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Geffen Records has a new dance label, Disorder. The label is being launched Thursday (Dec. 7) by Geffen in partnership with longstanding electronic music executive David Dollimore. Based in London, Disorder will sign DJs, producers, artists, brands and labels.
Dollimore has a long history as a dance music tastemaker, working at London’s lauded Ministry of Sound (where he started as an intern) for 15 years and helping develop the careers of artists including Eric Prydz, Duke Dumont, Axwell, Benny Benassi, MK and Avicii. When Ministry of Sound was acquired by Sony Music UK in 2016, Dollimore became president of RCA Label Group, which clocked dance hits from artists including CamelPhat, London Grammar and Jade Thirlwall during his tenure.
“Disorder will be an incubator for the future of dance music and redefine the landscape as we see it,” Dollimore said in a statement. “This label will be a portal to the underground club world, distilling future trends for mass consumption. We will be leading a generation forging alternative routes to the top, outside the confines of dated traditional structures. The Disorder artist will resonate in fashion, culture, lifestyle and entertainment, across multiple platforms, forming a newgen of future visionaries within the field.”
The first project from Disorder is WHP Records, an imprint created in collaboration with The Warehouse Project, the tastemaking Manchester-based dance events brand that’s been putting on shows in and beyond the city since 2006. Founded by Richard McGinnis and Sam Kandel, The Warehouse Project sells more than 300,000 tickets every winter season. WHP Records is intended to transmit the sounds of its events to the world.
“Having spent the last two decades dedicated to finding and breaking talent, we can’t believe it has taken us this long to make this jump but David was the one person we wanted do it with,” McGinnis and Kandel said in a joint statement. “Being able to work with artists in a whole new way, providing tangible support in the live space alongside equitable partnerships, with David and Tom who share our passion for this culture is an exciting new chapter for us.”
“Together,” added Dollimore, “[Geffen Records president] Tom March, Rich, Sam and the impressive team at The Warehouse Project and I, have the network, the platform and the global infrastructure with Universal to make this one of the most successful partnerships in dance music.”
March has his own storied history with electronic music, having started his career in dance music PR and working with artists including Avicci, Alesso, The Chemical Brothers, Tiesto, Deadmau5, Jax Jones, DJ Snake, Zedd, Meduza, Swedish House Mafia and Becky Hill.
“At Geffen we are always looking to partner with our industry’s most successful and innovative entrepreneurs,” March said in a statement. “I couldn’t be more excited to partner with David as he heads back to what I consider him to be the best in the world at — signing and A&R-ing dance music. Between us, we have worked with many of the great names in the last twenty years of electronic music. I am so happy to be joining forces with him now.”
Enrique Iglesias and Influence Media Partners have struck a major partnership deal, it was announced Wednesday (Dec. 6).
According to a press release, Influence and Iglesias have partnered on the rights management of his pre-2021 recorded music rights, including his independent masters and his Universal recorded music royalties, along with name, image and likeness (NIL) rights to expand future licensing opportunities for the singer.
This marks the first NIL deal for Influence Media, which last year partnered with Black Rock and Warner Music Group for funding and infrastructure.
“My songs hold immense significance for both my fans and me,” Iglesias said in a statement. “I’m excited to be working with the Influence Media team. I feel confident we will build an enduring partnership for my music and future projects.”
“Enrique is a global icon and having him as a part of our Influence Media family is a game-changing moment for us,” added Lylette Pizarro, Influence Media founder/co-managing partner. “For a quarter of a century, he has captivated fans globally with chart-topping and record-breaking hits. From ‘Experiencia Religiosa’ to ‘Hero’ and ‘Bailando’ to ‘I Like It’ and ‘Be With You,’ there are few artists who come close to accomplishing what Enrique has achieved commercially. He has played a pivotal role in introducing bilingual music to the masses. We couldn’t be more excited to partner with one of the most recognizable figures in modern music.”
With a career that spans over three decades, Iglesias is one of the first Spanish-language acts to successfully cross over into the English-language market. He has placed five top 10 hits on the Billboard Hot 100, including “I Like It,” “Tonight (I’m Lovin’ You)” and “Hero.” He’s also placed three top 10 albums on the Billboard 200 (Escape, Euphoria and Sex And Love) and 27 No. 1 hits on the Hot Latin Songs chart.
