MBW Reacts is a sequence of analytical commentaries from Music Enterprise Worldwide written in response to main latest leisure occasions or information tales. Solely MBW+ subscribers have limitless entry to those articles.The under article initially appeared throughout the newest MBW+ Month-to-month Overview electronic mail, issued completely to MBW+ subscribers.
If Bloomberg is to be believed, Sony Music Group is presently in discussions with Queen’s representatives over a possible acquisition of the legendary band’s catalog. Sony, experiences Bloomberg, has an as-yet-unnamed monetary accomplice prepared to co-invest within the deal, which may value, relying on the variety of rights included, USD $1 billion.
You may keep in mind MBW breaking the information that Queen’s reps had been in discussions with numerous events over a possible $1 billion-plus catalog sale final 12 months. At that time, Common Music Group was mentioned to be the front-runner for the deal; the world’s greatest music rightsholder since appears to have walked away from discussions.
Rob Stringer, Chairman of Sony Music Group, declined to immediately talk about the Queen rumors throughout a presentation for Sony Corp traders on Might 30. However he definitely made a nod in its route.
Credit score: Sony Music Group
“We’re undoubtedly probably the most aggressive main music group in M&A.”
Rob Stringer, Sony Music Group, talking Might 30
Throughout Stringer’s presso, he famous the rising significance of older music to in the present day’s industrial music {industry}. He identified two stats: (i) In line with Luminate, 73% of streaming consumption within the US final 12 months was of catalog music; and (ii) Some 41% of Spotify‘s annual world 200 greatest tracks in 2023 had been launched greater than two years beforehand.
Stringer, glint in his eye, then said: “By way of focused investments, we consider catalog is the bottom of our technique to navigate a profitable path to all future tech developments within the music area… Within the coming 12 months, we’ll be sensible in our purchases which can be curated to this strategy.”
Aka: Don’t cease me now.
This, although, wasn’t the quote from Stringer that might have most rattled Sony’s rivals.
That crown was reserved for these phrases from the Sony exec: “We’re undoubtedly probably the most aggressive main music group in M&A.”
On the catalog facet of issues, in recent times, Stringer’s assertion is simple.
If Sony Music Group reaches a take care of Queen, will probably be the largest single music catalog deal in historical past. The most important, in actual fact, since SMG’s reported acquisition of a 50% curiosity in Michael Jackson’s catalog for $600 million in the direction of the tip of 2023. That MJ deal, in the meantime, was the largest single-artist music catalog deal since Sony acquired Bruce Springsteen’s publishing and recorded music catalogs – helped by co-funding from Eldridge Industries/Todd Boehly – for north of $500 million.
Nonetheless, Stringer’s “most aggressive M&A” jibe wasn’t completely about music catalog offers. It additionally referenced Sony Music Group’s astonishingly prolific company acquisitions over the previous decade.
2018: Sony paid roughly$2.6 billion($2.3bn for Mubadala’s 60% stake, practically $300 million for the Jackson Property’s extra 10% stake) to amass the 70% in EMI Music Publishing it didn’t already personal. (These offers gave EMP a $4.75bn valuation on the time);
2021: Sony paid round$125 million (€102m) to amass Common Music Group’s 50% stake in Todd Moscowitz’s Alamo. (Sony possible paid extra, on to Moscowitz, to lock in majority-ownership of the corporate);
2022: Following regulatory clearances, Sony accomplished its $430 million deal to amass Kobalt‘s AWAL(and the Neighboring Rights enterprise now often known as Kollective). Sony additionally paid $255 million to amass Brazil’s Som Livre;
2023: Sony is known to have acquired a 30% stake (for an undisclosed charge) in Rimas Leisure, run by Noah Assad and residential to Unhealthy Bunny.
The chosen money offers itemized above cumulatively characterize a company M&A spend from Sony of roundUSD $4.5 billion. Even so, looking back, lots of them seem like bargains.
Throw in simply 4 massive catalog offers – the reported Michael Jackson catalog acquisition ($600m, 2023), the Bruce Springsteen acquisition (~$550m, 2021), the acquisition of Bob Dylan’s recordings (~$150m, 2021), and the acquisition of Paul Simon’s tune catalog (~$250m, 2021) – and our by-no-means-comprehensive tally of Sony’s spending right here soars above $6 billion.
That’s an enormous quantity, highlighting that no different firm in music rights has matched the size of Sony’s M&A spending over the previous ten years.
(This could rapidly be caveated with the truth that, simply earlier than the final decade started, Common, shopping for EMI Music from Citigroup for ~$1.9bn, after which Warner, shopping for Parlophone Label Group from UMG for ~$765m, made large, transformative acquisitions.)
