Business News
Page: 5
Austin’s Waterloo Records, a cornerstone of the city’s music scene since 1982, is entering a new chapter.
After over four decades as the heartbeat of Austin’s music culture, owner John Kunz has announced that he is passing the torch to new owners—Caren Kelleher, Founder & CEO of Gold Rush Vinyl, and Austin entrepreneur Trey Watson.
Along with the change in ownership, Waterloo Records will also be relocating to a new, larger space at 1105 North Lamar this spring.
Waterloo Records has long been a cultural hub for Austinites and visitors alike, hosting in-store performances by artists like Norah Jones, Willie Nelson, and Nirvana and playing a pivotal role in co-founding Record Store Day in 2008.
Trending on Billboard
“My decades-long hope, dream and endeavor, has been for Waterloo Records & Video to live on forever, continuing to promote Austin’s vibrant music culture and community,” said John Kunz.
“Now with this transition, all of my boxes are checked: a new larger home, just five blocks away; Caren and Trey buy in as my new, talented, local music industry partners; all of my team are retained and they will gain the opportunity for store ownership; all of the Waterloo Records hallmarks and traditions continue on, including innovation; and now as a minority partner and not sole proprietor, I get to work less, and play more. So thank you Austin!”
“John, Trey and I recognized this as a once-in-a-lifetime opportunity to guard and grow an iconic music business and to get to do so in a town we all love,” said Caren Kelleher. “John was one of the first people to welcome me to Austin when I moved here to start Gold Rush Vinyl and his friendship has been so important over the years. It means so much to me that he and his wife Kathy Marcus trust me to be part of the next chapter of Waterloo.”
Trey Watson, a longtime Austin entrepreneur with a background in music and media, said the store’s legacy is part of the city’s fabric.
“Since 1982, Waterloo Records has been a large part of the fabric of that soul as a small business and as a place where people gather as a community to celebrate music. I’m honored and grateful that John Kunz has entrusted our team with guiding Waterloo into the future. We have great things planned for all to experience.”
The move to 1105 North Lamar marks a significant upgrade for Waterloo, expanding its current 6,400 sq. ft. space by 50% to allow for larger events, enhanced in-store performances, and improved parking options.
The location, previously occupied by Louis Shanks Furniture and later a Whole Foods regional office, provides modern amenities while maintaining the store’s proximity to downtown Austin and nearby music venues. This expansion underscores the commitment to keeping Waterloo a key destination for music fans and artists alike.
The transition comes at a pivotal moment for Austin, a city known for its deep musical roots but also experiencing rapid growth as a global tech hub. “Austin has a soul about it that attracted me to move here over 25 years ago and continues to draw people here today,” said Watson.
Two legends are celebrating diamond anniversaries together this year: Princess Cruises (aka “The Love Boat”) and The Temptations. And fans are welcome to join in the festivities when Princess sets sail on its 14-day 60th Anniversary Mexican Riviera Voyage on Dec. 6, 2025. Also on board for a special performance will be The Temptations, who […]
When it came to music stocks in 2024, there was Spotify, and then there was everything else.
The Swedish music streaming company not only had the top-performing music stock of the year, but its share price’s gain nearly tripled the next best company. Despite ending the year on a four-week losing streak during a downturn that eroded an otherwise spectacular year for many markets and indexes, Spotify’s share price jumped 138.1% to $447.38 in 2024.
Layoffs and price increases in 2023 did wonders for Spotify’s financial statements. Headcount was reduced by about 25%, eliminating the bloat gained during a pandemic-era hiring spree that mirrored a boom in subscriber gains. At the same time, Spotify broke with its long-standing tradition of leaving prices untouched by hiking fees in the U.S. and many other major markets — followed by a second price hike in 2024 in the U.S. and U.K. After more than a decade of adding features and expanding editorial programming, the streaming giant believed it could finally raise prices without its customers fleeing to competitors (many of whom raised their prices before Spotify). It was right.
The one-two punch quickly produced results. Perpetually unable to turn a profit, Spotify went from an average quarterly operating loss of 112 million euros ($121 million) in 2023 to an average quarterly operating profit of 296 million euros ($322 million) in the first three quarters of 2024. Gross margin (revenue less cost of sales) shot up, too, from 24.1% in the second quarter of 2023 (the last period before the first price increase) to 31.1% in the third quarter of 2024. Subscribers didn’t just stick around, they grew in numbers, from 220 million before the first price increases to 252 million on Sept. 30, 2024.