Currently on the U.S. Trilogy Tour with Pitbull and Ricky Martin, Iglesias most recently scored his eighth No. 1 on the Tropical Airplay chart with his bachata collab “Así Es La Vida” with Maria Becerra. The 48-year-old artist is set to drop his new album, Final Vol. 2, next year.
Iglesias was represented by Mitch Tenzer and John Branca from Ziffren Brittenham LLP. Influence was represented by Lisa Alter from Alter, Kendrick and Baron.
Influence Media previously acquired the commercially-released master recording catalog of Blake Shelton for his 2001-2019 output, Future’s song publishing catalog and Puerto Rican songwriter-producer Tainy‘s song publishing catalog from 2005-2021, among other investments.
Luis Fernández has been appointed chairman of NBCUniversal Telemundo Enterprises. Fernández, who previously served as president of Telemundo’s news division, Noticias Telemundo, from 2015-2021, will report directly to Cesar Conde, chairman of NBCUniversal News Group. “Throughout his extraordinary career, Luis has time and again shown visionary leadership, building and growing the most successful Spanish language […]
“I’m a musician. The risk I take is in my chosen career path. I don’t want to take risk in my investments.” This was the most common remark we heard from entertainer clients for years.
And the most common advice those musicians would receive to address their concerns was, “Invest in municipal bonds. Your principal is protected, default risk is low, and you get tax-free income.” For the most part, that was true… until interest rates stayed close to 0% from 2020-2022 and then rose at their fastest pace in US history since then. During that time, municipal bonds were not what they were promised to be — down almost 10% in 2022 — especially for those who thought they couldn’t lose money owning them.
To be fair, barring defaults, and even with the recent price declines, municipal bonds bought prior to the rise in interest rates will give investors the return they signed up for when they bought them. But now we have artists coming to us excited that they are getting paid 5% pre-tax on cash in money market funds. However, those heady money market rates can be cut in half by taxes and they won’t last forever — we suspect they won’t even last much longer from here.
So, what can you do for an attractive risk-adjusted return these days while avoiding the volatility of the stock market? Let’s look at some particularly interesting options.
Intermediate Duration Municipal Bonds
While past performance doesn’t always translate into the future, over rolling two-year periods, high-quality intermediate municipal bonds have never lost money. Now, with interest rates at their highest levels in almost 20 years and municipalities’ finances healthy, these bonds look more attractive than they have in a long time.
However, balancing exposure to different sources of return in fixed income is important. We do not recommend just buying Treasuries or Treasury/municipality ladders. Consider an actively managed bond portfolio (as opposed to laddering) with the flexibility to move between municipal bonds and taxable bonds based on their relative attractiveness. This allows you to maximize after-tax returns while also managing interest rate exposure.
Hedged Exposure to Stocks
The S&P 500 is up over 18% year-to-date (as of Dec. 4), but it’s done so in a fairly volatile manner and more than half of the stocks in it are actually down for the year.
For investors concerned about volatility, they can consider reducing exposure to the market in the near-to-medium term by using a defined outcome exchange-traded fund (DOETF). Like other ETFs, these types of securities have daily liquidity and relatively low cost. But what makes DOETFs different from the index ETFs that many investors are familiar with is that they utilize options to create a specially designed payoff. For instance, recently created versions of DOETFs allow an investor to capture around 15% of any upside in stocks while not experiencing the first 15% of any market decline.
So, if the market is up 20% over the next year, investors will be up around 15%. If the market rises 8%, investors’ returns will be the same. If the market is down 10%, the investors won’t have any gains but also won’t take any loss. And if the market has an awful year and ends down 20%, investors would only be down 5%.
Private Credit
Every week brings new headlines about banks cutting back lending in different areas. It raises the question, “Who is lending money to businesses these days?” Private debt funds.
This area has grown substantially since the financial crisis as government regulations have made it harder and costlier for banks to lend. The private markets have stepped into that void. One notable aspect of these loans is that they’re made at floating rates, with financing usually made similarly. That’s protected them from the run-up in interest rates, as fixed interest investments have declined in value. That’s also allowed them to keep up better with inflation. Investors contemplating private credit should consider the fact that some of these strategies are only available to accredited investors or qualified purchasers and they’re often illiquid, with money locked up for several years at a time.
