State Champ Radio catalog deal
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Primary Wave Music announced on Tuesday (Nov. 18) that it has acquired a stake in both the publishing copyrights and master recordings of jazz icon Dave Brubeck through a major partnership with Derry Music Company. The partnership also grants Primary Wave a share in licensing Brubeck’s name, image and likeness, with the company collaborating closely with the Brubeck family on future creative decisions.
According to the company, it will leverage its marketing and publishing infrastructure to amplify Brubeck’s legacy through branding initiatives, digital campaigns, synch placements and film and television projects. Financial terms were not disclosed.
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“The Brubeck family enjoys a rare position in the musical world as we have inherited an exceptional legacy,” the family said in a statement. “Our father, Dave Brubeck, was a world figure known for his talent, originality, international diplomacy, and decency. We are thrilled about our new partnership with Primary Wave, whose innovative team will enable us to further extend the appreciation of our parents’ musical and humanitarian heritage.”
Brubeck’s cerebral style transformed West Coast jazz in ways that remain unparalleled. Forming the Dave Brubeck Quartet with alto saxophonist Paul Desmond in 1951, the World War II Army veteran helped usher cool jazz into the mainstream with groundbreaking college tours and albums like Jazz at Oberlin and the on-the-nose Jazz Goes to College.
By the end of the decade, the iconic quartet featured Desmond, drummer Joe Morello and bassist Eugene Wright — the lineup behind Brubeck’s 1959 landmark album Time Out. The record, which opens with “Blue Rondo à la Turk” and includes the iconic “Take Five,” shattered conventions with its daring time signatures and became the first jazz album to sell over a million copies. (It went double platinum in 2011, according to the RIAA.)
Today, Time Out stands alongside albums like Miles Davis’ Kind of Blue and John Coltrane’s A Love Supreme as one of jazz’s defining works.
This quartet, which recorded for Columbia, also produced such classic albums as 1961’s Time Further Out and 1963’s The Dave Brubeck Quartet at Carnegie Hall. His later work included collaborations with baritone saxman Gerry Mulligan and various projects with his children Darius (electric piano), Chris (bass), Matt (cello) and Dan (drums).
Beyond his musical innovations, Brubeck was a staunch advocate for racial integration, famously canceling performances at venues that refused to welcome Wright, who was Black. His six-decade career earned him the Kennedy Center Honors, the National Medal of Arts, eight Grammy nominations and a Grammy Lifetime Achievement Award before his passing in 2012 at the age of 92.
“I’ve worked on dozens of acquisitions for Primary Wave in the 15 years I’ve been with the team, but this one is personal,” said Primary Wave’s John Luneau. “Dave Brubeck and his classic Quartet were my first musical idols – three years before the Beatles! – and remain so still. It’s the honor of my career to help bring about this brilliant marriage of Dave’s musical genius with Primary Wave’s skill at preserving and expanding the legacies of iconic artists.”
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Primary Wave noted it will continue to pursue iconic jazz catalogs, having recently struck deals with Pat Metheny, the late Chuck Mangione, and previously partnered with the Count Basie estate.
The deal comes on the heels of Reservoir Media’s acquisition of Miles Davis’ publishing catalog, signaling a renewed industry focus on preserving jazz’s greatest legacies.
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Mike Morris is one of music’s biggest new investors — and he’s placing his bets on the indies. The managing director of Chicago-based private equity firm Flexpoint Ford has overseen what Billboard estimates is more than $375 million of investments in some of music’s most influential independent companies since 2023. After initially backing the front-line music business at Nettwerk, the label that broke Sarah McLachlan and Barenaked Ladies, that same year the firm announced a “significant investment and partnership” in Goldstate Music, the catalog investment firm founded by former BMG president/COO and J Records co-founder Charles Goldstuck. Last year, Flexpoint led a $34 million equity financing round for Duetti, a music investment company that focuses on indie rights, and led a $165 million investment in Create Music, a music distribution, publishing and data analytics company.
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Morris, who has previously held positions at Northleaf Capital Partners, H.I.G. Capital and Moelis & Co., says that Flexpoint’s focus on high-return middle-market companies serving independent artists has resulted in “repeated success.”
“We’ve really leaned into the independent sector of the music industry — it is just growing much faster than the traditional majors ecosystem,” Morris says. “This part of the market is so large and fragmented and there is so much growth…and tremendous opportunity for innovation.”