Trending on Billboard
Investors have rewarded Spotify for becoming a more efficient business without sacrificing the product quality necessary in a competitive market. An investment in Spotify on Nov. 4, 2022, when the share price reached an all-time low of $69.29, would have returned 446% by the end of 2024. For a brief time in early December, Spotify’s market capitalization surpassed $100 billion.
The 20-company Billboard Global Music Index gained 38.5% in 2024, easily besting the tech-heavy Nasdaq Composite (up 28.6%), the S&P 500 (up 23.3%), the Shanghai Composite Index (up 12.7%) and the FTSE 100 (up 5.7%). Because the index is unweighted, Spotify, the index’s largest company by market value, was responsible for much of that improvement. Without Spotify’s gain, the index would have risen just 2.5%.
Streaming and live music accounted for eight of the 10 music stocks that posted gains in 2024, reflecting these companies’ ability to capture the financial benefits of consumers’ willingness to spend more on music. Despite Spotify’s enormous improvement, live music was the best segment with an average gain of 24.8%. Live Nation was the index’s second-best performer with a 38.3% gain, besting German promoter CTS Eventim (up 30.4%), Sphere Entertainment Co. (up 18.6%) and MSG Entertainment (up 11.8%). These companies have benefitted from music fans’ ability to withstand consistently higher prices. Last year, the average ticket price for the top 100 tours was $132.30, up from $119.64 in 2023, according to Billboard Boxscore.
Music streaming stocks posted an average gain of 23.0%. Chinese music streaming companies Cloud Music and Tencent Music Entertainment gained 27.2% and 26.0%, respectively, and U.S.-based LiveOne gained 5.0%. Abu Dhabi-based Anghami and French streamer Deezer were exceptions to music streaming’s banner year. Anghami fell 21.2% while Deezer slipped 37.1%.
Record labels and music publishers — here classified as multi-sector companies — continued to expand their revenue in 2024 but didn’t have the momentum of live and streaming companies. Universal Music Group (UMG) fell 4.2% even though its sales through the third quarter reached 8.4 billion euros ($9.1 billion), up 6.3% from the prior-year period. Warner Music Group (WMG) dropped 13.4% after its revenue for the fiscal year ended Sept. 30 rose 6% to $6.4 billion. Both companies’ recorded music streaming revenue grew nicely, too — 7.3% for UMG and 6.9% for WMG — but investors rewarded streaming companies, not record labels, for subscriber and pricing gains.
K-pop companies were down across the board in 2024. HYBE, SM Entertainment, YG Entertainment and JYP Entertainment lost an average of 19.0% last year after gaining an average of 30.0% the prior year. Some of the decrease can likely be attributed to sharp profit declines and uneven revenue growth in recent quarters, though it can also be attributed to the rough year for South Korean stocks in general. The KOSPI composite index dropped 9.6% and was already in poor shape when South Korean Prime Minister Yoon Suk Yeol declared martial law on Dec. 3.
French music company Believe is an outlier in the multi-sector category, though most of its 37.1% gain can be attributed to the deal in June that took the company private at a 21% premium. Another notable outlier is Reservoir Media, which gained 26.9% without the benefit of a transaction to boost the share price. Instead, Reservoir shares were helped by activist investor Irenic Capital Management LP, which took an 8.1% stake in September and called on the “undervalued” company to “undertake a full review of all alternatives” to maximize shareholder value. From the date of Irenic Capital’s regulatory filing to the end of the year, Reservoir Media shares rose 17.8% while other multi-sector stocks either barely improved or lost value.
Radio companies have not been darlings of Wall Street in recent years, and 2024 was no exception. For all the optimism espoused by broadcast and satellite radio companies, they continue to struggle in an increasingly streaming-based world. The worst-performing music stock of the year was Cumulus Media, which fell 87.4% to $0.67. Through September, Cumulus’ revenue was down 2.4% and its net loss more than doubled. SiriusXM fell 58.3%, with much of that decline coming after the company announced plans to focus on in-car satellite listening after its streaming app, launched in late 2023, failed to catch on with consumers. iHeartMedia dropped 25.8% but ended the year on a high note after exchanging much of its long-term debt to extend maturity dates.
The majority ownership stake in Global Music Rights (GMR) is now in new hands after a deal that valued the boutique performance rights organization at $3.3 billion closed just before Christmas, sources tell Billboard. According to those sources, Hellman & Friedman, a San Francisco-based private equity firm, bought out Texas Pacific Group’s stake in GMR, as well as a slice of the minority equity stake held by the Azoff Company.
