HITS Daily Double
"I would like to give you my assurance that current specu-lations about take-overs or a sale of BMG are com-pletely unfounded. Bertelsmann not only recognizes BMG’s achieve-ments, it has pledged its commitment to music as a core business."
——BMG head Rolf Schmidt-Holtz


BMG Chairman/CEO Chooses
Music Over Television

BMG Chairman/CEO Rolf Schmidt-Holtz has chosen to stay on as head of the German media company’s music division, and has called current speculation about takeovers or a sale of BMG "completely unfounded."

In a letter sent Thursday to BMG managers worldwide, Schmidt-Holtz downplayed reports of his exit to head up the company’s television unit, RTL Group. "I would like to address you directly today in response to recent speculation regarding the future development of BMG and my rumored move to head the RTL Group," he said. "I am happy to announce that I have decided to remain at BMG in my current role as Chairman and CEO."

Schmidt-Holtz, who has served as BMG Chairman/CEO for two years, points to the corporate culture he helped create at BMG as one of the reasons for his decision. "Last year, we not only delivered a great turnaround at BMG, we also achieved record results based on an unprecedented number of top international releases from our labels," he said. "I firmly believe that our current success and positive momentum are rooted in our new corporate culture, which is founded on a willingness to accept responsibility, on teamwork, openness to new ideas, a heightened sense of the market and a high level of motivation. Each of you has demonstrated these values within BMG in more than 40 countries throughout the world. By taking this approach, you have transformed your daily hard work into solid operating results."

The German media veteran does point out that the road ahead may indeed be a bumpy one. "The continuing weakness of the international music market, the unrealized potential of digital distribution as well as the development of a new business model are among the most important challenges facing BMG today," Schmidt-Holtz wrote. "We will overcome these obstacles together with strength and confidence, with flexible structures and with renewed energy."

Schmidt-Holtz took the opportunity to also poo-poo talk of a BMG merger or buyout. "I would like to give you my assurance that current speculations about takeovers or a sale of BMG are completely unfounded," he said. "Bertelsmann not only recognizes BMG’s achievements, it has pledged its commitment to music as a core business. Our shareholders are pleased that BMG is once again a respected player to be reckoned with by its competitors in the international music market. We are now in a position of strength and can analyze and make the most of strategic options.

"We have had to make many difficult but vital decisions that demanded flexibility and assertiveness from everyone in the company. It also required a great deal of trust in management. I would like to take this opportunity to thank you for the trust you have shown me and for the support and encouragement you have given me, especially over the last few days," he said.

Schmidt-Holtz also singled out COO Michael Smellie, who he credits with helping carry a large part of the burden of BMG’s turnaround during the last two years. "We have the best team in the music industry in our Corporate Committee and the best Managing Directors in the key markets as well as in the smaller countries," he said. "Above all, we have the best creative talent in the industry at the heads of our labels in Clive Davis, "L.A." Reid, Barry Weiss and Joe Galante."

Speculation of Schmidt-Holtz’s exit began in February ,when wonderers started wondering if he would be leaving his post to take over at Bertelsmann’s television unit, RTL.

The New York Post reported that Schmidt-Holtz is a top candidate to run RTL, whose former chief, Didier Bellens, just recently resigned.

During his two years as Chairman/CEO, Schmidt-Holtz has been a very busy man. Over the course of his tenure, he has made moves that have seen the combination of J and RCA to form the RCA Music Group under industry legend Davis, whom he brought back into the BMG fold. He has allowed Reid to grow into a leading label head at Arista. And, he is overseeing the integration of Jive/Zomba into the BMG group after its acquisition for $2.7 billion last year.