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Bertelsmann, KKR form music unit

Masuch to head rights management business

German media giant Bertelsmann said Wednesday it was joining forces with private equity firm KKR to create a global music rights management business.

Bertelsmann will fold its BMG Rights Management into the new group and hold a 49% stake, with KKR owning 51%.

BMG Rights Management CEO Hartwig Masuch will become CEO of the new company.

KKR will back the joint venture via “substantial equity investments through its European private equity funds.”

“The music rights sector offers opportunities for significant growth across the globe,” said Johannes Huth, who heads KKR in Europe. “Our financial strength combined with BMG’s sector expertise will create a unique platform for building up a global music rights management business.”

Thomas Rabe, Bertelsmann’s finance chief and chairman of the joint venture, said the coin would boost the development of the business.

With the music industry at an important turning point, the group sees growth opportunities for licensing and administering music rights. Music licensing is growing beyond the recording business to include broadcast and live performances as well as the synchronization of broadcasting, commercial and movie productions.

Bertelsmann added that the joint venture would “benefit from BMG Rights Management’s know-how in licensing and administrating music rights, its large number of music catalogs and artists, the established BMG brand and its experienced management team.”

The deal must be approved by competition watchdogs, but both sides expect to complete the transaction within a few months.

Bertelsmann launched BMG Rights Management in October after selling its 50% stake in Sony BMG to Sony Corp. It included a selection of European music catalogs from about 200 artists retained from the former Sony BMG venture. Since then, it has signed 100 more contracts with songwriters and rights owners.

The company’s repertoire includes songs and recordings from such artists as Kylie Minogue, Andrew Roachford and the Scorpions.

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