In the wake of the deal, sources say that Hellman & Friedman now owns nearly 90% of GMR, which was founded by Irving Azoff and Randy Grimmett in 2013. Moving forward, the Azoff Company and Grimmett — who also serves as CEO — will retain control of GMR’s operations, which is considered an essential ingredient to GMR’s continued success, given the affiliation with Azoff and his portfolio of companies that employ powerful industry executives.
Hellman & Friedman has not previously invested in music assets, but it was drawn to the stability and reliability inherent to the business of collecting music royalties. Those traits have made performance rights organizations ripe targets for private equity funds interested in investing in music. BMI was acquired by New Mountain Capital in early 2024, and SESAC is said to be fielding acquisition offers from interested parties.
Trending on Billboard
When Billboard first reported on the GMR deal in September, a source familiar with the matter said that the switch in majority ownership would not change anything “for the writers or the GMR management team. GMR’s goal will remain the same: to transform the industry and bring more value to songwriters and their publishers.”
GMR is one of four U.S. performance rights organizations, with the others being ASCAP, BMI and SESAC. While ASCAP and BMI operate under U.S. Department of Justice consent decrees and must accept any songwriter who applies as a member, SESAC and GMR are invitation-only societies. SESAC pioneered that strategy, although in the last five years, it has been quietly pruning its membership from 35,000 members in 2019 to 15,000 currently.
GMR is even more exclusive, with a membership roster that numbers between 150 and 200 songwriters or songwriter estates, all of whom are considered to have star status as a writer or artist. That roster includes the likes of Bad Bunny, Billie Eilish, Billy Idol, Bob Seger, Bob Scaggs, Bruce Springsteen, Bruno Mars, Bryan Adams, Drake, Eddie Vedder, George Harrison, George Michael, Glenn Frey, Gwen Stefani, Harry Styles, Ira Gershwin, James Hetfield, John Lennon, Jon Bon Jovi, Lizzo, Nicki Minaj, Pete Townshend, Philip Lawrence, Post Malone, Prince, Ryan Tedder, Shane McAnally, Shawn Mendes, Slash, Smokey Robinson, Stephen Stills, Steve Miller, The Weeknd, Travis Scott and YoungBoy Never Broke Again, among others.
Even with a limited roster, GMR has grown into a powerhouse in the U.S., with estimated revenue of about $400 million to $450 million, sources say, with some suggesting that its net publisher share (NPS) — what the company retains after royalties are paid out — approaching 50% of the revenue estimate. Given that, if GMR had $200 million in NPS, that $3.3 billion valuation translates into a 16.5 times multiple.
Building a company from scratch into one that can command a $3.3 billion valuation in 10 years is a big accomplishment, several people say. Moreover, that valuation appears to have ignited a process that could see SESAC come up for sale, which Billboard reported last week (Dec. 24). As one music asset investor told Billboard, many private equity firms looked at GMR and were “all shocked by the final valuation … Those firms have a real appetite for music because music assets are doing well.”
Hellman & Friedman specializes in traditional buyouts in the technology and financial services sectors. Among media and entertainment companies, it previously invested in the German media company Axel Springer and Getty Images, although it has since sold its stakes in both companies.
Representatives for GMR, the Azoff Company and Hellman & Friedman did not respond immediately to requests for comment.
Dr. Sasha J. Carr, a clinical psychologist who focused on family care for all ages, died in Norwalk, Conn., on Saturday (Dec. 28). She was 55. A cause of death has not been reported.
Dr. Carr was the daughter of Barbara Carr, longtime co-manager of Bruce Springsteen, and the stepdaughter of music critic and author Dave Marsh.
She was predeceased by her sister Kristen Ann Carr, who died in 1993 at age 21 of sarcoma, a rare form of cancer. The Kristen Ann Carr Fund, supported by major artists and executives, was established in her sister’s memory to advance sarcoma research and support families affected by cancer.
Dr. Carr was born in London, lived in New York City through her high school years and had been a longtime resident of Norwalk. In 2022, she relocated to Burlington, Vt. She attended The Chapin School in New York, received her undergraduate degree in 1992 from Brown University and was awarded a Ph.D. in clinical psychology in 2006 from Rutgers University.
Trending on Billboard
While her parents have been prominent in the music industry, Dr. Carr’s career followed a different path.
In Norwalk, she built a consulting practice, Off to Dreamland, and was a sought-after family sleep expert, dedicated to helping babies, children and families get the rest they need.