By the way in which, our $6 billion+ spending determine above doesn’t depend many vital different company acquisitions from Sony prior to now decade — from the key’s acquisition of Remex’s catalog in Mexico to its buy of LA-based distie Human Re: Sources, plus Simon Cowell’s Syco music property, a stake in Walter Kolm’s WK Data, and its buyout of UK/EU-based distributors, together with Important Music + Advertising, Phonofile, and Finetunes.
One other huge takeaway from Stringer’s Might 30 presentation? Sony’s aggressive M&A technique hasn’t stopped prior to now 12 months – and I’m not simply speaking about these Queen discussions.
Stringer verbally confirmed that Sony acquired Spanish distributor/label Altafonte in late 2023, persevering with its heavy funding in each Latin music and firms that service unbiased artists.
But Stringer’s presentation additionally got here with visible slides that confirmed that Sony has executed extrakey acquisition offers prior to now 12 months. Within the ‘Expansions’ part of Stringer’s presentation, you’d have discovered logos for corporations together with:
Drake’s personal label, OVO Sound (which doesn’t home Drake’s solo recordings, however does embody world hits from the likes of PARTYNEXTDOOR). It’s understood Sony (through Todd Moscowitz’s Santa Anna) acquired a again catalog from OVO whereas inking a go-forward distribution deal earlier this 12 months;
The RECORDS label, led by Barry Weiss. Once more, it’s understood that Sony acquired the historic catalog of this label (of which Sony already owned 50%) in late 2023. Right this moment, Weiss continues to run RECORDS as a JV between himself and Sony – extra newly-signed artists weren’t included within the 2023 acquisition;
Different logos included on Stringer’s ‘Expansions’slideincluded two much-respected indie labels: heavy steel home Napalm Data, and Mississippi-born Fats Possum, plus Triple Tigers, a country-focused JV that Sony fashioned with indie Thirty Tigers in 2016. A Sony spokesperson wouldn’t verify the construction of the key’s M&A dealings with these three labels once I contacted them, however a supply near the state of affairs mentioned that Sony is now “closely invested” in all of them. My guess? In every case, Sony replicated the catalog-acquisition-plus-partnering-on-future-releases construction it pulled off with OVO and RECORDS.
A slide from Rob Stringer’s Might 30 presentation confirmed ‘Choose Current Expansions’ together with Rimas, Fats Possum, OVO Sound, Triple Tigers, and Napalm Data
Elsewhere in his investor presentation, Rob Stringer mentioned Sony’s prolific M&A technique over the previous decade: “We’ve had a window to be extra aggressive — and I feel we’ve taken that chance.”
That was a barely cryptic remark, however my take was that he was referring to 2 issues:
(i)Common Music Group being ‘locked out’ of constructing vital company acquisitions in Europe for 10 years from 2012-2022 by regulators, following its industry-changing acquisition of EMI Music;
(ii) Some M&A warning that will have influenced Common and Warner’s methods, at completely different factors, within the lead-up to/the wake of their respective IPOs in 2021.
To be clear, neither UMG nor Warner have been slouches within the acquisition stakes prior to now decade.
In the meantime, Common famously spent the better part of $400 million shopping for Bob Dylan’s tune catalog in 2021, earlier than spending nine-figures apiece on the catalogs of Sting and Neil Diamond the next 12 months. Elsewhere, UMG’s company M&A has included a sizeable payout to purchase the Money Cash catalog, the acquisition of 49% of [PIAS], and a latest run of offers in rising markets – together with 2023’s nine-figure acquisition of a majority stake in Nigeria’s Mavin Data.
Right this moment, with their respective 2021 public floatations firmly within the rearview mirror, there are indicators that each UMG and Warner Music Group are set to extend their aggressiveness within the M&An area.
Common says that will probably be finishing up future catalog acquisitions through Chord Music – which UMG co-owns with Dundee Companions following a $240m deal in February – quite than from its personal stability sheet. This could theoretically take the handbrake off UMG’s potential spending within the catalog market (particularly if Chord can elevate substantial debt), which might have beforehand been affected by shareholder dividend expectations.
Warner, in the meantime, not too long ago edged shut to creating a $1.8 billion bid for Consider. That provide didn’t occur, however it was a telling signal of WMG’s starvation and capability for M&A acceleration.
Associated: final week, Warner boss Robert Kynclintroduced that he’d poached Michael Ryan-Southern to steer world M&A at WMG. Ryan-Southern not solely brings expertise from Goldman Sachs – he was additionally beforehand Mubadala’s handpicked finance whiz at each EMI Music Publishing and Hakkasan.
When Rob Stringer claims that Sony is the “most aggressive main music group in M&A”, the stats over the previous decade again him up.
However the subsequent 10 years in major-label-land are but to be written. Music’s acquisitive aggressive panorama may change into fiercer than ever.
Are you able to hear these checkbooks thudding open as I kind?Music Enterprise Worldwide