What do you think of the maneuvers by the majors, like Universal Music Group’s proposed acquisition of Downtown Music, that target the growth of the indie segment?
They are evidence enough of the fact they have been losing share to the independent ecosystem. They wouldn’t be buying these companies if it weren’t the case. We think our platform companies — whether one or more of them ends up in a major at some point, we’ll see — can outcompete because they don’t have the legacy infrastructure that some of the majors do. And they can complement the majors in serving this vast, fragmented and growing part of the market.
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What are the new modes of monetization you have talked about that excite you?
I’m talking about everything outside of the traditional streaming platforms: Meta, TikTok, YouTube, which is where Create started out. YouTube rights management, if you know how to do it correctly, is a very attractive and important area. Synch placement in video games, fitness apps — all of these tangential revenue streams. Not everyone knows how to monetize those streams, and it is core to the strategy for all of our portfolio companies.
What makes Create special?
Create has only been around for about 12 years. They are a digitally native service and capital provider to the independent sector. It doesn’t have the legacy baggage around infrastructure that some of the services and labels have. Create started out as a pure-play rights management business and then went through a natural evolution, tacking on distribution, accounting systems, publishing — all built on this digitally native background. Their numbers aren’t public, but if they were, they’d speak for themselves.
Duetti was the first, but likely not the last, company to acquire the masters and publishing rights of indie artists bubbling under the mainstream radar. How are they prepped for competition?
This is something [Duetti CEO Lior Tibon] has thought a lot about. They do have a first-mover advantage. But the reason no one else is doing it is because it’s really hard to do. Buying these small catalogs involves a high degree of sophistication, data, AI [artificial intelligence] and operational discipline to acquire thousands of catalogs and thousands of individual tracks. Most music companies and other funds in the space have not set themselves up to do that in a way that’s scalable. More competition is something we’ve planned for at the board level and among the shareholder group and management team. We feel like it’s going to be very hard to replicate the strategy at this kind of scale.
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Goldstate Music is more traditional compared with the other companies in your portfolio. What do you like about their method of investing in music intellectual property [IP], and would Flexpoint directly acquire catalogs itself?
Charles Goldstuck is a best-in-class operator who’s proven over decades in and around the music business that he knows how to start businesses, take on institutional capital like ours, identify attractive parts of a market and use capital to create attractive returns for his investors. [He has a] sophisticated, important piece of the strategy: working on them actively to get the most juice out of those assets. Things like changing and optimizing distribution contracts, synch placements, creating remixes and derivative works, getting [name, image and likeness] rights and doing merch and working actively with those artists.
Songs by Xania Monet, an AI artist that Hallwood Media signed to a multimillion-dollar agreement, are climbing the Billboard charts. How could the commercial success of AI music affect the value of catalogs?
It’s fascinating to see AI-powered artists now being signed by labels. Yes, they’ll compete for listening time and could take some share. But in practice, I think it makes high-quality, authentic catalogs and artists even more valuable. So I don’t see AI destroying catalog value. Instead, I see it widening the gap: disposable, machine-made music on one side and enduring, human-driven catalogs on the other. The latter will continue to command attention, cultural relevance and investor confidence.
What are you currently working on?
The most interesting things I’m seeing right now [include] international opportunities in Asia, the Middle East [and Latin America], both on the catalog side and with music service providers. Music-adjacent service providers and IP businesses in music-adjacent spaces like film, TV and video games are heavy users of music. We’re looking at a business in Korea right now that is in some ways like Create. It has evolved organically in the Korean music ecosystem to provide services focused on artists’ and independent labels’ needs.
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How long do you plan to be involved with portfolio companies?
We’re not quick-flip investors. We’re not in the quick-hits business. We’re about partnering with entrepreneurs and founders to build enduring businesses that can compound value over a long period of time. We think exits take care of themselves, as long as we’re helping build enduring businesses. Sometimes it takes three years, sometimes five and sometimes 10.
Many companies, including Duetti and Create, are exploring raising funds through issuing asset-backed securities. Why is this a good strategy, and what are the potential drawbacks?
To me, this is just music catching up to what other asset classes have been doing for decades. When you have reasonably predictable cash flow streams, it is a more efficient form of financing — no different from bank financing. But it’s in a more regimented form and checks the boxes the buyers of these types of bonds want. It’s a clear positive for the industry. The only real drawback is it is a significantly bigger undertaking in terms of the documentation and the ratings process than going to a bank and getting a loan. So it does require time, attention and effort from management teams and us.
