acquisitions
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U.K. digital music company 7digital plans to accept an acquisition bid by Songtradr for 19.4 million pounds ($23.4 million), 7digital announced Wednesday (Feb. 8).
7digital shareholders will receive 0.695 pence ($0.84) per share in cash, a 114% premium over the prior day’s closing price.
7digital directors, who collectively hold 43.7% of outstanding shares, intend to recommend that shareholders vote in favor of the acquisition. Songtradr says it has also received irrevocable undertakings to vote in favor of the deal from institutional and other shareholders representing 24.8% of outstanding shares.
Since its founding in 2014, Santa Monica, Calif.-based Songtradr has raised over $100 million to build a company intent on solving many of the inefficiencies in music licensing. It acquired AI metadata and music search company Musicube in 2022, music licensing agency Massive Music in 2021 and licensing agency Big Synch Music in 2019. In addition, Songtradr established a global creative division, led by industry vet Amanda Schupf, in 2021.
Songtradr’s announcement highlighted a number of strategic benefits it will receive from the proposed transaction. For starters, 7digital would give Songtradr a platform and music catalog that “will enhance relationships with existing customers and accelerate new customer acquisition” and put the company “in an advantageous position to provide unmatched combined solutions” in the video game space for both licensors and music rights holders.
Also, 7digital, which launched in 2004, would give Songtradr a technology solution that “delivers both music and audio rights at scale, metadata enhancement, digital rights management, content tracking and royalty spending.” The acquisition would allow Songtradr to quicken its growth strategy and “simplify global music licensing,” the announcement added.
Following the acquisition, current 7digital CEO Paul Langworthy will join Songtradr along with the rest of the senior leadership team, though interim chairman Mark Foster, CFO Michael Juskiewicz and all non-executive directors will step down. Songtradr will additionally repay 7digital’s £2 million revolving credit facility as well as two £500,000 loans. It will continue to operate 7digital’s London office for the time being.
The acquisition marks the close of a turbulent few years for 7digital, which in July 2019 faced the possibility of going into administration — or the U.K. equivalent of Chapter 11 bankruptcy — unless it managed to raise £4.5 million ($5.5 million) in additional funds by the end of that month.
Grouplove signed with Glassnote Records ahead of their sixth album, which is due out this year. “We just made the best album of our career and on our first call with Daniel, we could immediately tell that he agreed,” said the band in a statement. “Glassnote has so many amazing artists we respect and admire and we are so proud to call it our new home.”
B2B distributor FUGA, a division of Downtown Music, struck a distribution deal with Marathon Music Group that will see Marathon utilizing FUGA’s global digital and physical distribution offering for its own roster and all labels under the group’s umbrella, including Moves Recordings, New Soil, Mahogany and DMY. Marathon will also have access to other FUGA services including marketing, enhanced trends and analytics, synch and brand partnerships, YouTube services and audience strategy.
Spotify added over 10,000 Arabic songs to its platform via a new licensing deal with Rotana Music for the label’s full catalog. The songs will be available to Spotify users in Algeria, Armenia, Azerbaijan, Bahrain, Chad, Comoros, Cyprus, Djibouti, Egypt, Georgia, Iraq, Jordan, Kuwait, Lebanon, Mali, Mauritania, Morocco, Niger, Oman, Pakistan Palestine, Qatar, Saudi Arabia, Tunisia, Turkey and the United Arab Emirates. Spotify will provide on-platform support by introducing “This is Rotana,” a destination that will serve as the home for some of the label’s most popular songs.
Music strategy and supervision agency Premier Music Group closed its second round of financing led by MEP Capital, which will join Premier’s board of directors. The investment will power Premier’s ongoing acquisitions, including, most recently, sonic identity and sound design firm We Are Listen. Premier, which did not disclose the dollar amount of the current round, was advised by Arnaud Levy at Qualia Legacy Advisors.
ASM Global‘s Tech Port Center + Arena in San Antonio has been renamed Boeing Center at Tech Port. Additionally, Boeing entered a seven-year partnership with the Kelly Heritage Foundation — an educational nonprofit affiliated with Port San Antonio, on whose behalf ASM Global manages the arena — to expand STEM learning and workforce development in South Texas via a $2.3 million investment from the aerospace company.
