Bertelsmann May Sell Sony BMG Stake

Bertelsmann is close to selling its stake in the music venture Sony BMG, the Financial Times reported on Monday. A sale would help finance a buyback of shares owned by Groupe Bruxelles Lambert (GBL), which owns a 25 percent stake in the company.

Sony BMG is most remembered in the technology industry for placing rootkits on its music CDs as a copyright protection mechanism. Fallout surrounding the discovery resulted in several lawsuits -- including one from the state of Texas -- and a public relations nightmare for the music giant.

Bertelsmann wishes to remain privately held, but it is not clear if GBL will push for an IPO in May. Company CEO Gunter Thielen said it would not make any decision about selling Sony BMG until GBL had clarified its intentions.

Bertelsmann owns a 50 percent stake in Sony BMG and its music publishing division, which owns the rights to nearly one million songs. Any sale would likely attract a host of bidders, including media conglomerates and private equity groups.

However, exiting the partnership may not be easy. Under the agreement, if Sony wouldn't agree to purchase Bertelsmann's half, the company would be forced to find a buyer who would be willing to partner with Sony, or convince Sony to sell its stake as well.

According to analysts, Sony would likely have no interest in spending the cash necessary to own Sony BMG completely, as it continues to focus on bringing its electronics arm up to speed. The music label is also a significant source of revenue for Sony, which reduces the chance of a sale.