It’s hard to predict the staying power of songs. Do you have any concerns about very young songs being used to collateralize this type of bond or companies with high loan-to-debt rates adding to their debt this way?
I hear all the same things. The performance of these bonds — both public and the private — has been 100%: no defaults, no issues. But it’s a relatively young asset class in the securitization market. So you might see some folks use the leverage very aggressively, which would be unwise. But I think the buyers of these bonds are sophisticated enough to know what they’re getting into and to analyze these cash flows and to structure them in a way that makes sense. These investors have a lot of experience now in both music and other asset classes where the modeling isn’t very different. It’s all a function of risk/reward tolerance and pricing appropriately.
Hipgnosis, the catalog company with rights to songs by artists including the Red Hot Chili Peppers that became the face of music-as-an-asset-class for Wall Street investors, is being renamed Recognition Music Group, the company said on Wednesday (March 12).
The new name covers what was previously three separate companies that each had Hipgnosis in the name: Hipgnosis Songs Fund, a publicly traded music royalty investment fund formerly listed on the London Stock Exchange; Hipgnosis Songs Assets, a privately-held royalty fund backed by Blackstone; and Hipgnosis Song Management, the investment manager previously run by founder Merck Mercuriadis that worked to generate a return on the song rights held in the catalog funds.
Mercuriadis did not respond to a request for comment.
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Since Blackstone acquired Hipgnosis’s public fund for $1.47 billion and Mercuriadis stepped down from his role as chair of the investment manager last year, the company decided it was time to shed the old name, CEO Ben Katovsky tells Billboard.
Recognition’s portfolio of publishing and master recording rights to some 45,000 songs include stakes in megahits like Shakira‘s “Whenever, Whereever,” The B-52s’ “Love Shack,” Fleetwood Mac‘s “Go Your Own Way” and Diana Ross‘ “I’m coming out.” A video made by the company to promote its new name to its roughly 40 employees weaves together lyrics from these and other songs in its portfolio to send a message that despite their history as separate entities, the Hipgnosis companies are meant to “get together,” even if one almost went its “own way” during Blackstone’s billion-dollar bidding war with Concord. Nearly a year after it consolidated ownership, Blackstone and Katovsky “want the world to know” this is a new company.
“It’s impossible not to have those songs resonate in your mind,” Katovsky says from Recognition’s London offices. He tells Billboard that the new name refers to “a combination of how easy it is to recognize those songs day to day and also to recognize the talent of the artists and songwriters and musicians who made those songs.”
Qasim Abbas, Blackstone’s head of tactical opportunities international, the division of the global financial fund that owns Recognition, said in a statement that last year showed “strong investor conviction in this asset class.”
“The company is now set to build on its position as a leading independent investor in music rights; owning and managing an incredible portfolio of songs and recordings,” Abbas added.
Hipgnosis was known for acquiring dozens of catalogs a year between 2018 and 2021, earning it a reputation of contributing to a run-up in the market for music royalties. In contrast, Recognition intends to be a “selective buyer” of music rights, Katovsky says.
“Our ambition is to continue to grow the portfolio, and we already have scale as a business,” Katovsky says. “The scale allows us to invest … but it also means we’re not under any pressure to deploy capital.”
Recognition’s portfolio remains heavily weighted to publishing rights, which comprise roughly 80% of its assets; the remainder are mostly master recording rights. Blackstone still owns Hipgnosis Songs Group, the subsidiary that has housed Big Deal Music’s administration business since Hipgnosis acquired the independent publisher in 2020. The company has said the division is under strategic review, and Recognition is now looking to partner with publishers and music companies for the administration of its assets.
“Recognition Music will be a very collaborative player in this space in ways that it was not historically,” Katovsky says. “We want to work with other partners in this industry to do that.”
Earlier this month, Warner Bros. Discovery and Cutting Edge Group announced they were teaming up to launch a joint venture to generate more money from one of the original Hollywood studios’ catalog of 400,000 movie and television songs.
The blockbuster deal — reportedly worth $1 billion — includes the Harry Potter and Lord of the Rings franchises, Friends, Game of Thrones, and Succession, to name a few.