She was also a faculty member of the Family Sleep Institute. She published an illustrated children’s book, Putting Bungee to Bed, which empowered children to develop good sleep habits. Her passion for travel and adventure inspired her to help families in yet another way, by acting as a travel agent for kids-oriented vacations.
Dr. Carr’s career was focused on family care for all ages, and she was one of the first to address the unique and challenging role of caregivers with her book The Caregiver’s Essential Handbook: More than 1,200 Tips to Help You Care for and Comfort the Seniors in Your Life (McGraw-Hill, 2003).
Dr. Carr was a devoted mother to her beloved son Weston Kristoff Carr, 13. She is survived by Weston; her mother Barbara Carr and stepfather Dave Marsh of Norwalk; her father Patrick Carr of Florida ; and many loving aunts, uncles and cousins. Sasha was predeceased by her sister, Kristen Ann.
For those who wish to make a contribution in Dr. Carr’s memory, her family has requested donations be made to the Kristen Ann Carr Fund, for which Dr. Carr was a founding Board of Trustees member, or a charity of their choice.
Classic rock is still big — it’s the pictures that are getting smaller.
The definitive modern pop music documentary was Beatles Anthology, the 1995 multi-night television project released with three CD sets of band outtakes and a coffee table book. More recent years brought Ron Howard’s 2016 documentary about the band’s touring years, Peter Jackson’s 2021 series about the making of Let It Be, and the self-explanatory Beatles ’64. In 2027, the Beatles’ Apple Corps will release four more films, one about each individual member of the band.
Bob Dylan, like the Beatles, has always loomed too large for one movie. Don’t Look Back, arguably the most powerful rock documentary ever made, followed Dylan’s 1965 tour of the U.K. Martin Scorsese’s 2005 No Direction Home chronicled the first five years of his career. Then the director made another documentary, this one full of fictional elements and in-jokes, just about Dylan’s 1975-’76 Rolling Thunder Revue tour.
Now James Mangold’s A Complete Unknown, which opened Christmas Day in the U.S., offers a fictionalized take on the first chapter of Dylan’s career, from 1961 through the 1965 concert at which he “went electric.” Timothée Chalamet stars as Dylan, with Edward Norton as Pete Seeger, Monica Barbaro as Joan Baez and Elle Fanning as a character based on Suze Rotolo (the woman pictured on the cover of The Freewheelin’ Bob Dylan). It’s a fantastic film, and the performances are incredible — Chalamet captures Dylan’s lost-boy charisma, and Norton channels Seeger’s inflexible idealism perfectly. The movie, based on author Elijah Wald’s Dylan Goes Electric!, took in more than $23 million during its first week in theaters, and reviews have been almost universally favorable.
Trending on Billboard
The story of the movie is anything but unknown, and there’s not much suspense in it — Dylan grows up fast in the Greenwich Village folk scene, then plays an electric rock set at the Newport Folk Festival, upsetting much of the audience. Dylan’s early career now has the quality of myth, so even the most casual rock fan knows where the story is going — the joy is in seeing it get there in the hands of such talented storytellers. How surprising was Dylan’s decision to play with a rock band, given that the half-electric album Bringing It All Back Home had been out for three months and the single “Like A Rolling Stone” came out five days before the show? Were people booing because Dylan went electric, because the volume obscured his voice, or because his new songs weren’t political? Wald’s excellent book gets at the truth behind the myth — the movie just retells it.
And why not? Stories become myths partly because they’re compelling, and A Complete Unknown evokes nothing so much as a superhero origin story — except that in Dylan’s case, so much of his origin involves making up his actual origin as he went along. In the movie, by the time people realize that this brash young Jewish kid from Minnesota didn’t really work in a traveling circus, he had managed to acquire his own mystique. (In real life, it was a bit more complicated.) As with comic book movies, this leaves plenty of room for sequels, and jokes about this have already been made.
Now’s the time: Chalamet captures Dylan so well that I hope someone signs him up for a sequel based on Dylan’s 1965 tour with the Band, ending with his 1966 motorcycle crash. After that, there’s a domestic drama to be made about Dylan’s retreat into family life in Woodstock, ending with his divorce and Blood on the Tracks. That’s only the first decade and a half of Dylan’s career — there’s another movie to be made about Dylan’s born-again period, when he again offered new music to fans who didn’t receive it well. And what about a comeback story on the making of Oh Mercy or Time Out of Mind?
