acquisitions
Page: 8
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.”
While HarbourView Equity Partners has acquired the publishing or master recording royalties of an array of big-name artists such as Brad Paisley, Florida Georgia Line and Luis Fonsi since founder and CEO Sherrese Clark Soares launched the firm a year ago, her likely biggest deal to date—and one of the biggest deals by any acquirer in 2022— was for a bundle of music assets with far less star power but with a large economic punch.
Earlier this year, HarbourView Equity Partners, launched in October 2021, bought the little known but economically large SoundHouse Acquisitions LLC catalog, which includes some rights to some master recordings by the likes of Tech N9ne, Trey Songz, George Jones, Tenth Avenue North, Whiskey Myers and a heavy Latin music presence through the likes of Eslabon Armado, Natti Natasha, Lenin Ramirez and other Latin artists, sources say. Billboard estimates the deal went for about $325 million.
While that catalog consists mainly of royalty income payments for streams of sound recordings, the catalog is said to contain recordings from over 100 artists, consisting of about 10,000 songs that generate more than 10 billion streams annually. All told, SoundHouse’s 2021 income was put at about $24 million. Sources say that Shot Tower Capital shopped the catalog.
Prior to its acquisition by HarbourView, SoundHouse, founded in 2016, was known for approaching distressed labels and offering to buy their royalty income, mainly from the streaming of master recordings, at bargain-basement prices, sources say. SoundHouse also did deals with artists as well, but mainly by buying their streaming revenue from master recordings, leaving the artists to retain other income streams associated with their records. SoundHouse also sometimes only acquired income streams from some of the songs in an artist’s catalog, not all of them, one source suggested.
In addition, SoundHouse also acquired the assets of InPop Records, an indie contemporary Christian label based in Nashville. At the time of that deal, in February 2018, a press release said InPop was SoundHouse’s 15th acquisition and brought its catalog to over 3,500 recordings. MusicRow.com reported that deal represented SoundHouse’s third Christian music acquisition, and added that SoundHouse was backed by Spark Capital, Columbia Capital and Pinnacle Bank.
In any event, sources suggest that the HarbourView deal for SoundHouse carried a price tag that ranged anywhere from $250 million to $400 million. These days, master recording rights are trading for a 12-15 times multiple, although superstar recordings have been known to reach a 20-times multiple of net income, also known as net label share. Considering the catalog’s annual income and artist caliber, a 12-times multiple would price the catalog at $288 million, while a 15-times multiple would price it at $360 million. Consequently, Billboard estimates that the catalog sold for about $325 million.
That price puts it in the same size area as the deal for the Genesis/Phil Collins et al. master recordings/publishing catalog acquired by Concord in September. However, unlike that deal, the SoundHouse deal doesn’t include any publishing revenue, so that puts the SoundHouse deal up there as possibly the biggest deal of 2022 for recorded master assets, at least so far this year.
SoundHouse was founded by Michael Rosenblatt, an executive producer of 20 feature films such as Valley Girl and Teen Wolf. With the sale of the SoundHouse catalog, the company principals have started a new vehicle, with apparently the same mission of buying music income streams. That company is named round2media, and aside from CEO and president Rosenblatt, it also lists among its leadership team COO/CFO Jeff Patterson, formerly with Columbia Capital; senior vp of finance, accounting and administration Vanessa Jolie, who held a similar position at SoundHouse; and vp of business affairs Shara Yolkut, whose background includes a stint at EMI Music Publishing as vp of product operations.
Clarke Soares declined to comment for this story. Likewise, round2media’s Rosenblatt declined to comment for his story, beyond emailing a statement: “As a company, SoundHouse, and now round2media, considers the confidentiality of our transactions to be one of our ethical cornerstones. I can confirm that round2media is in the business of acquiring rights and royalties and has made multiple acquisitions to date. Please visit our website to learn more.”
Live Nation Urban has acquired a significant equity stake in the Washington, D.C.-based Broccoli City Festival, company officials announced Friday (Oct. 14).
Broccoli City has grown every spring since the launch of its first event in 2010; Live Nation Urban notably acquired the stake from festival co-founders and entrepreneurs Marcus Allen and Brandon McEachern.
As part of the acquisition, Live Nation Urban welcomes Allen and McEachern in executive roles. They will work alongside Live Nation Urban president Shawn Gee and his team to scale the Broccoli City brand and “catalyze the creation of new content and culture-centric live experiences and festivals,” according to a press release announcing the deal.
The Broccoli City Festival, described as “a black-owned social enterprise rooted in impact and entertainment that focuses on people and progress,” has notably featured icons such as Lil Wayne, Cardi B, Childish Gambino and the late Nipsey Hussle as well as rising superstars Lil Baby, Lil Durk, Summer Walker, Wizkid and City Girls. Based in D.C., the festival “staunchly supports environmental consciousness in the African-American community and fosters creativity through innovative initiatives at the intersection of technology, music, art, and social impact,” the release continues. “Over the last decade, it has inspired and mobilized 20 million-plus young people through events and online platforms.”
The acquisition highlights a cycle of black entrepreneurship. Beyond the festival, Gee and Live Nation Urban have focused on championing Allen and McEachern and their vision in the long run.
“For us as a company, this investment was an important one,” said Gee, noting that when Live Nation Urban formed in 2018, one of its first deals was a co-promotion agreement with Broccoli City. “I promised the guys that the success of our partnership would lead to greater things, and it was important to me to keep my word. We are not simply investing in a festival; we are investing in these amazing founders. We believe this will be the first of many brands that we will build together with Marcus and Brandon as they have an insatiable entrepreneurial spirit.”
The Broccoli City crew is “super excited about this partnership with LNU/LN, and working closer with Shawn Gee. I really appreciate him encouraging us to be big thinking entrepreneurs and brand builders… not limiting us to event producers,” added McEachern.
To position Broccoli City for further growth, “we are going to focus on curating untapped niche markets, bigger partnerships, and international expansion,” Allen added. “Our big picture goal is to create a 100-million-dollar community at the apex of live entertainment, social impact, and digital media.”