This novel arrangment was inspired by WBD’s need to get more out of its most valuable assets as the rise of streaming shakes the fundamental economics underlying modern media businesses. Cutting Edge Group is a nearly 15-year-old company founded by Philip Moross, a former real estate developer who saw an opportunity to acquire, manage and develop music rights from films and TV shows.
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Now a three-prong company that also includes studios where partnering artists like Timbaland produce music specifically for Cutting Edge projects in the film, TV or wellness space, Cutting Edge is embarking on its biggest project yet.
Billboard spoke with CEG’s Moross about how the joint venture with Warner Bros. Discovery will work, including what Cutting Edge brings to the table and if they other joint ventures between music companies and studios to follow.
What are you aiming to accomplish with this joint venture, and what role will Cutting Edge play do day-to-day?
I put the idea [to WBD] that as we are solely focused on music, we could help make it a larger profit center for them. We are working closely with Warners’s music department … and hope to build a music business within the framework of Warner Bros. Discovery the way that Warner Chappel was in the past. We are a music business. They are a film and television business that incorporates music into their creative process. Our job is to effectively maximize the monetary end of it. But how it’s going to work on a day-to-day basis we are still working out. I will say We have no interest in changing the relationships [Warner Bros. Discovery] has with UMPG and Sony. We’re an independent and we don’t compete with any of them.
This is a massive catalog. How will you manage maximizing its value?
You compartmentalize—pure instrumentals, songs, etc.—and then see what the market wants from each category … and take into account the composers. We understand the composers are the lifeblood of the business. Warner wants to take care of them from a creative point of view.You must balance the economic value of that with the creative process. A composer may not want the main theme to Harry Potter used anywhere else, but the body of the music may be available. On the other hand, the song “Shallow” is a huge song, which is relevant now, that you may be able to get some very big synchs on. We are going to have to work to make sure all parties are involved–because it is not 100% owned by one party and the master is owned by Gaga’s record label. We have the time and inclination to do that whereas Warner is on to the next movie already.
You’ve got 400,000 titles so it’s not going to be quick and easy. If I am advising I’d be saying go for the top 20% that generate 80% of the revenue, but don’t lose sight of the gems in there.
Will Cutting Edge be providing its two cents on films?
We hope to provide input on songs for films in the works. In the core business of Cutting Edge, we’ve done that. We’ve bought catalogs of film rights and suggested to composers … to use the same themes again because creatively it works.
What is so important to Warner Bros. Discovery is maintaining creative integrity. They are never going to tell a director what music to use and what music not to use. … [and] it is not our role to impose any creative ideas. What we hope to do is to suggest [through the Warner Bros. Discovery music department] to the creatives, “If you’re doing Aquaman 3, why don’t you use the same themes from Aquaman 1 and 2 for certain characters?”
Cutting Edge’s Myndstream business does a lot linking music with the wellness industry. Are there opportunities in the wellness space in this catalog?
Absolutely it’s an area of focus for us. We work on [opportunities like these] all the time. There is a Nicholas Britell track called Agape [from the score of If Beale Street Could Talk]. It’s one of the most used tracks on Peloton for their meditation programs. Everything is about the emotional connection and identifying opportunities.
Everyone knows the soundtracks of “Harry Potter” and Friends. But there are music cues in the catalog as well. Can you describe what those are and their potential?
When you are watching a film or television show and you hear the background music, every item of music that sits in that film or television show is a cue. It is the background music that you’ve got right up to the songs. For example, The Rembrandts in Friends — the opening titles can be a cue. It could be the 3 ½ minute version of the Rembrandt song — a full song — or the 1-minute portion of that. That is the cue. The cue that is registered with BMI is earning its revenue from broadcast performance. So when the TV show plays, the network that is paying the royalty will pay the PRO which then pays the publisher, which in this case is our joint venture. We track to make sure nothing is missed.
How much of your day will be devoted to this?
[Cutting Edge’s] operating team will spend the majority of its time on this. It’s certainly the biggest deal that I’ve ever done. It deserves the attention because it is such a big scale.
What kind of return is this JV expected to produce on Warner Bros. catalog?
I can’t give you a number as to how much we will increase revenue.
Tell us about your team.
This is a family affair. My background was in real estate historically; I gave it up in 2010. All three of my kids are in the business; 12 on 12 is run by my daughter Claudia, Freddie runs the MyndStream business, and Tara [Finnegan] runs the bigger picture. Tara has done an exceptional job in this whole process, but we have really navigated together from the beginning. Tim Hegarty and the Cutting Edge M&A team, as well. The deal could not have been done without them.