Dylan’s career lends itself to a certain kind of expansive storytelling, partly because he’s changed so much. (Todd Haynes’ I’m Not There had six different actors essentially playing six different Dylans.) But it’s also worth asking if Dylan is pointing the way forward for music films, as he did with Don’t Look Back. Think about it. Walk the Line told the Johnny Cash story in a way that ends in the late ‘60s, but Cash went on to decline in the ‘80s and came back in the ‘90s, with some of his best work, on the “American Recordings” albums. Isn’t that story worth its own movie? Straight Outta Compton tells the N.W.A. story, but the group’s members went on to have compelling careers that are worth their own stories.
Film executives might suggest that the big stories have already been done, but these days aren’t big stories just foundations for a franchise? Seeing a hero become himself is just the beginning — the best stories are often about what happens next. That’s certainly true in Dylan’s case, and I think it’s true of other artists, to one extent or another. That’s the idea behind the forthcoming Paul McCartney documentary Man on the Run, which tells his story after the Beatles broke up. I hope a Dylan movie sequel follows.
Billionaire hedge fund investor and Universal Music Group director Bill Ackman is a step closer to de-listing his Pershing Square Holdings from the Euronext Amsterdam exchange, a move that Ackman — whose Pershing Square company has owned around 10% of stock in the Universal Music Group since 2021 — has advocated for UMG to do, too.
The Euronext Amsterdam approved a plan for Pershing Square Holdings to de-list, with the closed-end fund’s last day of trading to be Jan. 30. The investment vehicle will consolidate trading of its shares on the London Stock Exchange, where it was co-listed in 2017 and where the majority of its trading happens.
Ackman and his family own more than 20% of the fund, and in November he advocated for moving the fund and UMG’s listing from the main Netherlands’ stock exchange after fans of an Israeli soccer team were attacked in early November in Amsterdam.
Trending on Billboard
UMG said at the time that it will review and decide what is in the best interests of all shareholders.
In a separate announcement on Thursday, Pershing Square said it distributed around 47 million shares of Universal Music Group stock, or roughly 2.6% of its overall stake, to investors as part of a planned wind-down of one of the funds Pershing Square initially used to purchase UMG shares from Vivendi in September 2021.
Pershing Square, which managed the closed-end fund called PSVII, said it decided to distribute, rather than cash out, the UMG stock “because we believe that UMG stock is substantially undervalued at its current share price, and the tax-free stock distribution enables our limited partners to continue to own UMG shares.”
Pershing Square continues to own around 140 million shares, equal to a 7.6% stake in UMG, through its core funds — Pershing Square Holdings, Ltd., Pershing Square, L.P. and Pershing Square International, Ltd. — Bill Ackman, Pershing Square employees and other affiliates, according to a company statement. UMG is still Pershing Square’s largest single holding.
As of Dec. 31, Pershing Square said UMG has had a total return of “46% including dividends over the approximately three-and-one-quarter-year life of the investment.” The company said that is better than “the S&P 500’s 37% return and the Amsterdam Exchange Index’s return of 21% over the same period.”
Lauren Davis, a veteran music business attorney, has been promoted to associate chair of New York University’s Clive Davis Institute of Recorded Music.
Davis joined the institute’s full-time faculty in 2006, teaching courses on the legal and business aspects of the music industry, including intellectual property law. She has also lectured on social entrepreneurship and advancing equity and inclusion in music. As the director of professional development at CDI, she oversees the professional planning and Senior Year Professional Development courses for graduating students.
With 33 years of experience as a music and entertainment attorney, Davis has represented high-profile recording artists, songwriters, producers, publishers, and music companies. She has also served as the faculty senator on NYU’s Faculty Council for six years, advocating for faculty interests.
Trending on Billboard
Nick Sansano, chair of the Clive Davis Institute, praised Davis for her unwavering support and inspiration to students since the institute’s inception.
“Her music business and legal expertise, and her academic focus on policy, rights advocacy, and gender equity in the music industry has influenced and directed the professional lives of so many of our students and alumni,” he said. “Her willingness to take on the role of Associate Chair, deepening her contribution to the development of our curriculum and mission, is a huge win for our program.”
Davis expressed her excitement about her new role, stating it has been a privilege to teach and prepare future industry leaders over the past 18 years, adding that she’s “excited to roll up my sleeves, work with Nick Sansano as chair, and help steer the Clive Davis Institute’s growth and expansion in the years ahead.”
Named after the iconic music executive, the program offers a distinctive BFA that blends business, creative and intellectual exploration as part of NYU’s Tisch School of the Arts. The CDI marked its 20th anniversary earlier this year and is a fixture in Billboard‘s annual list of top music business schools.
