After selling off his 50% stake in Sony BMG to Howard Stringer and Sony, Bertelsmann CEO has a message for his former employees: It doesn’t make any sense for us to be in the music business (except in a tiny way). But good luck to you folks!
After four years of successful partnership with Sony, Bertelsmann is selling its 50-per cent stake in the Sony BMG joint venture. Subject to antitrust approval, Sony Corporation of America will be the sole owner of the music company established in August 2004, which will do business as Sony Music Entertainment in future. Bertelsmann will retain the BMG brand along with select music catalogues in countries including Germany,
the U.K., France and Italy, which will form the basis for reentry into the music rights business.
The joint-venture contracts with Sony originally stipulated a partnership that was initially planned for five years. We have now mutually agreed that given the changes in the music market, a quick decision about the shareholder structure would be better – for the company, artists, and employees alike. Bertelsmann believes that Sony’s portfolio makes it the ideal shareholder for Sony Music Entertainment’s future development. Sony unites a creative approach to entertainment media with technical entertainment electronics expertise.
Sony and Bertelsmann likewise agree that the establishment of our joint venture, the long struggle to get it approved by the antitrust authorities, and our efforts for a smooth integration of the two companies were all well worth it. Under Rolf Schmidt-Holtz’s management, Sony BMG was able to at least cushion the decline in the worldwide music industry by establishing innovative business approaches, as well as through continual reorganization. Today, the company is in far better shape than most of its competitors and more rigorously prepared for the digital future.
Four years ago, dear colleagues, there was no alternative to the establishment of Sony BMG. On their own, both partners would today be in a much more difficult situation than side by side. Take, for instance,
the case of Bertelsmann at the time: BMG was the smallest major, the world’s number five, faced with an overpowering global market leader and more powerful rivals.
After 50 years in the music business, of course parting ways with Sony BMG is not an easy step for Bertelsmann. It means parting with strong labels and fascinating markets, and above all saying goodbye to longtime colleagues and artists, friends and companions.
And yet this step also means new chances and a new beginning for us. Small beginnings in the music business, to be sure, but on a larger, strategic scale for Bertelsmann as a whole: the proceeds from the sale of our stake in Sony BMG create new latitude for us to make targeted investments and grow again, including and especially in North America, the world’s most important media market. So the sale of Sony BMG feeds into the focus on our growth businesses, and our new strategic course that demands this clear focus on investments and efforts for growth and value creation.
I would like to take this opportunity to say a heartfelt thank-you to all Sony BMG employees, on behalf of the Executive Board and all colleagues – on behalf of all Bertelsmann, in short – for your achievements in the past years and decades. Our best and sincerest wishes accompany you into the future, even if that future is no longer at Bertelsmann.
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