BMG FORECASTS BAD YEAR
In an interview with Thursday’s Handelsblatt (everyone’s favorite German daily), Rolf Schmidt-Holtz (everyone’s favorite German chairman) said he did not expect Bertelsmann Music Group to make a profit or see any sales growth in the year ending June 30, 2001.
Schmidt-Holtz’s comments are a bit of a flip-flop from Bertelsmann chief Thomas Middelhoff’s "everything’s OK" comments earlier this month (hitsdailydouble.com, 5/7)
By comparison, the 1999-2000 fiscal year was a banner year for the company. During that time, BMG achieved EBITDA of 223 million euros ($189 million) and sales of 4.7 billion euros.
A spokesman for the company blamed a global economic slowdown, music piracy and El Nino for the downturn.
Despite the gloomy (some might say German Expressionist) forecast, Schmidt-Holtz said he expects BMG to rebound and post "record results" in 2002.
BMG, currently the world's fifth largest music company (with only the four other major labels ranking larger), is restructuring its management to focus more specifically on cost cuts, acquisitions of new labels and investment in artists. The company says it has an aggressive schedule for releases of new and established artists, among them Carlos Santana, Whitney Houston and, of course, Eros Ramazzotti. Oh yes, who wouldn’t bank on Eros Ramazzotti to right the fiscal ship?
BMG has been in the throes of restructuring its online music division, parceling out the duty of running the online biz to the company’s e-commerce group, BeCG and purchasing music website Myplay.com (hitsdailydouble.com, 5/30). The latter move being something of a reaction to Vivendi Universal’s recent purchase of MP3.com (hitsdailydouble.com, 5/21).
BeCG chief Andreas Schmidt plans to integrate Myplay into the company’s newly formed digital music service BeMusic, which already includes CDNow, BMG Music Service and the company's stake in Napster.
BeMusic would have 35 million customers and sales of 2.2 billion marks ($954 million), Schmidt said. With 20% of the CD market in the United States, BeMusic would be the world's biggest music services company.
