Bertelsmann May Sell Stake in Sony BMG

Facing a possible cash crunch, German media giant Bertelsmann is considering selling its 50% stake in the Sony BMG Music Entertainment joint venture it owns with Japan’s Sony Corp.

But executives, who requested anonymity because of the delicacy of ongoing discussion, said a sale was only one of many options under consideration.

At a minimum, however, Bertelsmann is expected to sell its stake in Sony BMG’s music publishing unit, the executives said.

Bertelsmann is under pressure from a minority shareholder, Brussels-based Groupe Bruxelles Lambert, to take itself public or repurchase minority shares. Bertelsmann’s controlling shareholders, the Mohn family, are exploring how to raise cash quickly to avoid a public offering.

In a recent report, Goldman, Sachs & Co. estimated Bertelsmann’s stake in Sony BMG and the music publishing company to be worth more than $1.9 billion. Sony BMG is the second-largest U.S. music company, home to such artists as Usher and Alicia Keys.

Spokespeople at both Sony Corp. and Bertelsmann declined to comment.

Under terms of the partnership between Sony and Bertelsmann, the electronics and entertainment company has first dibs on purchasing the rest of the company it doesn’t own if Bertelsmann chooses to sell.

The two partners just ended a bruising fight that began when Bertelsmann demanded removal of Chief Executive Andrew Lack, who was closely aligned with Sony Corp. The struggle was resolved when he swapped roles with former non-executive Chairman Rolf Schmidt-Holtz, a Bertelsmann executive.

Sony insiders said it is possible that Sony might buy out Bertelsmann. But other potential scenarios include both companies exiting the declining music business by selling to private investors. The private equity firm Thomas H. Lee Partners, for example, had made a killing on its acquisition of Warner Music Group in 2004.