Real Estate
In addition to private credit, we’re seeing attractive opportunities to lend into the commercial real estate (CRE) market, partly for the same reasons as private credit (with banks stepping back) and partly for real estate-specific reasons, such as the pressure on office prices since the pandemic. However, with office being only one small piece of the overall market and with lenders having attractive bargaining power as assets are revalued and refinanced, that’s an area we’ve been highlighting in 2023.
Finally, and further up the risk spectrum, is real estate equity. Even inside that asset class, the risks can vary. With the turbulence in the market, we’re starting to see more attractive opportunities emerge in the “core plus” space, which are typically well-leased, income-producing properties in good locations. They’re often found in commuter suburbs in secondary or tertiary markets.
Like private credit, these real estate strategies are often illiquid, and even some of the strategies which are advertised as more liquid have gated investor redemptions recently. But for investors with enough cash flowing in to meet their outflows (even in a distressed situation) and a longer time horizon, the rewards for accepting that illiquidity can be meaningful.
What to Do
As always, investors should consult with a licensed investment advisor before making investment decisions. While each of the asset classes discussed here may be of interest, they are not suitable for all investors. At the same time, we recognize that having excess cash earning 5% in money market funds may feel nice for now, but it may not feel so nice looking back on things in a year’s time. Investors don’t need to feel tied to cash or forced to swing for the fences — there are many options worth considering in the middle ground.
Finally, while we’ve mostly focused on safer options here, which are meant to guard against the risk of market volatility, there’s another risk that investors must weigh — the risk of running out of money during retirement. Taking too little volatility risk can potentially generate excessive depletion risk. We recommend discussing this, and other considerations, with your financial advisor.
Adam Sansiveri is a senior managing director and head of the Nashville Private Client Group at Bernstein. Stacie Jacobsen is a director in Bernstein’s Wealth Strategies Group. Sansiveri and Jacobsen are co-heads of the Sports, Media and Entertainment Group at Bernstein Private Wealth Management, a division of AllianceBernstein. AllianceBernstein is a leading global research and investment management firm headquartered in Nashville with over $700 billion under management and offices in 53 cities in 26 countries.
HarborView Equity Partners, a rising player in music acquisitions that has built a hip-hop and R&B-heavy song catalog, announced Tuesday (Dec. 4) that it amended its senior secured credit facility to increase its borrowing capacity from $200 million to $300 million. The additional $100 million of funding will be used to continue to acquire music royalty catalogs as well as for general corporate purposes.
The credit facility is led by Fifth Third Bank and includes California Bank & Trust, MUFG Bank, Regions Bank and BankUnited. For the amended facility, three new lenders were added to the syndicate: Bank of America, Barclays and First Bank & Trust Company.
“HarbourView remains committed to providing the best execution for our growing LP base, against a relatively challenging market environment. We are thankful to both our new and existing financing partners for their commitment to HarbourView’s success,” said HarbourView head of capital markets Carlos Cruz in a statement.
“As capital conditions evolve, we are grateful for the continued support of our banking partners who have helped support HarbourView’s tremendous growth since inception,” added HarbourView CEO/founder Sherrese Clarke Soares.
Clarke Soares, a former managing director at Morgan Stanley who later founded Tempo Music and won the UBS & Billboard Trailblazer Award in February, has been attracted to R&B, hip-hop and Latin genres in addition to the classic pop and rock catalogs pursued by most investors.
Founded in 2021, the Newark, N.J.-based Harbourview is behind such recent acquisitions as the royalty income of select Nelly recordings, select recorded music and publishing assets of Wiz Khalifa and select publishing assets of Kane Brown. To date, HarbourView has acquired 45 music catalogs spanning about 26,000 songs. HarbourView owns the publishing catalog of “Despacito” co-writer Luis Fonsi and the publishing catalog of Dre & Vidal, the songwriting and production duo behind hits from Alicia Keys, Jill Scott and Mary J. Blige.
“We’re looking at the intersection of historical performance, growth trends, returns — and expectation in terms of price,” Clarke Soares told Billboard in 2022. “Where all that intersects is where we have found a lot of great opportunities.”
Alec Benjamin (“Let Me Down Slowly”) signed with Range Media Partners‘ music division. The singer-songwriter is ramping up for the release of his third studio album, which is slated for release on Elektra next year. “Coal” singer-songwriter Dylan Gossett signed with UTA for global representation in all areas. Gossett also recently signed to Big Loud […]
Going once.
