djfrosty

A move by Barry Weiss to reconfigure ownership over his RECORDS label has resulted in deal that buys out his former partners with a new going-forward joint venture directly between him and Sony Music, sources say.

Weiss — the former Jive/Zomba impresario — launched RECORDS in 2015 with his then-partners at the SONGS publishing firm, Matt Pincus and Ron Perry, and in 2017 they soon entered into a joint venture with Sony Music for the label. That deal was renewed for another three years in 2020, but with that arrangement coming to term Weiss and his original partners recently hired Artisan’s Brian Richards to selectivity shop for a new equity partner. The original 2017 deal, sources say, had a buy/sell mechanism in place that when it expired, either partner — Sony or the original RECORDS founders — could chose to buy out the other partner. While that mechanism never officially kicked in, sources say that if Sony decided to trigger the buy/sell option, Weiss and his partners apparently wanted to be prepared.

By the end of 2022, sources say, RECORDS was generating about $20 million in annual revenue and the original partners were seeking a valuation above $100 million. The label’s roster and catalog includes music from 24K Goldn and Noah Cyrus, who each have racked up over 1 million album consumption units in the U.S.; rapper Nelly’s 2021 country-crossover album Heartland, which is approaching 600,000 album consumption units in the U.S.; and the Labrinth-Sia-Diplo collaboration LSD and Stella Lennon, who are each approaching 500,000 album consumption units in the U.S.

As part of the deal, Sony now owns outright that part of the RECORDS catalog and all of its other masters from the original joint venture, although Weiss and his team will continue to work those records. Meanwhile, the recent singings that sources say are likely part of the new joint venture owned collectively by Sony and Weiss, include Matt Stell, who has scored two No. 1 records at country radio — the double platinum “Prayed For You” and the platinum “Everywhere But On”; former Band Perry member Kimberly Perry, whose “If I Die Young Pt. 2,” is just hitting country radio; and iCandy, whose “Keep-Dat-N—a” has become a TikTok hit.

As one source puts it, “while RECORDS may have been slow-going at the start, Weiss did a really nice job of building up the label and creating a valuable business.”

The search for a new equity partner received a number of interested offers from suitors that were said to be in the ballpark of the asking price. But it turned out that Sony — which sources say also had matching rights — came up with the most attractive offer and a deal was struck, one that had the added advantage of likely being the easiest deal to make since Sony was already familiar with the label.

In the original joint-venture deal with Sony from 2017, the major became RECORDS’ majority owner with a stake slightly over 50%. Of the remaining stake, sources say Weiss had the largest remaining equity piece, around 25% to 30%. Perry had the second largest stake, while Pincus — who originally had the largest stake at the label’s founding — had been left with the smallest slice of equity.

The new deal, according to sources, sees a 50/50 partnership between Sony and Weiss, with Pincus and Perry bought out completely from RECORDS as they received their second payday from selling a stake in the label to Sony. Moreover, even Weiss received a payday by cashing out his stake in the original joint venture, besides the new joint-venture deal, those same sources say.

While Pincus and Perry are no longer owners in RECORDS, Perry is chairman and CEO of Columbia Records, the distributing label for many of the releases from RECORDS, so he will still be involved in the label he helped found.

In the last six months, this marks the third deal involving music assets in the Sony Music Group orbit that were or are up for sale, either wholly or in partially, where the company has moved aggressively to keep — or try to keep — the music assets under its umbrella.

Two other deals that are likely still up in the air but close to fruition involve Rimas Entertainment and the Michael Jackson Estate. In the former situation, Sony is helping Noah Assad to buy out his partner in another deal that will rejigger the ownership structure of that company; while in the latter deal, Sony is negotiating to purchase outright the Jackson estate but the executors want to keep their hand in running that operation, according to sources. No formal announcements have been made for either deal.

Weiss and Pincus didn’t respond to requests for comment, while Sony Music declined to comment.