Music technology platform Orfium — which provides software, data and licensing solutions to the entertainment industry — acquired music cue sheet reporting and audio recognition company Soundmouse. “Over the past 20 years, Soundmouse has been building and setting the standard in cue sheet management and monitoring for the broadcast and entertainment production space,” said Soundmouse co-CEO Charles Hodgkinson in a statement. “Combine that with Orfium’s expertise in UGC tracking and claiming for publishers, labels and production music companies and we bring the worlds of digital and broadcast together in an integrated way.”
RECORDS Nashville, Barry Weiss‘ joint venture with Sony Music Entertainment, signed the James Barker Band. The group’s first single under the label, “Meet Your Mama,” drops Friday (Jan. 27). Comprised of James Barker, Taylor Abram, Connor Stephen and Bobby Martin, the band is signed with BOOM Music Group for publishing and Starseed Entertainment for management.
Live entertainment and concert production company Décibels Productions has acquired a majority stake in Olivier Gluzman‘s French talent agency Les Visiteurs du Soir (Rufus Wainwright, Angélique Kidjo, Pink Martini). The deal will allow Les Visiteurs du Soir artists to “tap into [Décibels’] production skills and global network,” said Gluzman in a statement. Morgan Production, the audiovisual company and festival organizer that first invested in Les Visiteurs du Soir in 2011, will remain a key stakeholder in the agency.
Sony Music and Todd Moscowitz‘s new artist and label services company Santa Anna signed a distribution agreement with indie label Listen to the Kids (Yeat, Alexander 23, Ericdo, Sally Bossa). Under the deal, Listen to the Kids’ roster will have access to Santa Anna’s marketing, distribution, legal and promotional support, among other services.
Big Loud Records artist Mackenzie Porter (“Thinking ‘Bout You,” “Pickup”) signed with CAA. She will be represented by the agency’s Bennett Beckner and Jeff Krones.
Riser House Records artist Meghan Patrick signed with WME for global representation and Make Wake Artists — where she will work with Chris Kappy and Randi McFadden — for management. Patrick released her new song “She’s No Good For Me” on Friday (Jan. 20).
Compass Records Group signed alt-country artist Robbie Fulks, who will release a new studio project on the label this spring. Fulks is ramping up for a U.S. tour that kicks off in April.
Kelsey Hart signed with Curb Records; he previously signed to Curb | Word Music Publishing as a songwriter for artists including Jake Owen, Dylan Scott and Trace Adkins. The label recently released two songs from Hart: “Forget to Remember You” and “My Daddy’s Fault.”
Nettwerk signed producer Donovan’s Playground, a new project from Fallen Roses member Donovan Ferra; Smile High, the solo project of Ben “Smiley” Silverstein of The Main Squeeze; and Malaysian alt-pop artist A Kid Named Rufus. The label will soon release Donovan’s Playground’s debut album To My Past Self, Smile High’s EP Snack Pack and Rufus’ single “Eighteen” featuring Cole Bauer.
Matador Records signed Brooklyn duo Water From Your Eyes and will release their new album in the first half of the year. Water From Your Eyes will host a weekly live residency in New York throughout the month of March leading up to the release.
Penske Media Eldridge — a Penske Media Corporation (PMC) subsidiary and joint venture between PMC and Eldrige — has acquired Dick Clark Productions (dcp), it was announced Wednesday (Jan. 25). PMC is the parent company of Billboard.
The acquisition of the live events and alternative media producer was made as part of a broader strategic alliance between PMC and Eldridge, expanding the latter’s existing partnership with PMC’s entertainment media brands and SXSW, including the SXSW festival, Life is Beautiful, ATX TV festival and LA3C.
Founded in 1957, dcp owns and produces a number of TV’s most enduring awards shows, including the Golden Globe Awards, the American Music Awards, the Academy of Country Music Awards and the Billboard Music Awards. It also produces shows including Dick Clark’s New Year’s Rockin’ Eve and So You Think You Can Dance (in partnership with 19 Entertainment).
Penske Media Eldridge will assume full control of dcp’s operations in the coming weeks. As part of the deal, Adam Stotsky will step down as dcp president following a transition period.