Going twice.
Julien’s Auctions is SOLD on Nashville.
Nothing has been finalized, but the California-based auction house is planning to open a Music City office in 2024, after generating closing bids estimated at nearly $9.5 million for music memorabilia during a week at the Hard Rock Café in November.
The week included Music Health Alliance’s (MHA) fourth annual Lyrics for a Cause benefit auction, with Julien’s playing middleman on Nov. 14 for the sale of 57 autographed guitars and documents featuring song lyrics. To cite three examples: A guitar featuring Keith Urban’s signature alongside the words from “Blue Ain’t Your Color” netted $7,800; a “Girl Crush” guitar autographed by The Love Junkies — songwriters Hillary Lindsey, Liz Rose and Lori McKenna — brought another $1,950; and a “wait in the truck” guitar inked by HARDY and Lainey Wilson earned $4,445.
Julien’s followed Nov. 15-17 with its Played, Worn, & Torn Rock ‘N’ Roll: Iconic Guitars and Memorabilia Auction. Among more than 1,000 sales, an Eric Clapton guitar went for $1.3 million, a pair of Kurt Cobain’s jeans scored $476,000, and a signed Elvis Presley karate certificate pulled in $5,850. That auction also included a smattering of country items: a stage-worn Dolly Parton cape, $10,160; a Hee Haw contract signed by Johnny Cash and June Carter, $2,222.50; and Jerry Lee Lewis’ cowboy boots, $1,625.
Julien’s founder/president Darren Julien and founder/executive director Martin Nolan anticipated Nashville would have a significant regional draw for in-person bidding, on top of its online activity, and it played out even better than expected.
“People came from Missouri, Georgia, Alabama and Illinois just to see [the auction],” Nolan observes. “There’s definitely a huge interest here.”
Julien’s is already planning another Nashville-based auction in May, but it’s also scouting locations for an office, believing the market is underserved for celebrity sales. The company plans initially to staff with just one or two people who would utilize strong local connections to bring sale items to the public. The employees wouldn’t be expected to know how to price prospective memorabilia at the start; Julien’s has 30-plus employees in Gardena, Calif., and some of them can offer that expertise as the new Nashville team gets its bearings and Julien’s, if its plan works, ingratiates itself in the market.
A “Girl Crush” guitar autographed by The Love Junkies — songwriters Hillary Lindsey, Liz Rose and Lori McKenna — recently brought in $1,950.
“It’s a contemporary recording community across all different genres of music,” says Nolan. “Obviously, it has a very rich musical heritage, and that sort of fits squarely into our growth plans.”
Julien’s is celebrating its 20th anniversary, having entered the auction market shortly after the largest celebrity memorabilia houses, Christie’s and Sotheby’s, paid over $550 million apiece to settle a price-fixing case. Julien’s aggressively pursued the potential of online bidding, allowing buyers from around the globe to compete with in-person customers. The technology was comparatively primitive at the time — a seven-second delay in digital bids affected the proceedings, and Nolan remembers his Blackberry ran out of juice in the inaugural sale during that pre-smartphone era.
The company also put a premium, Nolan maintains, on more personalized service with high-profile clients who come with their own set of expectations.
“Cher wants her design one way, Barbra Streisand wants it another way, and Don McLean has another idea and Janet Jackson has another idea, and Ringo Starr,” says Nolan. “The big auction houses don’t have the resources to sit down with a celebrity and hold hands and walk them through the process and make it seamless for them.”
The stars deserve that kind of treatment, Nolan suggests.
“They’ve been hugely successful marketing geniuses in their own right,” he says. “There’s a fan base worldwide that wants to own something representing their life and career.”
Julien’s has made believers of MHA through its work on the agency’s Heal the Music fundraising auctions.
“In the last four years, Julien’s Auctions has not only elevated Music Health Alliance’s Lyrics for a Cause benefit auction to unprecedented heights through their global audience, they also seamlessly fused historical accuracy, integrity, and respect into the fabric of our mission to #HealTheMusic,” says MHA auction producer Colleen Hoagland. “Julien’s commitment to the minute details coupled with a passion for our cause has turned fundraising into an art form.”
