{"id":256159,"date":"2026-04-29T18:24:58","date_gmt":"2026-04-29T17:24:58","guid":{"rendered":"https:\/\/www.musicbusinessworldwide.com\/?p=256159"},"modified":"2026-04-30T13:20:56","modified_gmt":"2026-04-30T12:20:56","slug":"3-observations-on-bmg-x-concord","status":"publish","type":"post","link":"https:\/\/www.musicbusinessworldwide.com\/3-observations-on-bmg-x-concord\/","title":{"rendered":"3 Observations On\u2026 BMG x Concord"},"content":{"rendered":"

MBW Reacts is a series of analytical commentaries from Music Business Worldwide<\/a> written in response to major recent entertainment events or news stories. Only MBW+ subscribers<\/a> have unlimited access to these articles. The below originally appeared in Tim Ingham’s latest ‘Tim’s Take’ email, issued exclusively to MBW+ subscribers.<\/strong><\/b><\/p>\n

\n

BMG<\/b> just got significantly bigger.<\/p>\n

That’s one take on yesterday’s news of a merger between Bertelsmann’s<\/b> music company and Concord<\/b>.<\/p>\n

The newly combined company will be 67%<\/b> owned by Bertelsmann and carry the BMG<\/b> brand, but sit above two entities: Concord Records<\/b> and BMG Publishing.<\/b><\/p>\n

As reported earlier<\/a>, Bob Valentine<\/b>, currently CEO of Concord, will become CEO of the new entity, with Thomas Coesfeld<\/b> \u2013 currently CEO of BMG, and soon to be CEO of Bertelsmann<\/a> \u2013 becoming its Chairman.<\/p>\n

In their official confirmation of the merger, the companies didn’t disclose a valuation for either (i)<\/b> Concord itself or (ii)<\/b> the combined entity.<\/p>\n

But they did give us some breadcrumbs. Here are a few quick thoughts on the deal, and its financial significance.<\/p>\n

\n
1) A combined BMG and Concord is worth around $15 billion. That’s big.<\/strong><\/h6>\n

The run-up to this deal was marked by rumor and speculation<\/strong> about its commercial detail.<\/p>\n

Bloomberg<\/em>, which broke the news<\/a> of talks in January, reported that Concord could be valued “as high as $7 billion<\/strong>.”<\/p>\n

Billboard<\/em> came out of the traps next, and was more conservative, suggesting<\/a> the deal might value Concord at “more than $6.6 billion<\/strong>.”<\/p>\n

My own well-placed sources suggest that the agreement gave Concord an enterprise value of $7.4 billion\u2013$7.6 billion<\/strong>, and that the combined entity is now worth close to $15 billion<\/strong>.<\/p>\n

When you look at the numbers BMG<\/strong> released today, this is no great surprise.<\/p>\n

“if Concord<\/strong> and BMG<\/strong> each make up half of that $730 million<\/strong> figure this year, then a 20X multiple<\/strong> would get us to $14.6 billion<\/strong>.”<\/p><\/blockquote>\n

According to the official press release, BMG<\/strong> and Concord<\/strong> forecast that, combined, they will generate over $730 million<\/strong> in EBITDA this year.<\/p>\n

Sources close to the situation suggest that BMG<\/strong> and Concord’s<\/strong> profitability is “surprisingly similar” as things stand, and we already know BMG generated EUR \u20ac284 \/ USD $321M<\/strong> in adjusted EBITDA last year (see below).<\/p>\n

So if Concord<\/strong> and BMG<\/strong> each make up half of that $730 million<\/strong> figure this year, then a 20X multiple<\/strong> would get us to $14.6 billion<\/strong>.<\/p>\n

My sources suggest that (complete with the 20X multiple<\/strong>) is in the ballpark of what went down.<\/p>\n

\n
<\/a><\/i><\/a><\/figure>\n
\n

The combined company will be controlled by Bertelsmann<\/strong>, with investment management company Great Mountain Partners<\/strong> and its affiliates owning the other 33%<\/strong>.<\/p>\n

Helping Great Mountain<\/strong> and those affiliates (including the Michigan Pension Fund) swallow a minority seat at the cap table: a $1.16 billion<\/strong> cash payment from Bertelsmann to sweeten the deal.<\/p>\n

Most of the value of this ~$15 billion<\/strong> merger, therefore, seems wrapped up in a stock swap. But, in paper value terms, it’s still one of the biggest deals in music industry history.<\/p>\n

Other big swingers that come to mind: a consortium led by Tencent<\/strong> swooped for 20% of UMG in 2020\u20132021, for around $7 billion<\/strong> (UMG was valued at approx. USD $37 billion<\/strong> at the time). Len Blavatnik<\/strong> acquired all of Warner Music Group for USD $3.3 billion<\/strong> in 2011, while other ten-figure deals, such as UMG’s acquisition of EMI Music<\/strong> (2012) and Sony’s acquisition of EMI Music Publishing<\/strong> (2018), also warrant mention.<\/p>\n

The mac-daddy probably remains Seagram <\/strong>buying PolyGram<\/strong> from Philips for over $10 billion<\/strong> in 1998 \u2013 80% in cash<\/strong> \u2013 effectively creating the company we now know as Universal Music Group<\/strong>. Seagram later merged with Vivendi in an all-stock deal.<\/p>\n

\n
2) No, the ‘new’ BMG won’t be rivaling Warner Music Group for scale. Profitability? That’s another question.<\/strong><\/h6>\n

As mentioned, the press release today<\/a> noted a projected “pro forma EBITDA of over $730 million”<\/strong> for the combined BMG+Concord<\/strong> company.<\/p>\n