“I am thrilled to expand our partnership with Eldridge and Todd,” said Jay Penske, CEO and founder of Penske Media. “I have long admired dcp’s portfolio of iconic and prominent live entertainment brands and look forward to growing and evolving dcp’s footprint and legacy for future audiences across all platforms.”
“At Eldridge, we seek to grow businesses that stand the test of time,” added Eldridge chairman and CEO Todd Boehly. “Our decision to build upon our partnership with Penske Media, with whom we already have a deep alliance around media and publishing, is in service to that goal – so dcp may continue to flourish for many decades to come.”
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The way things are going, music rights valuations are likely to remain steady in the new year, according to dealmakers.
Total music consumption in the United States rose 9.2%, according to Luminate’s 2022 year-end report. While that was slower than the 11.3% consumption growth in 2021, “9.2% relative to 11.3% is not a massive move in growth,” says David Dunn, managing partner at Shot Tower Capital. “As a whole, the growth rates are within expectation for me and still very healthy,” adds Andy Moats, executive vp and director of music, sports and entertainment at Pinnacle Financial Partners. Last year’s numbers were also in line with the expectations of Daniel Weisman, principal at Bernstein Private Wealth Management. “Goldman Sachs’ report published in June of 2022 put streaming CAGR [cumulative annual growth rate] at 12%,” he says.
A mitigating factor is the difference in margins between digital and physical formats. On-demand song streaming — both audio and video — climbed 12.2%. On-demand audio streaming grew 12.1%, the same rate achieved in 2021. Physical album unit sales dropped 3.5%. CD unit sales fell a modest 11.6%, while vinyl LP unit sales grew 4.5% to a record 43.5 million units. Despite Taylor Swift selling nearly 1 million units of her Midnights album on vinyl and Beyoncé showing strong album sales across vinyl and CD formats, music consumption was — again — more digital than the prior year.
With streaming up and physical formats down, that mix is favorable for catalogs. “Margins are improving” as a result of increased digital consumption, says Dunn. Digital music is less expensive to distribute than physical formats — especially vinyl, which has relatively weak margins and high shipping costs. The cost of producing an additional download or stream is effectively zero, aside from negligible costs of data storage and bandwidth. That’s a net positive for catalog valuations. Experts value music catalogs by discounting future cash flows to a single present value. When revenues shift to higher-margin digital formats, rights holders will receive more cash.
The gains do not accrue evenly to all recordings and compositions, though. Last year’s streaming growth could “potentially” support current valuations for a catalog 10 years or older, “especially against a rising rate environment,” says Weisman.
Younger catalogs with decaying royalty growth, however, are a different matter. “I think for newer catalogs that have not yet leveled off and whose royalties are not increasing, it’s hard to argue that all the external economic factors — rising interest rates, inflation, etc. — do not have an impact,” says Weisman.
The shift in product mix carries implications for recorded music valuations specifically. As consumption increasingly skews toward digital, recorded catalog margins will catch up to those in the publishing business, says Dunn. “I generally think margin growth is continuing and I think investors are realizing you can exploit recorded catalog at margins similar to publishing.”
Focusing only on unit sales doesn’t tell the entire story, however. Vinyl records may have relatively poor margins, but rising vinyl prices create more margin dollars for labels. In the first half of 2022, the average sale price of vinyl in the United States rose 5.6% to $26.16, according to the RIAA.
Streaming is also becoming more valuable. After more than a decade of flat subscription prices, companies such as Apple, Amazon and Deezer are raising prices. Spotify’s CEO has indicated the company intends to raise prices in 2023, as well. Due to these increases — often just $1 per account — the U.S. streaming market could generate hundreds of millions of additional dollars this year without sacrificing a meaningful number of subscribers.
Nari Matsuura, partner at Citron Cooperman, believes the U.S. market is even healthier than Luminate’s data shows. That’s because music is becoming more ubiquitous with tech in our everyday lives, meaning there is revenue growth that consumption data can’t track.
“While streaming growth captured the whole narrative of the U.S. market a few years ago, now the narrative has changed to include much more than streaming,” she says. “Growth also needs to take into account the licensing of alternative music platforms, such as Peloton and Facebook, as well as the stellar growth in synch licensing due to the volume of new programming by SVODs as they compete for subscribers.”
