When Kohlberg Kravis Roberts & Co. LP (NYSE: KKR) announced that it was exiting BMG Rights Management GmbH, its joint venture with Bertelsmann AG, it left many wondering what's in store for the record label behind Johnny Cash and Bruno Mars.

A condensing music industry has artists worried, says Casey Rae of the Future of Music Coalition, a national research and advocacy firm for musicians. Large companies had, for years, lost the confidence of musicians and artists by acting like moguls.

The sale, which comes about four years since BMG was first brought into KKR's portfolio, is reportedly valued between $900 million and $1 billion. KKR, a New York private equity firm with about $75.5 billion in assets under management, invested $65.6 million in BMG in 2009, and then increased the investment to about $274 million. Ending the joint venture means KKR would be giving up the 51 percent it currently holds in BMG, allowing 49-percent stakeholder Bertelsmann to own the whole company.

German media conglomerate Bertelsmann is expected to continue making major acquisitions and strategic partnerships, especially when it comes to music rights companies. However, it may be limited on what it is able to buy as most of the record label industry is in the midst of major consolidation and finds itself controlled by fewer corporations with tremendous leverage.

The KKR/Bertelsmann deal comes just weeks after Warner Music Group (NYSE: WMG) won the auction for Parlophone. It was "the best of what would have otherwise been an unfavorable situation," says Rae.

The transaction, announced in February, undercut rival Sony Corp. (NYSE: SNE), which had hoped to buy Parlophone as part of a package of assets that Universal Music Group Inc. (UMG) Universal Music Group Inc. (UMG) had put up for auction to satisfy European regulators over its purchasing of EMI Recorded Music - a deal that sliced the music label industry from four major players to three.

The £478 million ($748.4 million) deal for Parlophone, the company behind Coldplay and Kylie Minogue, allowed "Warner to take on a huge chunk of rights and releases that will give them an ability to diminish the market power of the other two players," explains Rae.

Warner's winning of the auction was unexpected due to the company's extensive lobbying against the Universal/EMI transaction, fearing it would limit competition. Warner spent just $440,000 on lobbying costs in all of 2011, but allocated more than $360,000 in the first quarter of 2012 and $1.9 million total to block the deal.

But perhaps it was Parlophone's artist roster and music catalog, which includes David Guetta, Pink Floyd, Radiohead and Tina Turner, that lured Warner to the negotiation table.

BMG is believed to have teamed with Sony for the Parlophone auction. Simon Fuller, creator of "American Idol," and Chris Blackwell, founder of Island Records, along with billionaire investor Ronald Perelman, were also likely bidders.

Those looking forward to the next slate of record labels to hit the auction block should keep their eye on the middle market. UMG and its Paris-based owner, Vivendi SA (EPA: VIV), have already sold Mute Records and rock label Sanctuary to BMG, the latter going for $62.5 million on Feb. 14. That leaves Jazzland and EMI's share of the Now compact disc series pegged to be sold.

One auction that's reportedly in the works is Village Roadshow Entertainment Group's sale of Concord Music Group, which was formed in 2004 out of a merger with Fantasy Records.

For more music industry deals, see "SFX Entertainment Buys Beatport for $50M," "Liberty Global Purchases Virgin Media" and "Hilco Buys HMV's Debt." 

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