Do you think more studios will do deals like the one Cutting Edge has done with Warner Bros. Discovery?
I hope so. We are having discussions with various rights owners who are interested in maximizing the value of their music rights either through a sale or a partnership with Cutting Edge. They are driven by different motivations, which include the ability to release equity from ancillary rights that are fully amortized on their balance sheets; or the opportunity to work with Cutting Edge’s team of professionals to help with supervision, exploitation, soundtrack release and marketing.
There should be no major obstacles since we have completed the deal with WBD and proved the value we can add to these types of copyrights. We operate in a very specialist area of the music business and each rights owner has their own specific needs. It takes time to create a bespoke offer to meet these needs, which Cutting Edge is uniquely placed to do.”
Warner Music Group is buying a controlling stake in Tempo Music Investment, a catalog company that owns rights to songs by Wiz Khalifa, Florida Georgia Line and Brett James, in a deal sources say is worth around $450 million. WMG said it will acquire the stake from Tempo’s founder, Providence Equity Partners. Providence will remain a […]
Iconoclast, an artist and brand development company, said on Tuesday (March 19) it acquired legendary Great American Songbook singer Tony Bennett‘s catalog, as well as his name and image likeness rights.
The vocal titan known for his renditions of “Because of You” and “I Left My Heart in San Francisco” dedicated his nearly seven-decade career to the canon of American jazz classics, show tunes and popular songs from the first half of the century that are known as the Great American Songbook. Bennett, who died last July, became a bridge late in life between the classics and modern pop music through concerts and recordings with Amy Winehouse, Elvis Costello, k.d. lang and others.
Iconoclast founder Olivier Chastan, along with Bennett’s son and manager Danny Bennett, said the company has secured several Tony Bennett-branded projects, including a New York City restaurant, a series of watches with luxury American watch company Bulova and a Paramount+ documentary called The Lady and The Legend, about Bennett’s frequent collaborations with Lady Gaga.
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“We all walk in the footsteps of giants. Tony was one of these giants,” Chastan said in a statement. “Besides his extraordinary talent that radiated for over 60 years, Tony’s legacy is one of character, integrity, kindness and courage. We are truly honored to be the custodians of this incredible and historical legend.”
Danny Bennett said he expects the deal will ensure his father’s works “endure for future generations.”
“In working with Tony for over 40 years, my philosophy was always that I didn’t manage a career but, rather, managed a legacy,” said Danny Bennett. “Iconoclast … will continue this tradition.”
Chastan founded Iconoclast in 2021, after having previously led Irving Azoff‘s Iconic Artists Group. The company owns rights to works by artists including The Band musician Robbie Robertson, Marianne Faithfull and David Cassidy.
Terms of the deal were not disclosed. Iconoclast was represented by Sam Roseme and Peter Paterno of King, Holmes, Paterno & Soriano, and Tony Bennett was represented by Don Friedman of Grubman, Shire, Meiselas & Sacks.
LONDON — Hipgnosis Songs Fund’s shareholders have voted overwhelmingly in favor of passing a special resolution that authorizes the payment of up to 20 million pounds ($25 million) to prospective bidders seeking to acquire the fund’s assets.
The special resolution was approved by 99.9% of the fund’s shareholders at an extraordinary general meeting held in London on Wednesday (Feb. 7), according to a regulatory filing.
It gives Hipgnosis Songs Fund‘s (HSF) board of directors the power to pay a fee capped at £20 million to any prospective bidder or bidders making a “bona fide” offer or offers to acquire one or more of the company’s subsidiaries which own music assets, and/or some of the fund’s music rights on favorable terms. The fee is meant to reduce the risk of making an offer for Hipgnosis Songs Fund’s music catalogs by providing “significant protection” against their due diligence and acquisition costs.
In a statement, Robert Naylor, chairman of Hipgnosis Songs Fund, thanked shareholders “for their continuing support” and said the company’s board “remains focused” on its strategic review, “under which it is looking at all options to deliver shareholder value.”
The London-listed fund, which owns full or partial rights to the song catalogs of artists ranging from Justin Bieber, Neil Young, Bruno Mars, Jimmy Iovine, 50 Cent, Shakira, Blondie, Justin Timberlake, Lindsey Buckingham and many more, hopes that the enticement of a large fee will help draw potential bidders.