In the end, 2024 was the year that the U.S. performance rights societies found out what type of valuations they can command when they are put up on the block. As the year comes to a close, a select group of private equity suitors is kicking the tires on yet another performance rights organization, SESAC, according to sources.
Those sources say that deals like New Mountain Capital’s acquisition of BMI in February and Hellman & Friedman signing a letter of intent in September to replace Taxes Pacific Group as the majority owner of Global Music Rights that gave GMR a $3.3 billion valuation served as a catalyst for some private equity firms to reach out to SESAC’s corporate owner Blackstone to see if it was interested in selling.
Consequently, Blackstone is fielding inbound interest from a group of private equity firms that unsuccessfully bid on GMR, according to a source familiar with the matter.
Trending on Billboard
Many private equity firms look at GMR and are “all shocked by the final valuation,” says a music asset investor. “Those firms have a real appetite for music because music assets are doing well.” In fact, some sources suggest that SESAC has been a fantastic performer for Blackstone. Nevertheless, as an investment firm representing institutional clients, Blackstone has a fiduciary obligation to maximize returns on their investments. So with the aid of the Moelis & Co. and Morgan Stanley investment banks, Blackstone is selectively and informally shopping the PRO and its subsidiaries to a targeted group of private equity firms, while so far eschewing to reach out to potential strategic buyers, sources say. “You can’t blame Blackstone for testing to see what the market will pay for SESAC,” says one music asset buyer.
SESAC, Blackstone, Moelis and Morgan Stanley executives either declined to comment or didn’t respond to a request for comment.
Blackstone, which bought SESAC in 2017 for $1.125 billion, has since invested in the company as the PRO, led by chairman John Josephson, has been making subsequent add-on acquisitions to complement its core business. During Josephson’s tenure, SESAC has acquired the Harry Fox Agency and Audiam to go along with earlier acquisitions like RumbleFish and Christian Copyright Licensing International. What’s more, in 2021, when Blackstone bought Hasbro’s music assets, including the MNRK record label and the Audio Network production music house, the latter company was added to SESAC’s portfolio. (Sources say Audio Network is included in the SESAC assets being looked at, but Billboard could not determine if MNRK is also included in any potential deal.)
Along the way, Blackstone loaded up SESAC with about $1 billion in debt through a series of asset-backed bond offerings, with the latest securitization for $180 million happening earlier this year. On Feb. 8, Kroll Bond Rating Agency (KBRA) noted that the proceeds from that bond sale would be used for “distribution to equity investors” as well as to pay certain transaction expenses and make deposits into certain transaction accounts.
According to that credit rating report, SESAC had revenue of $388.6 million in 2024, presumably the fiscal year ended Jan. 31, 2024. It also said that the company is expected to hit over $400 million in its current fiscal year, likely the one that will end Jan. 31, 2025. What’s more, that $388.6 million revenue total tracks only the SESAC businesses that are part of the collateral for the February 2024 securitization offering, which included SESAC, Christian Copyrights and Audio Network. Revenue from the Harry Fox Agency (HFA), the Stephen Arnold Group (SAG) and a few other smaller entities are not included as collateral. With HFA and SGA consistently reaching a combined total of $20 million to $25 million, according to revenue numbers given in earlier SESAC bond rating documents — published by the likes of Morningstar and the Kroll Bond Rating Agency — for 2022 and 2019 SESAC bond offerings, it’s conceivable that SESAC’s revenue was already above $400 million by the end of its most recent fiscal year. Those assets are included in what’s being shopped, sources say.
A 2019 Morningstar analysis found that SESAC has had a 12.9% annual growth rate since 1994. While that report didn’t cite revenue from those earlier years, other SESAC-related documents obtained by Billboard through the years show that SESAC had grown from $9 million in revenue in 1994 to about $57 million by 2004, then to about $206 million by 2014 and about $275 million by 2018.
While it’s unclear what price will tempt Blackstone to sell, sources say that as recently as last year, Blackstone and SESAC executives were saying that the PRO and its subsidiary companies were carrying about a $2 billion to $2.5 billion valuation. However, that’s when its securitized net cash flow was $118 million on collections (revenue) of about $318 million, versus the latest financials, which put securitized net cash flow at $147 million on $388.6 million in revenue, according to the Kroll report. That represents increases of 24.6% in securitized net cash flow and nearly 22.2% in collections/revenue over the prior year. Besides that growth, the implied valuation of SESAC is further enhanced by the BMI and GMR deals, which shows that PROs are attractive to private equity, sources say.
