Vivendi Agrees to Buy BMG Music Publishing

Vivendi agreed Wednesday to pay $2.1 billion to acquire BMG Music Publishing from German media company Bertelsmann in a deal that would give the French company the world’s largest music publishing catalog and songs by artists such as Coldplay and Robbie Williams.

Vivendi, as expected, beat out a group of other bidders that included Warner Music Group Corp., Viacom Inc. and EMI Group. Its Universal Music Group division was thought to have the nod from the beginning. Because of Vivendi’s music publishing arm is smaller, it would probably face fewer regulatory constraints than EMI or Warner.

Universal Music is already the biggest recorded music company in the world, and the BMG unit is expected to be absorbed by the Universal Music publishing group.

BMG Music Publishing owns the rights to more than 1 million songs by recording artists such as Nelly, Maroon 5, Christina Aguilera, Justin Timberlake and Mariah Carey, as well as classic hits by the Beach Boys, Barry Manilow and other entertainers.

Universal Music Chairman and Chief Executive Doug Morris said the acquisition would diversify the company’s portfolio into key areas such as classical and Christian music.

“The acquisition of BMG Music Publishing is a unique opportunity to grow our music publishing business and enhance the value of Universal Music Group at a time when the music market is improving, supported by technological innovations and digital sales,” Vivendi CEO Jean-Bernard Levy said in a statement.

Some analysts said Vivendi paid too much for the deal and questioned its strategic rationale. Under the former leadership of Jean-Marie Messier, Vivendi embarked on a huge expansion that transformed it from a water utility to a global media conglomerate. But the company was left with a mountain of debt and was forced to sell some assets.

Standard & Poor’s said, however, that it was holding its debt ratings for Vivendi unchanged and noted that music publishing “is a profitable and fairly stable business.”

The deal must be approved by U.S. and European Union regulators, and analysts warned that they probably would scrutinize it particularly closely because of the new entity’s size.

Brussels-based Independent Music Companies Assn., a coalition of independent record labels, expressed concern that the proposed sale would further damage competition in recorded music, but said it had not yet decided whether to make a formal complaint to EU regulators.