ASM Global acquired talent buying agency Madison Entertainment, which works with both small-capacity venues and larger concert series/multi-day festivals. “We are committed to add resources to our promoter and live content division in order to ensure that all of our managed venues continue to be leaders in live-event performances,” said ASM Global president/CEO Ron Benison in a statement. “Under Roger’s leadership, the addition of Madison Entertainment will further grow live music content for our clients, particularly within our industry-leading nationwide theater network.”
DJ Pee .Wee, the “vinyl-spinning alter ego” of rapper Anderson .Paak, signed with the Las Vegas-based MAC Agency for representation. DJ Pee .Wee has several headlining dates on the schedule, including appearances at the Sundance Film Festival and a slot at the Bud Light Super Bowl Music Fest in February. Previous appearances included Spotify Beach with Kendrick Lamar in Cannes, the Ami After Party at Paris Fashion Week and Dave Chappelle‘s set at the Netflix Is a Joke festival at the Hollywood Bowl, among other engagements.
TikTok signed a licensing deal with Saudi Arabia-based Rotana Music Group, whose portfolio includes artists across the Arab world and Gulf region such as Mohamad Abdo and Amr Diab, among many others. “We at Rotana are very thrilled with this licensing agreement, which will facilitate Arab Music reach into the MENA music industry and young communities,” said Rotana Music Group CEO Salem Al Hendi in a statement. “The creative culture in MENA is so vibrant and diverse, and this agreement will enhance the exchange of music content, while promoting and supporting local artists on a proven leading platform for short-form videos.”
Vevo partnered with TikTok to create and program Trending on TiKTok, a new weekly Vevo show that will round up the music videos for the top trending songs on the TikTok platform, alongside clips of creators using the songs in their content. The show will be available across the Vevo networks in the U.S., Canada, Mexico and Brazil and will be a staple TV premiere on Vevo’s FAST (free ad-supported streaming TV) channels, with consecutive airing during peak viewing hours throughout the week.
Warner Music Group (WMG) partnered with digital fashion retailer DRESSX to provide WMG artists with a new revenue stream. Under the agreement, select WMG artists will collaborate directly with DRESSX to design and launch 3D and AR virtual clothing that fans can collect on Instagram, Snapchat and other platforms.
Independent singer-songwriter Cody Jinks’ Late August Records signed a partnership with The Orchard, under which the latter company will provide Late August artists “with the tools and support to build, sustain and elevate their global reach.” The first artist signed to Late August (other than Jinks, who previously started the label as a home for his own music) is singer, songwriter and guitarist Erin Viancourt, who will release her debut album in May 2023. Late August Records will continue to be led by Jinks and his longtime manager Arthur Penhallow, Jr., while Stephanie Hudacek will lead the label’s new Nashville office.
Event technology company Events.com secured a capital commitment of $100 million in the form of a share subscription facility (SSF) from Gem Global Yield (GGY). The investment will accelerate the company’s growth strategy through acquisitions, partnerships and other initiatives. Under the deal, Events.com will be able to draw down up to $100 million following an equity exchange listing. The company — which previously acquired an AI event discovery company, an event sponsorship technology company and a ticketing company — is set to announce a new acquisition soon.
Mastercard will use the Polygon blockchain to host its newly-announced Mastercard Artist Accelerator, which will connect five artists from across the globe with mentors and a “dynamic fanbase as they learn and create in Web3,” according to a press release. Slated to launch this spring, the program will give selected artists exclusive access to special events, music releases and more while teaching them how to build their brand via Web3 experiences including minting NFTs. Music fans will also be invited to purchase a limited-edition “Mastercard Music Pass” NFT that will give them access to the new platform. The Mastercard Artist Accelerator will culminate in a livestreamed artist showcase later this year.
Music marketing firm Feature.fm partnered with YouTube in a deal that will allow Feature.fm users to enjoy access to conversion and attribution data reporting to track streams in YouTube and YouTube Music that came from a Feature.fm smart link. Under the partnership, artists, managers and labels will be enabled to automatically connect YouTube and YouTube Music to their smart links, allowing them to better understand how to effectively market their music on the YouTube platform.
