts and consolidations are expected. “This acquisition comes at a time of renewed stability and success at BMG,” Bertelsmann topper Gunter Thielen said. “We expect that Zomba, combined with BMG, will further elevate Bertelsmann’s stature in the worldwide music industry.” It’s been a big month for strategic shifts at BMG. Last week, the major bought out the 50% of J Records it didn’t own from founder Clive Davis. J was added to BMG’s RCA Music Group division, and Davis, who had been ousted from the helm of Arista three years earlier, was installed to run the unit. In related news, Bertelsmann’s Pan-European broadcaster RTL Group is set to delist from the London Stock Exchange Dec. 31, company announced Tuesday. The group said back in September that it would delist due to lackluster trading. RTL shares have dropped to around $28 from a high of $169 in mid-2000. This does not affect the listings at the Luxembourg and Brussels stock exchanges but does reflect growing doubt in the capital markets. RTL, Europe’s biggest broadcasting group, has weathered the economic downturn better than most of its rivals. Company has enjoyed recent format successes like “Pop Idol” and managed to bolster its German TV assets with the recent acquisition of news web N-TV.