BMG Rights Management to buy Bug Music for $300 million

NEW YORK ― BMG Rights Management said on Monday it would pay around $300 million to buy Bug Music, a Los Angeles song publisher whose catalog includes hits such as “What a Wonderful World” and “Under The Boardwalk.”

BMG Rights reached the deal with Bug Music’s owner, private equity firm Spectrum Equity Investors. The deal values Bug Music at around $300 million, according to two people familiar with the process.

With a catalog of more than 250,000 songs the auction for Bug Music had attracted interest from a range of bidders including American Idol creator Simon Fuller, Ole Music and Sony/ATV, a joint venture between Sony Corp and the estate of late pop star Michael Jackson.

BMG Rights is a joint venture of giant German media company Bertelsmann [BERT.UL] and private equity firm KKR.

The deal is expected to close in October.

Even as global recorded music sales have tumbled in recent years, song catalogs have kept or increased their value because they can earn revenue from a wider variety of licensing sources than record sales.

Fund managers and investors like pension funds and private equity firms have been attracted by song publishers’ relatively stable cash flows.

Earlier this year, Russian-born billionaire Len Blavatnik paid $3.3 billion to take control of Warner Music Group, whose assets include the music publisher Warner/Chappell.

Blavatnik is now among contenders for EMI Music’s recording and publishing assets with final bids due by the end of this month, according to several sources.

BMG Rights and Sony/ATV are also known to be interested in EMI, but are more focused on EMI’s publishing catalog.

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