Music and influencer management firm Innovo Management invested in content aggregation platform JamFeed, marking them as the first investor in JamFeed’s second round of financing. JamFeed manages over a dozen TikTok creators/artists — enabling them to build their businesses and connect with fans — and also boasts a brand marketing division. As part of the investment, Innovo co-founder Sam Saideman has been added to JamFeed’s board of advisors to assist in the next phase of the company’s expansion.
Rapper Asian Doll signed a distribution partnership with music tech company Vydia, which will provide her with a suite of services, including video and audio supply chain, global distribution, analytics, rights management, payments and detailed revenue reporting in support of her forthcoming EP slated to drop on Jan. 31. The first new music released under the deal is the single “Sky Falling.”
Country singer Bryan Martin signed with WME for global representation. Martin has a national tour and a new album in the works, with a single, “Wolves Cry,” slate for release on Jan. 27 via Average Joes Entertainment.
Talking Stick Resort is the new name-in-title sponsor of Live Nation‘s 20,000-capacity outdoor Phoenix venue the Ak-Chin Pavilion. The venue is now known as the Talking Stick Resort Amphitheatre.
The National Independent Venue Association (NIVA) partnered with r.Cup, a sustainable platform that provides reusable cups to replace single-use plastic cups. Under the deal, NIVA members in r.Cup operating cities Denver and Seattle will be able to reduce their environmental imprint by using r.Cup’s reusable cup system, with $.01 of every cup used by a NIVA member donated to NIVA’s National Independent Venue Foundation (NIVF). NIVA members in Los Angeles and Milwaukee will also soon have the option to utilize the platform.
Griffen Palmer, winner of a 2020 episode of NBC’s Songland, signed with Big Loud Records, which will release his solo debut single “Second Guessing” — originally crafted during his appearance on Songland — on Friday (Dec. 13). Palmer’s debut album is slated to drop later this year. He previously signed a publishing deal with Big Loud Publishing in 2019.
Get Physical Music added the master and publishing catalog of house-music imprint Definitive Records (Jetstream, Dance Fever, Robot Man) to its portfolio of labels. Definitive co-founder John Acquaviva will remain with the label and continue to be active on the A&R front while working with the Get Physical team.
Canadian lifestyle brand October’s Very Own (OVO) partnered with FaZe Holdings, parent company of gaming and lifestyle brand FaZe Clan, on a collection that will include FaZe Clan and OVO co-branded gaming controllers, mouse pads, hoodies, varsity jackets and more. The collection was made available starting Dec. 21 at OVO’s online store and OVO retail locations. Further initiatives under the partnership are expected later this year.
Downtown Music Holdings has acquired Curve Royalty Systems, a company that specializes in royalty processing for digital income, it was announced Thursday (Jan. 5). Curve will now be a part of Downtown Music, a division that focuses on servicing the professional music industry.
In recent years, Downtown has pivoted away from its previous role as a traditional publisher and rights holder by selling off its 145,000-song catalog and putting its efforts into building a service-focused music company to tap into the growing cohort of DIY artists and professionals. The company has quickly amassed a suite of service tools via acquisitions including Curve, FUGA, CD Baby, Soundrop, AdRev and more. Downtown is also an active investor in companies like Beatbread and Vampr.
Though Downtown is integrating Curve into its suite of offerings for distribution and monetization, the royalty processing firm — which can distill multiple royalty statements into one cohesive report — will continue to serve its existing client base of over 1,000 labels and publishers worldwide. This includes Warp Records, Ingrooves, Mad Decent, MRC, Royalty Solutions Corp, Domino Recording Company, Hospital Records/Songs in the Key of Knife, Cal Financial and Alta Financial. Since its inception in January 2019 by co-founders Tom Allen, Richard Leach and Ray Bush, the company says it has processed nearly $4 billion in revenue.
Downtown Music president Pieter van Rijn said of the deal, “In Downtown Music, we’ve combined innovative technology and industry-leading services to create an offering that empowers music businesses and their creators. Curve perfectly complements our mission to be the leading music industry platform and their past work speaks to their high standards and pioneering technology.”