Establishing a stronger foothold in Nashville’s music community — particularly in country — would expand on Julien’s existing cultural connections. The company regularly holds auctions focused on pop music, TV and movies, sports and art.
Upcoming auctions include 1,000-plus lots of memorabilia from the collection of ZZ Top’s Dusty Hill Dec. 7-9 in Dallas; a Robots, Wizards, Heroes & Aliens event Dec. 14-15 in Hollywood featuring items associated with such franchises as Breaking Bad, Harry Potter and Batman; and a Dec. 16-17 sale of materials from The Big Lebowski.
Julien’s does get its fair share of pushback. When the company approached Parton about selling off some of her personal artifacts, she initially rebuffed the offer, reportedly telling them, “I’m not dead yet.” But there are other reasons for celebs to part with their history, Nolan insists, such as raising money for charity, downsizing and connecting with members of the fan base.
Beyond the headline-making million-dollar guitars, auctions often include smaller-priced items that are obtainable for fans of more modest means. As an example, photos, signed letters and several awards all went for less than $500 at a 2022 Kenny Rogers auction.
In its way, Nashville’s best-known export — country music — is a perfect fit for Julien’s.
“We’re all nostalgic,” says Nolan. “We’re all buying into something [from] our youth or a life stage when we got married, or first kid, or we were graduating college — whatever it is, it harks back to that time. We want to own the toys from that era. And that’s what we’re selling.”
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Shares of iHeartMedia got a boost from the sale of its stake in BMI, rising 7.9% to $3.00 and making the radio giant the best-performing music stock of the week.
The company announced on Monday (Nov. 27) that it expected to receive approximately $100 million from the sale of BMI to New Mountain Capital. With a current market capitalization of just $423 million, the $100 million pre-tax windfall could provide a boost to a stock that has fallen 51.1% this year. iHeartMedia’s announcement said the company plans to use the proceeds for general corporate purposes, “which may include the repayment of debt.” At the 2023 Wells Fargo TMT Summit on Wednesday, CFO Rich Bressler told investors, “You should assume that we will reduce debt with it.”
The BMI sale follows iHeartMedia’s announcement in its third-quarter earnings that it has paid off $519 million of debt since the second quarter of 2022. In the third quarter, the company retired $89 million in principal balance for $65 million cash, according to its Q3 2023 investor presentation. Debt reductions to date are expected to save the company about $43 million in annual cash interest. Additional debt redemptions aided by the BMI sale will further reduce interest expenses and help its bottom line while the advertising market recovers. “I think we’re in terrific shape from the liquidity generation and free cash flow,” Bressler said on Wednesday, “and also in terrific shape to be able to take advantage of opportunities in the marketplace to improve the capital structure.”
The Billboard Global Music Index dropped 0.2% to 1,449.08 as nine of the 20 stocks finished the week in positive territory, 10 stocks posted losses and one was unchanged. Year to date, the index has gained 24.1%.
The week was notable for the unremarkable movements — either positive or negative — in most stock prices. In the absence of earnings results or major news releases, the biggest companies on the Billboard Global Music Index were confined to a narrow band of results. Warner Music Group shares rose 3.8% to $34.59, Universal Music Group gained 1.5% to 24.60 euros ($26.80), Spotify fell 0.5% to $180.75 and Live Nation dropped 3.9% to $84.23.
Anghami, the Abu Dhabi-based music streamer, had the index’s largest drop, diving 18.1% to $2.30. Still, the company’s share price is up 44.2% year to date and has gained 129% since receiving a notification, from the Nasdaq Stock Market in October, regarding its stock’s closing price falling under the $1.00 per share threshold for 30 consecutive days. Companies whose stocks fall below $1.00 for extended periods face being de-listed from the exchange.
While music stocks dropped slightly, some major indexes finished the week at new highs. On Friday, the S&P 500 rose 0.8% to 4,594.63, its highest mark of 2023 and its best showing since March 2022. The Dow Jones Industrial Average, a collection of 30 blue-chip companies, rose 2.4% to a new all-time high of 36,245.50. The Nasdaq composite gained 0.4% to 14,305.03 — nowhere close to its all-time record of 16,057.44 set in 2021 but close to its 2023 high of 14,446.55 set on July 19. In the United Kingdom, the FTSE 100 gained 0.5% to 7,529.35. South Korea’s KOSPI composite index grew 0.3% to 2,505.01.