Unlike BMI and ASCAP, SESAC and GMR are not stymied by consent decrees, which is also a positive as far as private equity is concerned. A further deal point is that SESAC has a diversified revenue base. According to the Kroll report, at the end of fiscal year 2024, SESAC derived 37.2% of its annual revenue from general licensing, 21.7% from digital, 18.9% from TV, 9.7% from Audio Network, 6.4% from radio, 0.7% from foreign affiliates and 5.5% from other efforts.
On the other hand, that percentage breakout shows that even with the company’s diversification efforts into related music industry functions, its core business remains SESAC’s performance rights licensing, which it does through a boutique strategy of inviting songwriters to join as members. Through this strategy, it has landed such clients as Bob Dylan, Adele and Neil Diamond.
Still yet another plus that suitors will find attractive, says a music industry source, is the savvy stewardship of SESAC under Josephson. “He is been very effective there,” that source adds.
Moreover, in order to improve profitability, SESAC has been quietly pruning songwriters who are not generating enough royalties from their catalog. According to Kroll, the number of songwriter and publisher affiliates (with the former presumably the preponderance of the total), has shrunk from 35,000 in 2019 to 15,000 last year.
Pricing is paramount in whether Blackstone will do a deal. But it will be weighted against the possible return on investment if it chooses to retain ownership of SESAC. As it is, Blackstone and its equity investors likely have already clawed back a good portion of their initial investment in SESAC. In addition to the aforementioned possible equity distribution from the February bond offering, during the eight years it has owned SESAC, it’s likely that Blackstone made earlier dividend payouts to investors from the PRO’s profits down through the years; and possibly from earlier bond offerings, too. Besides that, Blackstone has provided itself with an annual $30 million management fee as measured against 16% of SESAC’s core retained collections, whichever is greater. (While the rating agencies do not define core retained collections, that could be the equivalent of net publisher share — what’s left after making royalty payments to songwriters and publishers.)
As for possible suitors, so far the only private equity firm that has come up in more than one conversation with music industry sources is TA Associates, a Boston-based private equity firm that says it has raised $65 billion in capital. A perusal of the investment firm’s website reveals that it has invested in another music company: In 2022, it acquired TouchTunes, the digital jukebox network that supplies music to bars, clubs, restaurants and other social spaces in North America and Europe. Moreover, a source says that TA may have even looked at SESAC in the past; SESAC has come up for sale a few times over the years and consequently had a few other institutional investor owners in the past, including Rizvi Traverse; before that, Oct-Ziff Capital Management Group was a minority shareholder in the company.
TA Associates representatives couldn’t be reached for comment over the year-end holidays.
Moelis, which is one of the banks said to be shopping SESAC, has made its mark elsewhere in the music business in 2024. Earlier this year, it was the buy-side advisor to New Mountain Capital in its BMI acquisition and the sell-side advisor for GMR in its search for an investor to replace the Texas Pacific Group. Morgan Stanley has music industry experience, including investing with Kobalt in making music acquisitions, among other deals.
Additional reporting by Elizabeth Dilts Marshall.
LONDON — Proposed changes to U.K. copyright law that would allow tech companies to freely use songs for AI training without permission threaten to place the country’s status as a “world music power” at risk, record labels trade body BPI has warned.
In 2024, hit records by Charli XCX, Sabrina Carpenter, Coldplay and Taylor Swift helped lift the United Kingdom’s streaming market to a record high with just under 200 billion music tracks streamed across the 12 months, up 11% year-on-year, according to year-end figures released Tuesday (Dec. 31) by BPI.
Overall recorded music consumption across streaming and physical album sales rose by a tenth (9.7%) on 2023’s total to 201 million equivalent albums, marking a decade of uninterrupted growth, reports the organization, which represents over 500 independent record labels, as well as the U.K. arms of the three majors: Universal Music Group, Sony Music Entertainment and Warner Music Group.
Trending on Billboard
However, the success of the U.K. music business is being challenged on multiple fronts, including intensifying competition from other global markets and proposed regulations around the use of artificial intelligence (AI), says BPI.
The proposed AI guidelines were announced by the British government two weeks ago (Dec. 17) as part of a 10-week consultation on how copyright-protected content, such as music, can lawfully be used by tech companies to train generative AI models. Among them is a controversial new data mining exception that would allow developers to use copyrighted songs for AI training, including commercial purposes, but only in instances where rights holders have not reserved their rights.