Downtown CEO Andrew Bergman added, “For some time, we have been admirers of the technology and service quality that Tom and Richard have been building at Curve. As we got to know them and their team, it became ever more obvious that their dedication and forward-thinking vision were a great fit for Downtown. Accuracy, precision, timeliness, and innovation in royalty services are core to Downtown’s mission of supporting creators and the businesses that serve them. Welcoming the Curve team to Downtown is another important step in furtherance of our mission.”
Round Hill Music Royalty Partners has acquired the royalty income stream of Steve Lillywhite, one of the premier rock producers of the last 45 years, in a deal that includes his share of royalties from such albums as U2’s October and War; Dave Matthews Band’s Under the Table and Dreaming and Crash; and The Rolling Stones‘ Dirty Work. Terms of the deal were not disclosed.
Additional recordings on which Lillywhite served as a producer or worked are covered by the deal, including music by Phish, Peter Gabriel, Morrissey, Talking Heads, Counting Crows, Siouxsie and the Banshees and The Psychedelic Furs.
“As someone who grew up idolizing the bands and albums Steve Lillywhite produced, it is an honor to partner with him on this exciting transaction,” Round Hill Music CEO Josh Gruss said in a statement. “Steve’s catalog includes royalties to some of the most sought-after songs and albums of all time. We are thrilled to have reached this milestone transaction.”
For his part, Lillywhite added in a statement that the deal brings his catalog under “a kindred spirit [Gruss], who is a pioneer in the music royalty business and the ideal partner for me and my family as I look to my next steps.”
According to the announcement on the transaction, Lillywhite has produced or contributed to more than 500 records in his more than four-decade career. During that time, he won the Grammy for Producer of The Year in 2006 for U2’s How to Dismantle an Atomic Bomb, which also won the Grammy for Album of the Year and Best Rock Album. He also won Grammys as one of the engineers/mixers listed on U2’s “Beautiful Day” and “Walk On,” which won Record of the Year in 2001 and 2002, respectively.
Other acts Lillywhite has produced or worked with during his career — and whose music is part of the acquisition — include XTC, The Pogues, Big Country, Joan Armatrading, Sinead O’Connor, Marshall Crenshaw, Crowded House, The Killers and Chris Cornell.
The Lillywhite deal adds to Round Hill’s overall investment portfolio, which has now taken in more than $200 million in investments in more than 40 acquisitions, according to the company.
South Korean investment and management firm Beyond Music made its first acquisition of a North American music catalog by purchasing the rights to the music of Greg Wells, a Grammy-winning Canadian songwriter-producer whose credits includes music recorded by Adele, Taylor Swift, Dua Lipa, Katy Perry and Quincy Jones.
Wells’ career spans genres and decades. As a songwriter, Wells has credits on Aerosmith’s Nine Lives, Celine Dion’s Let’s Talk About Love, Adele’s 21 and John Legend’s Bigger Love. His production credits include The Greatest Showman: Original Motion Picture Soundtrack, Twenty One Pilots’ Vessel and the In The Heights soundtrack. The rights vary by title and include publishing rights, producing income rights, and master performance rights, according to a company spokesperson.
With the Wells acquisition, Beyond Music’s assets under management are 300 billion won ($230 million). Before this deal, Beyond Music – which claims to be “largest music IP management company in Asia” – spent more than $200 million on acquisitions in Asia, including the catalogs of FNC Investment, KNC Music and Interpark, to build a catalog of more than 26,000 songs. The company received funding from institutional investors including KB Securities, Base Investment, Maven Growth Partners and Dreamus Company.
The Wells acquisition was made by a newly established U.S.-based subsidiary, Beyond Music US, because domestic transactions are simpler for tax and legal purposes, and the company wants to pursue additional international opportunities in the future, according to the spokesperson. That said, Wells’ catalog covers many Western artists who are also popular in South Korea and throughout Asia. This company believes this acquisition is a “unique opportunity” and “a stepping stone for Beyond to become a global music rights management company,” the spokesperson added.
“Now is the time to become a global music rights management company by securing not only Asian, but also international music rights,” Beyond Music CEO Jangwon Lee said in a statement. Jangwon is also the CEO of Content Technologies and CT Investments, which debuted a K-pop focused exchange-traded fund, using the ticker KPOP, on the NYSE Arca Exchange in September. Beyond Music is a subsidiary of Contents Technology.