Artists who decided to sell their catalogs in 2023 did a little better, on average, than the year before, according to a new report by Shot Tower Capital, a Baltimore-based investment banking firm that focuses on media and entertainment.
The average multiple of private music publishing catalogs — excluding a small number of iconic catalogs that fetch a premium — increased to 17.2 times net publisher’s share (or gross profit after paying writer royalties) in 2023 from 16.7 times NPS in 2022. Including iconic catalogs, the average multiple decreased slightly in 2023 to 19.2 times net publishers share from 19.4 times NPS in 2022.
While the average multiple improved this year, the 17.2 times NPS average was well below the peak of 20.1 times NPS in 2019, as well as below the 17.9 NPS average for the period spanning 2019 to 2023.
Even so, catalog valuations have held up well amid recent higher inflation rates, Shot Tower explains, even as interest rates — which began to climb in 2021 after falling to historic lows at the onset of the COVID-19 pandemic in 2020 — have tamped down valuations. That’s because buyers’ future growth expectations have increased, due in part to increased upcoming distributions from the Music Licensing Collective — thanks to favorable Copyright Royalty Board rate determinations this year — and the development of new digital sources such as TikTok.
A shift amongst buyers in the catalog market has also brought catalog valuations down from their 2019 peak.
Hipgnosis Songs Fund, the publicly traded investment trust founded by Merck Mercuriadis, was the price-setter from 2018 to 2021. In the latter year, Hipgnosis Songs Fund bought stakes in such catalogs as Neil Young, Shakira and Red Hot Chili Peppers. Before Hipgnosis Songs Fund’s IPO in 2018, the average publishing catalog multiple was 16.2 times NPS in 2017. That jumped to 18.8 times NPS in 2018 and 20.1 times NPS in 2019 and 18.8 times NPS in 2020. In 2022, though, when Hipgnosis Songs Fund was unable to raise more money through additional equity offerings and stopped buying catalogs, the average publishing multiple dropped to 16.9 times NPS. Since 2022, Hipgnosis Songs Management has been employing a more disciplined approach for its privately held fund, Hipgnosis Songs Capital, which is backed by Blackstone, sources tell Billboard.
Shot Tower believes catalog buyers like Hipgnosis Songs Fund and Round Hill Music Royalty Fund — another publicly listed investment trust that Concord acquired in October — now have less influence in current transaction valuations. Instead, large companies are showing their willingness to pay a premium to control rights such as licensing. As interest rates increase, the Shot Tower report states, “yield-focused financial investors have pulled back” and strategic buyers — major labels and publishers — “continue their focus on acquiring quality assets with control where they can impact long-term growth.”
New capital investment will favor the approach taken by these strategic buyers, according to the report. Publishing and recorded music catalogs that provide full control — such as owning 100% of the publisher’s and songwriter’s shares — will continue to be highly valued by strategic buyers. Rights of “marginal quality” catalogs and passive income “are finding less demand.” There’s are good reasons for placing a premium on control: Shot Tower estimates the ability to eliminate third-party distribution and administration costs is equal to an immediate increase in a valuation multiple of 2.0 times NPS or NLS. In addition, having control over a catalog provides opportunities for licensing and new projects with “potential to drive growth far in excess of industry averages.”
While the typical publishing catalog transaction value has leveled off since the 2019 peak, a few iconic catalogs — Shot Tower defines them as exceeding $200 million — approached 30 times NPS in 2023, a level matched in 2021 but higher than amounts paid in 2022. These catalogs go “primarily to an existing label/publisher with highly strategic (and sometimes defensive) reasons for purchasing at above-market prices,” the report explains.
One such iconic recorded music catalog sold for nearly 30 times net label share in 2023, according to the report — a much higher multiple than recorded music deals in previous years. (The report does not name the iconic catalog sold in 2023, but the only recorded music transaction exceeding $200 million that was made public this year was Litmus Music’s purchase of Katy Perry’s catalog for $225 million.) In previous years, iconic recorded music catalogs sold for between 22 times and 26 times net label share, or profit after royalty payments; and distribution, manufacturing, warehousing and shipment costs, but before marketing expenses.
