2002: Nippy News Release Articles

BMG Is Fit And Ready For Expansion
submitted by: Lisa D.
source: Billboard
Date: April 5, 2002

Chairman/CEO Schmidt-Holtz Says Company Is Back On Track After Global Restructuring

By WOLFGANG SPAHR

HAMBURG - BMG Entertainment chairman/CEO Rolf Schmidt-Holtz says his company is "so efficiently structured after the last year that it is now capable of planning acquisitions."

Although Schmidt-Holtz declines to give detailed breakdowns, he says BMG should post sales of $2.4 billion this year, with a profit margin of 5%. He tells Billboard, "We can already tell, from the first 10 weeks of 2002, that we are in for a very good year. We are growing in all regions, contrary to market trends."

The exec is particularly bullish about BMG's U.S. performance and prospects. SoundScan data shows that in the U.S., BMG had a 6% increase in album sales in 2001 compared with 2000, despite an overall sales slump in the U.S. market. Schmidt-Holtz claims that a comparison between the first 10 weeks of 2001 and the same period this year shows that its U.S. market share is up substantially, thanks to best-selling albums by Alan Jackson, Pink, Usher, and Alicia Keys. The next few months will also see major album releases by Whitney Houston, Christina Aguilera, Santana, Dido, OutKast, and Boyz II Men.

Schmidt-Holtz took over the helm of BMG Entertainment in January 2001, after the resignations of BMG entertainment chairman Michael Dornemann and president/CEO Strauss Zelnick and the death of Zelnick's designated successor, Rudi Gassner. He had been chief creative officer of parent company Bertelsmann. He recalls, "As 'the new boy on the block,' I was shocked at the selfishness and arrogance with which, in some cases, creative careers were being put on the line in the music industry and at the lack of executive skills with which the company was being managed . . . I wanted a change of culture at BMG to restore its credibility."

That change saw a new management structure installed and more than 1,300 jobs cut globally as part of a radical restructuring plan. Despite the cuts, Schmidt-Holtz insists that the new approach has had a positive effect on the motivation and confidence of BMG's staff.

"With my structure, I will give creative people enough air to breathe to create new repertoire and break new acts," he says. "Future releases require careful and intensive planning and preparation. Label managers and executives must make decisions even more quickly in the future to make release processes more effective and hence more successful.

"At the same time, we must search even more actively for new artists and talent capable of being established as international stars," Schmidt-Holtz continues. "I will not countenance any laid-back approach on the part of staff who think that it is sufficient to wait for talent to come to us sooner or later."

TAKING IT GLOBAL

Schmidt-Holtz adds that it is necessary to be aware of and actively use the promotional power that a media company of Bertelsmann's ilk possesses. "In the future, TV, radio, print, the Internet, and club activities must be integrated more creatively and intensively in the marketing and promotion processes. We must make even better use of existing platforms to turn talents into local stars and local stars into international superstars."

He says the past 14 months at BMG "have been among the most emotional experiences of my career. Music has captivated me, [and] the feeling for music also continues at home. I really enjoy my job today. I have caught the music bug."

Apart from the company's U.S. success, Schmidt-Holtz says it has benefited from the success in Asia of recent albums by Japanese acts Misia and Tatsuro Yamashita, as well as by Pink and Westlife. In Latin America, recent hits have come from Cristian and Jaguares. In Europe, he points to recent debut hits in the U.K. by Will Young and Gareth Gates, both of whom emerged from the massively successful "talent search" TV show Pop Idol, as proof that BMG has its finger on the pop pulse. He suggests that album hits for Pink and Dido are further evidence that Europe is headed in the right direction. Schmidt-Holtz attributes this to BMG Europe president Thomas M. Stein's "One Europe" strategy of marketing individual countries' national repertoire on an international basis.

Despite recent figures showing an ongoing decline in German record shipments, Schmidt-Holtz insists that the Germany/Switzerland/Austria market is regaining its former strength.

Schmidt-Holtz says that Stein and his new team have the right feeling for national product possessing international potential, adding that, for international success, it is necessary to leverage all the resources of a media group.

"My goal," he insists, "is for BMG to be able to attract the world's best artists, [because] they feel the most comfortable with us and receive the most support." But he concedes, "We still have quite a bit to do before we reach that target."