BPI chief executive Jo Twist said the proposed opt out mechanism was the “wrong way to realise the exciting potential of AI” and places the U.K.’s music and creative industries at risk by allowing “international tech giants to train AI models on artists’ work without payment or permission.”
“The U.K. remains a world music power, but this status cannot be taken for granted,” said Twist in a statement accompanying Tuesday’s year-end figures. She said that in order to continue to thrive, the U.K. music business needs “a supportive policy environment that puts the focus on human artistry and enables continued investment in the next generation of British talent.”
Of the current generation, more than 20 British groups and solo acts topped the U.K. albums chart in 2024, although Charli XCX and Coldplay were the only homegrown artists in the year’s top 10 best-selling artist albums list, occupying the eighth and ninth positions with Brat and Moon Music, respectively. Veteran British American rock band Fleetwood Mac had the year’s seventh most popular album with their compilation 50 Years – Don’t Stop.
Topping the year-end albums list was Taylor Swift’s The Tortured Poets Department, which has sold over 783,000 equivalent units since its release in April – the most for any artist release in a calendar year since 2017, reports BPI. The Tortured Poets Department was one of four albums by Swift to feature among the year’s 20 biggest titles alongside 1989 (Taylor’s Version), Lover and Folklore.
In total, female artists accounted for six of the top 10 and half of the 20 biggest selling artist albums in the U.K. last year with hit releases by Sabrina Carpenter, Billie Eilish, Chappell Roan and Olivia Rodrigo helping make it a landmark year for women.
Female artists also spent an unprecedented 34 weeks at No. 1 on the United Kingdom’s official singles chart, largely driven by Carpenter, who spent 21 weeks at the top with her three hit singles: “Espresso, “Please Please Please” and “Taste.” The best-selling single in the U.K. last year was Noah Kahan‘s “Stick Season,” which topped the U.K. charts for seven weeks, followed by Benson Boone‘s “Beautiful Things.”
Vinyl helps physical album sales return to growth
In terms of formats, streaming now makes up 88.8% of music sales in the United Kingdom, a marginal 1.1% rise on 2023’s figure and more than double streaming’s share of the U.K. market six years ago, reports BPI.
Meanwhile, physical sales experienced year-on-year growth for the first time since 1994 with vinyl and CD album purchases up 1.4% to 17.4 million units. Driving the resurgence in physical formats was a 17th consecutive annual rise in vinyl album sales which grew by just over 9% to 6.7 million units, marking a three-decade high.
The year’s most popular vinyl album was Swift’s The Tortured Poets Department, which sold more than 111,000 vinyl copies, followed by a 30th anniversary reissue of Oasis‘ debut Definitely Maybe. Other top-selling vinyl titles included Eilish’s Hit Me Hard And Soft, Fontaines D.C.‘ Romance, The Cure‘s Songs Of A Lost World and Charli XCX’s Brat.
CD sales fell 2.9% year-on-year to 10.5 million units, representing a significant slowdown on the 19% drop recorded in 2022 and the almost 7% slide in sales experienced in 2023. Digital album sales dropped almost 6% to 3.3 million units.
BPI’s preliminary year-end report doesn’t include financial sales data. Instead, it uses Official Charts Company data to measure U.K. music consumption in terms of volume. The London-based organization will publish its full year-end report, including recorded music revenues, later this year.
The U.K. is the world’s third-biggest recorded music market behind the U.S. and Japan with sales of $1.9 billion in 2023, according to IFPI. It is also the second-largest exporter of recorded music worldwide behind the U.S.
Tougher competition from other international markets, including Latin America and fast-growing countries like South Korea, has seen the U.K.’s share of the global recorded music market shrink over the past decade, however.
In 2015, artists from the United Kingdom cumulatively accounted for 17% of global music streams, according to BPI export figures. That figure now stands at 10% with U.K. artists accounting for just nine of the top 40 tracks streamed in the country last year – the highest being “Stargazing” by Myles Smith at number 12.
“From Coldplay, and Charli XCX, to The Last Dinner Party, and Myles Smith, there were plenty of examples of U.K. music success stories in 2024. But there are also rising challenges for domestic talent in a rapidly changing and hyper-competitive global music economy,” said BPI’s Jo Twist.
“By meeting the growing global challenge head-on, tackling challenges around AI, copyright and streaming fraud, and encouraging consumers towards viable models, like paid streaming subscriptions, we can help to ensure that the value of British music is protected and that our industry can continue to grow and flourish at home and around the world,” she said.
≈
Music Business Year In Review