Recorded music multiples — for both iconic and non-iconic catalogs — have risen over time while publishing multiples are consistent with levels seen in the late ‘90s, according to Shot Tower. That’s because the record business’s shift from physical to digital has helped improve record labels’ margins. Shot Tower points to Warner Music Group as an example: In 2010, when physical sales exceeded digital revenues, WMG’s adjusted earnings before taxes, interest, depreciation and amortization margin was 13.4%. By 2023, WMG’s adjusted EBITDA margin had improved to 23.8%. Shot Tower estimates that every 1% shift in revenue from physical to digital and streaming has increased WMG’s EBITDA and cash flow margins by about 25 basis points (a basis point is one-hundredth of a percentage point). If digital sources eventually account for 95% of recorded music sales, margins have the potential to improve another 5%.
Expect similar multiples in the coming years, says Shot Tower. Although its crystal ball is “a bit hazy” — uncertain interest rate and macroeconomic environments make predictions difficult — the firm expects interests to “moderate” in the first half of 2024 and multiples “to remain steady for the foreseeable future with higher-than-projected industry growth being offset by the continued drag of higher interest rates.”
Based on current growth projections, and adjusting for the current interest rate environment, ex-icon publishing multiples will range from 15.9 to 16.7 times NPS over the next four years. That’s in line with prior periods but a slip from the most recent years and well below the peaks from 2018 to 2020. Multiples averaged 16.4 times NPS from 2014 to 2022 but exceeded 18.0 times NPS from 2018 and 2020 and peaked at 20.1 times NPS in 2019.
As for recorded music, Shot Tower expects an average ex-icon multiple of 12.9 to 13.4 times net label share over the next four years. That’s in line with post-2020 trends that saw multiples jump as investors became convinced streaming would be a financial boon to recorded music revenues. Historically, the larger marketing spending associated with master recordings and a lower diversity of revenue streams has caused recorded music to trade at lower multiples to publishing assets. Shot Tower believes recorded music will continue to trade at a discount to publishing multiples despite margins improving as streaming accounts for a higher percentage of recorded music’s revenue mix.
But the value gap has become closer between music publishing and recorded music assets. In 2020, recorded music transactions carried an average NLS multiple of 10.4 times while music publishing transactions averaged an 18.8 NPS multiple that year — with a gap of 8.4 times between them. In 2022, that gap narrowed to 4.3 times, with a 12.4 times NLS multiple for recorded music and a 16.7 NPS for music publishing.
Shot Tower Capital has closed financings and M&A transactions in excess of $16 billion since its founding in 2012. Those have included such deals as the sale of Imagem to Concord, the sales of Phil Collins and Genesis catalogs also to Concord, and Michael Jackson’s estate share of Sony/ATV to Sony. If the Shot Tower principals David Dunn and Rob Law’s entertainment deals from the prior employment at the firms Alex. Brown and and Bear Stearns, respectively, are included, they have closed over 125 media, entertainment and consumer related transactions representing aggregate value exceeding $70 billion, according to the report.
Happy December? It’s time for another Executive Turntable, Billboard’s comprehensive(ish) compendium of promotions, hirings, exits and firings — and all things in between — across the global music industry.
Italian music data platform Musixmatch appointed Rio Caraeff to chief business officer. In his new role, Caraeff will lead business and revenue-driving initiatives and will be responsible for managing relationships with clients, partners, IP owners and other stakeholders at the company, which offers multiple solutions for displaying lyrics in search results, in apps and elsewhere. Caraeff is best known as co-founder and former CEO of music video platform Vevo, where he worked from its 2009 official launch until late 2014. Prior to building Vevo into a video powerhouse, he held a bevy of executive roles at UMG, Sony Pictures and Capitol Records, among other places. In recent years, Caraeff has served as chief commercial officer at spacial audio firm Syng and chief content officer at AR Headset maker Magic Leap. Musixmatch has backing by TPG, Micheli Associati, P101 Venture, United Venture and Piton Capital. “Rio is deeply passionate about the entire music ecosystem and his energy and excitement about his work has enabled his success at some of the most innovative and influential companies in our industry,” said Max Ciociola, Musixmatch founder and CEO.
