BMI Purchased by Private Equity Firm New Mountain Capital — $100 Million Allocated to Songwriters and Publishers

Broadcast Music Inc. (BMI), the world's largest performing rights organization, has announced its sale to private equity firm New Mountain Capital.
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Broadcast Music Inc. (BMI), the world's largest performing rights organization, has announced its sale to private equity firm New Mountain Capital.
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Photo Credit: Broadcast Music, Inc.

Broadcast Music Inc. (BMI), the world’s largest performing rights organization, has announced its sale to private equity firm New Mountain Capital. $100 million from the proceeds of sale will go to BMI affiliates — songwriters, publishers, and composers.

On Tuesday, BMI revealed in a statement that it has been purchased by New Mountain Capital, revealing that the deal is subject to approval by its shareholders, and a ‘customary’ regulatory review. The financial terms of the agreement were not disclosed. However, with rumors of a possible sale swirling throughout the year, earlier reports had suggested a price tag between $1.3 to $1.7 billion.

Following the closing of the deal — expected by Q1 2024’s end — New York-headquartered BMI will retain its President and CEO, Mike O’Neil, alongside his leadership team, according to the company.

Most significantly, the current shareholders have allocated $100 million from the sale proceeds to BMI affiliates (songwriters, composers, and music publishers), which will be released shortly after the deal closes — ‘in keeping with the company’s distribution methodologies based on performance levels over a set period of time,’ Shareholders revealed plans to finalize an equitable payout plan for affiliates within the coming months.

New Mountain Capital is acquiring the company from BMI shareholders, reserving additional capital meant to go toward growth ventures and enhancements that will accelerate BMI’s functions. Moreover, as part of New Mountain’s investment, Alphabet’s independent growth fund, CapitalG, will also invest a passive minority stake in BMI.

The private equity firm aims to ‘maximize distributions for its affiliates and improve the service it provides to songwriters, composers, and publishers.’

BMI head O’Neil said in his statement, “Today marks an exciting new chapter for BMI that puts us in the best possible position to stay ahead of the evolving industry and ensure the long-term success of our music creators.”

Referring to New Mountain Capital, O’Neil shared why the equity firm is an ideal partner for BMI, stating, “They believe in our mission and understand that the key to success for our company lies in delivering value to our affiliates. We are excited about the many ways New Mountain will accelerate our growth plan, bringing a new vision, technological expertise, and an outstanding track record of strengthening businesses, all of which will help us build an even stronger future for BMI and our songwriters, composers, and publishers.”

Pete Masucci, Managing Director at New Mountain, highlighted BMI’s role as a trusted guide and champion of music creators since 1939. “We are privileged to work with the company and its 1.4 million affiliates to build on that incredible legacy.”

“There are numerous growth opportunities ahead for BMI with significant potential to generate more value for the work of its songwriters, composers, and publishers,” said Masucci, adding, “We look forward to working together alongside Mike and his team to capitalize on those opportunities for the benefit of all BMI stakeholders.”

Since its inception in 1939, BMI has represented more than 1.4 million songwriters, composers, and music publishers, and current artists on the roster include the likes of Lady Gaga, Taylor Swift, and Dolly Parton.

The PRO licenses over 22 million music works for performing rights, and is the silent force behind the disbursements of billions of dollars in royalties to publishers and songwriters.

After operating chiefly on a non-profit basis since its inception, BMI shifted its business model to for-profit in October 2022. A for-profit model enabled the PRO to serve like a traditional business while remaining — like ASCAP — under the consent decree governed by the Department of Justice, which restricts some business opportunities.

Since its business model switched to the ‘greener’ side, rumors swirled surrounding BMI’s search for a buyer and its supposed flirtation with a sale to private equity firm New Mountain Capital. BMI also received flak from ASCAP, which now touts itself as ‘the only performing rights organization in the US that operates on a not-for-profit basis.’

The resulting uncertainty of BMI’s fate had naturally sparked concern among songwriters and publishers, whose fears the PRO has attempted to assuage within its latest sale announcement.

Apart from the $100 million of sale proceeds allocated to affiliates, BMI has clarified that the investment from New Mountain — a leading growth-oriented investment firm with over $45 billion in assets under management — ‘does not change the distribution targets previously communicated, which is the same approach the company followed in calendar year 2023 and which it will follow moving forward.’

More significantly, BMI announced that the growth investment will accelerate the company’s ambitious value creation plan, which contains three primary tenets: ‘continue to grow cash dividends for its affiliates,’ ‘invest in next-generation technology platforms and new service offerings that will improve royalty collections, enhance BMI’s customer service, and deliver the best possible experience for its affiliates,’ and ‘add new revenue streams driven by organic growth investments and M&A opportunities.’

Mike Oshinsky, Director at New Mountain, also added to the BMI-New Mountain deal announcement, saying, “There is tremendous opportunity to modernize this critical part of music infrastructure and ensure that long-term royalty collections for songwriters, composers, and publishers continue to grow.”