After more than 80 years of working, in fact, as a not-for-profit organization, BMI decided to transform itself into a for-profit business. The move comes on the heels of BMI – also known as Broadcast Music Inc. – Appointed Goldman Sachs to explore strategic opportunities earlier this year.
While this exercise was extensive and included the possibility of radio stations owning a performance rights organization selling the company, the bidders either did not reach the price the owners wanted, or came up with complex business plans going forward and did not resume BMI management, according to a Bloomberg Report in August.
“We learned a lot from this process, and most importantly to be more commercial in the future,” President and CEO of BMI Mike O’Neill Tells painting. “It basically came back to the concept of how we keep increasing distributions to our affiliates [publishers and songwriters] in a changing environment.
In a note to BMI employees, O’Neill said the change in business model “will open up significant new opportunities for us to invest in our business and ensure that we can continue to carry out our mission to support our affiliates and increase value from their music. Most importantly, our goal is to continue to Our distributions are increasing at a greater rate than we have been before.”
or as it repeats painting“Growth requires investment, not just maintenance… This is new [commercial] The model will grow at a faster rate than BMI has grown throughout history.”
Last year, BMI I slept Collections increased 15.6% to $1.573 billion, and dividends increased 10.2% to $1.471 billion from last year’s totals of $1.361 billion and $1.335 billion, respectively.
The change to the business model will not affect its consent decree with the US Department of Justice; The BMI consent decree, which provides a greater scope of BMI’s powers than the ASCAP consent decree, will remain the same, according to the organization.
In order to achieve the transformation into a commercial enterprise, BMI will require investments to upgrade technology and adopt new technologies; Improving and expanding existing services and products while adding new services and product capabilities. These efforts could mean partnering with or buying other companies, O’Neill said. While such moves will come at a cost, O’Neill says, “The nice thing is that BMI has no debt, so we’ll be able to use leverage to fund” planned BMI growth initiatives.
To be clear, the copyright groups and publishers will not be used to fund any new initiatives. Instead, proceeds from new initiatives will be used to “reinvest in BMI,” says O’Neill painting. He also indicated that BMI’s existing radio and television ownership would not be invested in BMI’s growth plans, but that no dividend would be paid to them under the profit model that BMI would adopt.
On the other hand, if the BMI, which is said to have a valuation in excess of $1 billion, was sold as a result of the previous Goldman Sachs operation — or if the PRO was eventually sold — the broadcasters would be the beneficiaries of that payment.
As to what these planned new initiatives might be, O’Neill was vague except to say that BMI will not branch out into mechanical licensing but may pursue growth opportunities outside the US “There is potential for international expansion” under the new BMI business model, O’Neill says. For example, he cites unlicensed areas around the world as a major opportunity. While there are music licensing and collection associations in many countries around the world, there are still some regions in Africa and Asia that could use a stronger licensing and/or presence.
In the above note to BMI employees, O’Neill added, “There is no doubt that the old paradigm served BMI well. But it has also held us back and limited our ability to invest in the future in a meaningful way. Our transition to profit gives us more financial flexibility and makes us smarter at Do what we need to do.”
This switch will allow BMI to be at the heart of industry change, says O’Neill, adding, “The way forward only works if it benefits our songwriters, composers, and publishers. We are fully aware that BMI growth will be the growth of our affiliates.”