LONDON – Hit records by AJR, Kontra K and KSI helped drive growth at BMG in the first half of 2021 as the music company posted a 5.2% increase (9% on a constant currency basis) in revenue to 296 million euros ($350 million) at the mid-year point ended June 30. That’s up from 282 million euros ($333.5 million) on the same period the previous year.
The record label and publisher’s operating earnings before interest, taxes, depreciation and amortization (EBITDA) were up 3.1% (7% at constant currency) to 50 million euros ($59.1 million), according to a mid-year financial report from German parent company Bertelsmann.
BMG CEO Hartwig Masuch said the results were “a ringing endorsement” of the company’s clients, long-term strategy and global workforce, which grew by 255 during the pandemic to total just over 1,000 employees. “The music business continues to change rapidly. Our challenge is to remain one step ahead of that change,” said Masuch in an internal email to staff.
Snapshot: First-Half Results for 2021
- Overall revenue rise 5.2% (9% on a constant currency basis) to 296 million euros ($350 million)
- Earnings before interest, taxes, depreciation and amortization (EBITDA) up 3.1% (7% at constant currency) to 50 million euros ($59.1 million)
- Publishing revenues stay flat accounting for 63% of overall revenue (186 million euros by Billboard’s calculations)
- Recorded music revenues up 30% to 110 million euros (by Billboard calculations). Digital accounted for 62% of overall revenue, from 59%
- Vinyl overtook CD to become BMG’s leading physical format by value, making up 54% of physical revenue
BMG said its publishing operations accounted for 63% of revenue, which equates to around 186 million euros by Billboard’s calculations (the company didn’t break out revenue numbers). Although global music publishing markets grew moderately over the past six months, Masuch said BMG’s publishing income remained flat with the previous year because of the continued impact of the pandemic and national lockdowns on the sector.
Recorded music represented 37% of revenue (around 110 million euros), which BMG said was up 30% on the first half of 2020. Digital accounted for 62% of overall revenue, up from 59%.
Records by AJR, Garbage, KSI, Jason Aldean and German rapper Kontra K, who has the biggest-selling album of the year so far in his home market, were among the company’s most popular artist releases.
Streaming accounted for 65% of recordings revenue, while vinyl overtook CDs to become BMG’s leading physical format by value, making up 54% of physical revenue. Releases by Motorhead, Mick Fleetwood, Joe Strummer and Black Sabbath were among its most purchased and streamed catalog titles.
Reflecting on the success of its recordings business, BMG said it outperformed market growth in both digital and physical in each of its three core markets: the U.S., U.K. and Germany. Recent artist signings include Duran Duran, Santana, Bryan Adams and Soft Cell, who Masuch said, came to the company because of “word of mouth” recommendations from their peers.
In March, BMG struck an eight-figure deal with global investment firm KKR to further grow its recorded music and publishing businesses through the acquisition of major music rights packages. BMG says one deal has been completed since the alliance was announced but did not disclose details. Four more deals are currently in due diligence with around 70 in the pipeline that the company says have an aggregate value of more than 1 billion euros ($1.2 billion).
“Amidst a pandemic, however, financial measures should not be the only focus,” said Masuch. “Artists and songwriters are hurting, awareness of injustice and discrimination are at an all-time high,” the CEO told staff, pointing to BMG’s efforts to address “historic unfairnesses.” In June last year, the company announced a review of all its recorded music catalogs and pledged to address historical injustices inflicted on black artists. “Expect more measures to come,” said Masuch.
As well as BMG, Bertelsmann’s media holdings include RTL Group, Penguin Random House, magazine publisher Gruner + Jahr and service provider Arvato. Bertelsmann reported total revenue of 8.7 billion euros ($10.3 billion) for the first six months of 2021, up 10.7% on the previous year and exceeding pre-pandemic levels.
Operating EBITDA increased to a record 1.4 billion euros ($1.7 billion), compared to 994 million euros in the first half of 2020. The media conglomerate, headquartered in Gütersloh, Germany, said it expects group profit of close to 2 billion euros for the full year.