In a statement, Wells called it “an honor to be the first major music catalog acquisition for Beyond outside the Korean market. I am impressed with their commitment to creative freedom as well as maximizing the impact of my songs. I feel my work is in good hands with them.”
Wells won a Grammy in 2019 for Best Compilation Soundtrack for Visual Media for his production and engineering work on The Greatest Showman: Original Motion Picture Soundtrack (he spoke with Billboard’s Pop Shop podcast about the soundtrack in 2018). He also received Grammy nominations for his work on In the Heights, Katy Perry’s Teenage Dream and Andrew Lloyd Webber’s Cinderella.
Liberty Media Acquisition Corp., a special purpose acquisition company (SPAC) launched by John Malone’s Liberty Media a couple of years ago in hopes of finding at least one takeover target, has taken a key step towards closing down the financial vehicle.
On Monday, a virtual special meeting of stockholders voted in favor of the move by approving updates to its certificate of incorporation, which allow it “to unwind and redeem all of its outstanding public shares prior to Dec. 30,” which is “in advance of the contractual termination date of Jan. 26, 2023.”
Liberty Media president and CEO Greg Maffei told the online meeting that his company — which owns the Atlanta Braves and the Formula One race car circuit among other media and entertainment assets — looked at around 140 companies in all as potential acquisitions, without identifying who they were. He added a picky Liberty Media saw no targets worth pursuing for a merger.
Maffei added Liberty Media had been working amid an industry backdrop where financial markets had turned down. That made financing any potential transaction more difficult and jumping through regulatory hurdles for a time extension to work out taxation issues more challenging.
“Frankly, getting an extension wasn’t worth it, given we had nothing on the table that was attractive enough for us to take us look,” Maffei told investors about the decision to wind up the SPAC.
SPACs, or “blank check companies,” have been a popular vehicle in recent years, including for former top media executives, including James Murdoch and former Walt Disney executives Tom Staggs and Kevin Mayer, to raise cash and hunt for acquisitions. But stock market volatility, macroeconomic uncertainty and the disappointing performance of some SPACs, along with other factors have led to questions about the outlook for SPACs.
Liberty Media Acquisition (LMAC) had announced the special meeting in October, detailing the challenges of its management team, led by Maffei, in finding a suitable merger deal.
“Since its IPO on Jan. 23, 2021, LMAC’s management team has employed a broad set of search criteria for potential target business combinations and evaluated more than 140 such target companies,” the firm said back then. “In evaluating these businesses, management remained focused on finding fair valuations amid volatile market conditions. LMAC’s management has observed what it believes were high valuations in 2021, a declining IPO market in 2022 and significant public and private market volatility, which have prevented the company from securing an opportunity that it believes will offer a compelling return on investment for its stockholders. In light of these circumstances, LMAC has determined that it is not feasible to complete an initial business combination (or enter into an agreement in principle with respect to an initial business combination) by Jan. 26, 2023.”
LMAC also noted “recent changes in U.S. tax law” that “could create corporate-level tax liabilities in connection with stockholder redemptions following year-end.”
This article was originally published by The Hollywood Reporter.
For months, industry executives from Warner Music Group to Kobalt have been steadily beating a drum for investing in the Middle East and African markets.
On Thursday (Nov. 3), it it looked like the investor interest swirling around the region may be codified when Frankly magazine reported that Spotify was considering buying Anghami, the Arab-speaking world’s most popular streaming and content service. Billboard could not independently verify the report, however, and a source close to the situation refuted its contents. A Spotify spokesperson says the company has “no news to report regarding any potential acquisition.” Still, investment bankers say we are likely to see increasing investor interest and action around music assets in these markets, as song catalog prices remain elevated and the challenging macroeconomic outlook for North America and Europe slows down the pace of dealmaking there.
Financial players say that the dominant music streaming platforms and labels are looking to extend their global reach through popular streaming companies like Anghami in the Middle East and Boomplay and others in Africa because of those regions’ rapid growth, comparatively positive economic outlooks and the explosive potential for converting free subscribers to paid.
Anghami CEO and co-founder Eddy Maroun declined to comment on the acqusition reports out Thursday, but in a late-September interview Maroun confirmed the company has been approached by interested parties in the past.
