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Bertelsmann Realigns-BMG for the Music-Rights Business

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MAIN NEWS HEADLINES
August 7 – 14, 2008 Edition

Bertelsmann Realigns
BMG for the Music
Rights Business

New York / Gütersloh, August 5, 2008 –The international media company Bertelsmann is gearing the business of its Bertelsmann Music Group (BMG) towards music rights management, it announced earlier this week. The realignment is connected with the sale of Bertelsmann’s stake in the Sony BMG Music Entertainment joint venture to the Sony Corporation of America. Bertelsmann is taking over selected European catalogs of music rights from Sony BMG as part of the transaction. They comprise the works of more than 200 artists. The catalogs will continue to be distributed by Sony Music. Asked whether a similar program might be applied to book rights, a spokesman from Bertelsmann’s German office told Authorlink that there are no plans in that direction.

Taking over these catalogs is an important step towards the planned establishment of a licensing and management platform for exploiting and marketing music rights under the BMG brand. The designated managing director of BMG, based in Berlin, is Hartwig Masuch, an experienced music industry executive, who most recently advised Bertelsmann in the negotiations with Sony. Maximilian Dressendörfer, Vice President BMG, will also be part of the management team.

Bertelsmann’s Chief Financial Officer Thomas Rabe, who is responsible for the music pision on the group’s Executive Board, stated:”The many new distribution paths are causing an increase in the demand for music use rights. In view of this fact, we believe that building a business for the management and exploitation of such rights in Europe is an attractive proposition. We want to take advantage of our opportunities and position ourselves with the strong, well-established BMG brand and a management that is highly regarded in the market".

Designated managing director Hartwig Masuch added: "I am confident that, by building this new business under the historic BMG brand, we will continue to be successful in shaping the music industry. The activities of Bertelsmann’s various pisions, coupled with the realignment of BMG, provide countless opportunities for us to put together attractive service packages for creatives and rights owners. Our top priority will be to assert the rights owners’ claims efficiently and protect their interests against a backdrop of increasingly complex use and distribution models".

Consummation of the transaction remains subject to a number of conditions, including approvals of regulatory authorities in certain jurisdictions. JP Morgan acted as sole financial advisor to Bertelsmann on the sale of the Sony BMG stake and the new music venture.

About Bertelsmann AG

Bertelsmann is an international media company encompassing television (RTL Group), book publishing (Random House), magazine publishing (Gruner + Jahr), music (BMG), media services (Arvato), and media clubs (Direct Group) in more than 50 countries. Bertelsmann’s claim is to inspire people around the world with first-class media and communications offerings — entertainment, information and services — and occupy leading positions in its respective markets. The foundation of Bertelsmann’s success is a corporate culture based on partnership, entrepreneurial spirit, creativity, and corporate responsibility. The company strives to bring creative new ideas to market and create value.