Napster Settlement Impacts Bertlelsmann AG Earnings

Because of its settlements with the four major music publishers involved in the Napster case -estimated at over $400 million- the German media conglomerate Bertelsmann AG (FRA: BTG4) reported a first-half net loss of shareholder profit of €51 million ($69.4 million), compared to earnings to shareholder of €258 million euros ($351.2 million) in the previous fiscal year.  The last of the pending Napster cases was settled the in August.  The BMG division posted a net operating EBIT loss of €3 which was said to reflect the sell off of its BMG Music Publishing division, the market declining by 12 percent and exchange rate effects.  Bertelsmann’s announcement also stated that although it saw a strong growth in the sell of digital formats, this effect proved unable to compensate for the decline in physical sales, which equaled a drop of roughly 20 percent. Sony BMG expects to counter this trend by expanding its digital business,

BMI posts record profts

BMI, one of the largest performance rights organizations in the world, announced today that it will distribute more than $732 million in royalties for the 2006-2007 fiscal year.  This figure is an 8% increase over the prior fiscal year.  BMI also noted that it posted record-setting revenues of $839 million for this fiscal year, a 7% increase over last year.  One of the reasons cited for the increase revenue and distribution was the diversity of media using BMI’s catalogue, including cable networks and satelite audio which are replacing the more traditional over-the-air distribution.  This is the highest annual revenues and royalty distributions ever reported by a performance rights organization, according to the announcement.  BMI’s president and CEO, Del Bryant, stated that “the dynamic growth and continued popularity of the BMI catalog have made these outstanding financial results possible at a time of unprecedented change in the media and entertainment business.”