Jake Kozarec was promoted to partner at Fortress Talent Management, a leading agency representing elite composers and music supervisors including Howard Shore, Philip Glass and Gustavo Santaolalla. Kozarec has been a Fortress mainstay since 2016 and has overseen the careers of composers Lorne Balfe (Top Gun: Maverick) and Matthew Margeson (Kingsman: The Secret Service), among others. “He shares the same values we do – hard work for our clients, good taste and judgment, and integrity – and was a perfect fit from the moment he joined the company,” said Fortress founders Robert Messinger, Rich Jacobellis and Randy Gerston. “We are very excited to see what the future holds.”
Many Fortress clients likely belong to the Guild of Music Supervisors, which just announced their new board of directors and changes to its leadership team. Lindsay Wolfington and Heather Guibert are the guild’s new president and vp, respectively, replacing Joel C. High and Madonna Wade-Reed in the roles. Wolfington and Guibert’s board includes newcomers Jonathan Leahy and Robin Urdang, along with returning members Joel C. High, Howard Pair, Todd Porter, Aminé Ramer, Jennifer Smith, Andrea von Foerster and Wade-Reed, the former vp.
Radio, Radio: Lazy slouch Ryan Seacrest will carry on as host of iHeartRadio‘s On Air with Ryan Seacrest and America’s Top 40 with Ryan Seacrest until the end of 2027, according to a recently minted contract. He’ll also continue working closely with both CEO Bob Pittman and COO/CFO Rich Bressler on major initiatives and hosting several events, namely the iHeartRadio Music Festival … “Rude” Jude Angelini was let go from SiriusXM on Nov. 16 after 19 years as host of The All Out Show on Eminem’s Shade 45 channel. He had been at the satellite giant longer than Howard Stern, who joined up two years later. “I knew I wasn’t a fit for the channel anymore,” he told The Detroit News following his unceremonious firing. “I was in an impossible situation.” … NPR hired Collin Campbell as its new senior vp of podcasting strategy and franchise development. Based in Culver City, Campbell arrives from Gimlet Media, where he was executive editor for new show development. His public radio bonafides include a stint at WNYC, where he helped create The Takeaway and Freakonomics Radio.
ICYMI:
BBR Music Group senior vp of promotion Carson James and senior director of A&R Chris Poole had their positions eliminated by parent company BMG … Day After Day Productions announced the appointment of Christianne Weiss, former APA agent and vp and head of its adult contemporary music division, to serve as svp and head of touring … Diddy stepped down as chairman of REVOLT in the wake of three three sexual assault lawsuits … Former SM Entertainment chief Nikki Semin Han launched a new U.S.-focused K-pop company … and Atlantic veteran Riggs Morales joined the team at Def Jam Recordings as executive vp of A&R.
Amazon without Jillian Gerngross? That’s the new-normal after the respected exec vacated her role as general manager and director of Amazon Music for Europe, Australia and New Zealand after 12 and a half years at the wider company. “It is hard to believe that I have spent nearly 30% of my life with one company,” she observed in a LinkedIn post announcing the move, while thanking Paul Firth, Ryan Redingtoon and Steve Boom for their “unending mentorship and support.” Gerngross scored an Amazon internship in 2010 and soon made it official as a senior marketing manager of traffic for Amazon Fashion. After that dalliance in fashion, she moved over to Amazon Music in March 2013 and never left, taking roles in artist relations, customer engagement and marketing before nabbing her most recent title three years ago. For her efforts, Billboard recognized Gerngross as one of this year’s International Power Players. After her last day at Amazon, she joined tech firm Nothing as vp of marketing.
Entertainment company Neon Coast, founded by music industry entrepreneur and Kane Brown manager Martha Earls, has appointed Janie Whitefield as director of digital. Whitefield will oversee digital strategy for Neon Coast management clients including Brown, Restless Road, Dylan Schneider, Nightly and more. Whitefield previously spent four years as creative director at Venture Music.
Opus 3 Artists absorbed the staff and artists of Magnum Opus Artists into its vocal division, starting in the new year. Caroline Woodfield will hand over the reigns of the division to Nathan Wentworth in April, while MOA artist manager Trevor Newman will return in the same role. Opus 3 Artists’ roster includes instrumentalists, vocalists, conductors, composers, chamber music ensembles, and touring chamber and symphony orchestras. The firm is part of an alliance headed by the San Francisco Conservatory of Music which includes sister artist management company Askonas Holt and recording label Pentatone.