“We believe what we are on to as an opportunity is big,” Maroun told Billboard at the time. “Until now we are independent, and we wish to remain independent as long as it’s in line with our company goals.”
The Middle East and North Africa (MENA) was the fastest-growing region globally last year, with revenues up 35% to $89.5 million and a market that nearly doubled between 2019 and 2021, according to the International Federation of the Phonographic Industry (IFPI). More than 95% of MENA revenues came from streaming, and paid subscribership is expected to double by 2030.
“This sends a very big message to every industry player that this is a hot region and that this is where growth is,” Maroun said in September.
Launched in 2012, Anghami is the first and most popular streaming and content company focused on Arabic-language music, with about 58% of the Middle East’s market share and around 20 million active users, according to company filings.
With investors including the Saudi Arabia-backed firm MBC Group and Middle East Venture Partners and partner Sony Music Entertainment Middle East, with whom Anghami launched a joint venture record label last year, Maroun and co-founder took Anghami public in February.
After listing on the NASDAQ through a reverse merger with a special purpose acquisition company, Anghami stocks have fallen nearly 75% to $2.56 on the NASDAQ as of Thursday. Meanwhile, the company reported first-half 2022 revenues increased by almost 30% and monthly paid subscribers rose by 41% to 1.28 million. Bank sources described that growth as “encouraging,” and say that Anghami’s low stock price could make it an appealing acquisition for companies like Spotify.
For its part, Anghami aims to diversify its business with an entertainment division that houses a content creation studio, runs Anghami’s record label, Vibe Music Arabia, and operates a chain of music venues and lounges, the first of which recently opened in Riyadh, Saudi Arabia.
In addition to MENA, music and streaming companies in Sub-Saharan Africa, where music revenues grew by 9.6% last year, are steadily gaining big industry investors.
Major labels like Sony Music Group are adding staff to local offices in West Africa — where Sony previously had just two people — and Warner Music Group is leaning further into their strategy to acquire record labels and distribution companies in Africa, one of five priorities it pitched to investors during their 2020 IPO roadshow, say bankers familiar with the matter.
“French copyrights and Latin American copyrights became popular a little earlier,” says Michael Ryan-Southern, Goldman Sachs’ global head of music and live entertainment investment banking. “Now we’re seeing more and more music coming out of these local territories and therefore [companies] need to invest to make sure they are capturing that funnel of new artists locally to exploit globally.”
In its most recent Music In the Air report, Goldman Sachs analysts said Africa presents “a significant opportunity over time” and specifically highlighted Boomplay, one of the leading music streaming services, with 60 million monthly active users and a rapidly expanding song catalog.
Sources say streaming services and other companies that provide infrastructure for music are currently more appealing investment opportunities than catalogs by popular artists in the region because investors fear those are less mature assets with unknown decay rates.
Executives from Warner Music Group, Reservoir Media, Primary Wave, Kobalt and others have called out Africa and the MENA region in their emerging markets growth strategies in recent months.
U.S.-based Reservoir Media is one of the most vocal companies about the opportunity it sees in the Middle East and Africa. With its partner, the United Arab Emirates-based independent music company PopArabia, Reservoir recently bought the Egyptian label 100COPIES, the Lebanese label and music publisher Voice of Beirut, and signed publishing deals with Egyptian rapper and singer Mohamed Ramadan, Lebanese indie singer songwriter Zeid Hamdan and Moroccan hip-hop star 7liwa.
On a recent call with investors to discuss Reservoir’s earnings, the company’s founder and chief executive Golnar Khosrowshahi said emerging markets investments are a key part of the company’s diversification strategy.
“The thing about the emerging markets is that we could do high-volume deals, but at significantly lower price tags than what we do in Europe … North America, etcetera.,” Khosrowshahi said.
Outgoing Warner Music Group CEO Stephen Cooper said in September that Warner’s share in the Africa and MENA markets has grown from 10% to 30% in recent years through partnerships with record labels and distribution companies, and it aims to continuing investing in the region.
“Great content, great entertainers, great storytelling is starting to transcend language, and there’s a recognition that the next global chart-topping songwriter can come from anywhere in the world,” says Aaron Siegel, Goldman Sachs global head of entertainment investment banking. “That is a theme that major labels and publishing companies are willing to bet on.”