Today, BMI President & CEO Mike O’Neill shared a letter, below, providing new and important information about the company’s operations under its for-profit business model, as well as an update regarding a potential sale of BMI.
BMI’s Annual Report for fiscal year 2023 was also issued this morning and can be reviewed here.
October 12, 2023
Dear BMI Affiliates and Industry Partners:
We are pleased to issue our FY ‘23 annual report, which highlights the excellent year for BMI and our affiliates. In addition to the annual report, which I encourage you to review, I would like to address a few other topics.
First, we are all aware of the conversations taking place about a possible sale of BMI. I can confirm that we are engaging in discussions with a potential new partner, and while our conversations are ongoing and have been very productive, no deal has been signed at this time.
There have also been a lot of questions recently about BMI and our business model transition, and I appreciate that our affiliates have a right to understand how they may be impacted by these decisions.
As I have shared, we changed our business model last year to invest in our company and position BMI for continued success in our rapidly evolving industry. Our mission remains the same, to serve our songwriters, composers and publishers and continue to grow our overall distributions as BMI has done each year that I have been CEO. In order to continue this trajectory, we need to think more commercially, explore new sources of revenue and invest in our platforms to improve the quality of service we provide to you. I’m pleased to say that we have already made great progress on delivering these goals.
Understandably, much of the recent discussion has centered around the level of profit that BMI will take under this new model, and I have heard your feedback around the need to clarify this issue. So let me do just that. Importantly, the strategy outlined below will hold true for BMI whether or not we move forward with a sale.
As we look at the next three years of our business, our goal is to distribute 85% of licensing revenue to our songwriters, composers and publishers and retain approximately 15% to cover our expenses/overhead (which have historically run around 10%) and a modest profit margin. For context, this is well below the margins taken by comparable for-profit businesses in our industry. Additionally, for any incremental growth we create for the company (for example through better technology, M&A opportunities, new businesses or expanded services), we will look to take a higher margin on any revenue generated, though always with the goal of sharing that new growth with our affiliates.
In addition, if BMI decides to seek outside capital or borrow money to invest in new services and opportunities, any repayments will come out of our retained profits and not distributions. We will also announce the annual growth rate of our cash distributions.
I am pleased to share that our distributions for the full calendar year of 2023, all under our new model, are projected to be up 11% compared to the corresponding distributions under our old model in calendar year 2022. Not only did each quarter increase year-over-year, but our upcoming November distribution is forecasted to be over $400 million, another record that would make BMI the first PRO to ever distribute this high an amount in a single quarter.
We will also maintain our open door policy of welcoming all songwriters and composers of all genres of music, as we have done since our founding.
We are excited for the future and confident in our ability to accomplish our plans on our own, but we also recognize the opportunity to substantially accelerate our growth by partnering with a like-minded, growth-oriented investor with a successful history of building businesses. Of course, that partner would need to share our vision that driving value for our affiliates goes hand-in-hand with growing our business and building a stronger BMI.
As always, we are there for you, our incomparable creative community. We recognize there is no BMI without our songwriters, composers and publishers and it is in our best interests to ensure that any changes we make work to your advantage, so that you choose to remain part of the BMI family for many years to come. You have my commitment that the updates I’ve shared here, and any decisions we make going forward, will continue to benefit our creative community, so you can keep delivering the world’s best music.
President & CEO