Reuters suggests this is expected to be achieved from an annual turnover of $2.2 billion<\/strong>, putting BMG\/Concord’s<\/strong> EBITDA margin at 33%+<\/strong>.<\/p>\n

Again, this fits with what we already know of BMG<\/strong>, whose profit margin under Thomas Coesfeld reached a record 32%<\/a> in 2025.<\/p>\n

Coesfeld<\/strong> told me in an interview set to publish shortly that he sees three types of music rights companies: (i)<\/strong> Distributors\/administrators; (ii)<\/strong> Catalog owners; (iii) <\/strong>Hybrid music firms, who can use their operational power and reach to drive revenues for their catalog.<\/p>\n

BMG<\/strong> and Concord<\/strong> are both in game (iii)<\/strong>, he suggests, but have been unusually rigorous in keeping their profit margins high for shareholders. With further acquisitions, industry growth, and combined efficiencies ahead, that margin may yet creep higher.<\/p>\n

“If Coesfeld<\/strong> and Valentine<\/strong> can achieve their aim \u2013 nearly doubling profit while maintaining strong 30%+ margins \u2013 expect public investors in major music companies to take note.”<\/p><\/blockquote>\n

The combined BMG+Concord<\/strong> is now comfortably the world’s fourth biggest music rights company. However, it won’t be challenging the world’s third biggest \u2013 Warner Music Group<\/strong> \u2013 for reach any time soon.<\/p>\n

In its FY 2025<\/a>, to end of September last year, WMG generated $6.71 billion<\/strong> in topline revenue \u2013 around three times the size of BMG+Concord’s expected revenue in 2026. (Worth noting: Some $835M<\/strong> of these WMG revenues came from ‘artist services and expanded-rights’ \u2013 areas that Coesfeld has deprioritized at BMG as he re-focuses the company on the “core” of recorded music and publishing.)<\/p>\n

WMG’s preferred profitability metric \u2013 adjusted OIBDA (Operating Income Before Depreciation and Amortization) \u2013 stood at USD $1.44 billion<\/strong> in FY 2025, a margin of around 21.5%<\/strong>.<\/p>\n

Eagle-eyed readers will have spotted that WMG’s annual profitability there ($1.44B<\/strong>) isn’t far away from the yearly EBITDA number that BMG+Concord <\/strong>says it is now targeting<\/a> in the “mid-term”: $1.2 billion<\/strong>.<\/p>\n

WMG<\/strong> will almost certainly also grow its bottom line in that “mid-term” period too, of course.<\/p>\n

But if Coesfeld<\/strong> and Valentine<\/strong> can achieve their aim \u2013 nearly doubling profit while maintaining strong 30%+ margins \u2013 expect public investors in major music companies to take note.<\/p>\n

\n
<\/a><\/i><\/a><\/figure>\n
\n
3) BMG is proud of its direct digital distribution strategy. Will it bring the same to Concord?<\/b><\/h6>\n

Today’s story isn’t just about who ‘acquired’ Concord<\/b> \u2013 it’s about who did not<\/i>.<\/p>\n

Universal Music Group<\/b> has long been Concord’s<\/b> exclusive global distributor for recorded music.<\/p>\n

Yet on this occasion, UMG declined to acquire Concord \u2013 potentially wary of regulatory scrutiny following a bruising ride from the European Commission<\/b> over its Downtown<\/b> buy.<\/p>\n

There are advantages to distributing via UMG for Concord<\/b>: UMG’s global infrastructure, its platform-level negotiating leverage, and its access to, for example, Spotify marketing tools represent strong additive value.<\/p>\n

“Don’t be surprised to see BMG now migrate Concord’s<\/b> digital distribution onto its own direct infrastructure over time \u2013 replicating the margin-boosting playbook.”<\/p><\/blockquote>\n

Yet one of Thomas Coesfeld’s<\/b> first major moves as BMG’s CEO, back in late 2023, was to end the company’s long-running distribution deal<\/a> with Warner Music Group\/ADA<\/b> and take streaming distribution in-house, going direct with Spotify<\/b> and Apple Music<\/b>.<\/p>\n

The results have been notable and have played a material role in BMG’s EBITDA margin hitting that record 32%<\/b> in FY 2025.<\/p>\n

Don’t be surprised to see BMG now migrate Concord’s<\/b> digital distribution onto its own direct infrastructure over time \u2013 replicating the margin-boosting playbook.<\/p>\n

Physical distribution<\/b>, though, is a different matter.<\/p>\n

For Concord’s<\/b> overwhelmingly catalog-heavy repertoire \u2013 some 85%<\/b> of its revenue derives from catalog, per Valentine’s previous disclosure<\/b><\/a> \u2013 vinyl, CD, etc. is a vital revenue engine.<\/p>\n

BMG already runs its physical recorded music business through Universal<\/b>. I now expect that relationship to deepen, rather than dissolve.<\/p>\n","protected":false},"excerpt":{"rendered":"

This article orginally appeared in Tim Ingham\u2019s latest \u2018Tim\u2019s Take\u2019 email, issued exclusively to MBW+ subscribers.<\/p>\n","protected":false},"author":3,"featured_media":256191,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[9,7],"tags":[130318],"class_list":["post-256159","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","category-news","tag-mbw-reacts"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/256159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/comments?post=256159"}],"version-history":[{"count":8,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/256159\/revisions"}],"predecessor-version":[{"id":256258,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/256159\/revisions\/256258"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media\/256191"}],"wp:attachment":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media?parent=256159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/categories?post=256159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/tags?post=256159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}