In October, shareholders voted against the music royalties fund’s proposed $440 million deal to sell 29 catalogues to Hipgnosis Songs Capital – a partnership between investment giant Blackstone and the fund’s investment adviser Hipgnosis Song Management – citing the lack of an “up-to-date” valuation.
October’s annual meeting of shareholders also saw a majority of investors vote against a resolution “to continue running the fund in its current form” — a so-called “continuation vote” — commencing a six-month countdown for the board to come up with a plan “for the reconstruction, reorganisation, or winding-up of the company.”
That led to the installation of a new executive board with Naylor replacing Andrew Sutch as chairman in November.
Last year wrapped with Hipgnosis lowering the value of its music portfolio following what Naylor described to investors as a strained relationship with its investment advisor, the Merck Mercuriadis-led Hipgnosis Song Management (HSM), over the catalog’s worth.
This year has so far begun on an equally rocky footing with the fund’s board of directors calling into question HSM’s ability to field competitive bids for its assets.
A major sticking point is the investment advisor’s call option, which gives it the right to purchase the company’s portfolio if its contract with the fund is terminated with less than 12 months’ notice, among other scenarios. The fund’s board contends that Hipgnosis Song Management’s call option harms its ability to receive competitive bids.
Last week, Mercuriadis announced that he will be stepping down as chief executive officer of Hipgnosis Song Management to take up a newly created chairman role with Ben Katovsky replacing him as CEO.
Hipgnosis Songs Fund’s share price was roughly flat at 65 British pence ($0.84) following Wednesday’s extraordinary general meeting.
Investors want serious, swift changes to make Hipgnosis Songs Fund more profitable and stable. That was the key takeaway from more than 80% of investors’ votes last week on how the London-listed trust that owns rights to songs by Journey, Bruno Mars and Rihanna should proceed. While the landslide vote opened the door to possibly winding up the pioneering publicly traded music royalty trust, it doesn’t spell an immediate end — more like the long beginning of company-wide rethink to improve the company’s stock price.
More than 80% of Hipgnosis investors voted in favor of the board drawing up “proposals for the reconstruction, reorganization or winding-up of the company to shareholders for their approval within six months,” the board said in a regulatory filing.
“These proposals may or may not involve … liquidating all or part of the company’s existing portfolio of investments.” Adding further uncertainty to the fund’s future is that, while its board devises a plan to restore regular dividends and boost a lagging share price, it must simultaneously find replacements for its chair, Andrew Sutch, and two other members, after those three either resigned or failed to win re-election to the board seats last week.
Sources say Round Hill Music Royalty Fund’s outgoing board chair, Rob Naylor, is being considered to chair of Hipgnosis Songs Fund’s board. Naylor is a former London banker and currently the chief executive officer of Intuitive Investments Group, a fund that invests in high growth life sciences companies. Naylor would have been closely involved in negotiating Round Hill’s $469 million sale of its public fund to Concord, which shareholders approved in mid-October and closed this week.
Jefferies analyst Matthew Hose says one route the board might take would be similar to Round Hill’s sale — Hipgnosis Songs Fund could sell itself to its sister fund Hipgnosis Songs Capital, which is jointly run by Mercuriadis’ investment advisor Hipgnosis Song Management and private equity goliath Blackstone, or it could sell itself just to Mercuriadis’ investment advisor Hipgnosis Song Management.
Although investors soured on an earlier plan to sell about 20% of the Hipgnosis Songs Fund to Hipgnosis Songs Capital, with Blackstone’s backing it remains among the most capable buyers and it knows the portfolio of songs well, analysts agree. There’s also a clause in the investment advisory group’s contract that says if the public fund ends its contract with investment advisor, the investment advisor can buy out the fund. The clause, which was laid out in the fund’s 2018 filings when it went public, was intended to help Mercuriadis reassure artists whose catalogs Hipgnosis acquired that he would always stay on as the relationship manager in charge of their songs and legacy.
While Hose says a sale to Mercuriadis and the investment manager could benefit all parties, “the question is whether this board is able to propose an ‘open’ sale process for the portfolio that extracts this fair value for shareholders, while still honoring the manager’s option, or will the existence of the option simply prohibit any realistic bids?”
Analysts who cover investment trusts like Hipgnosis Songs Fund say that about 80% of the time following a no continuation vote, a fund winds up, either through selling its assets to multiple buyers or all of the portfolio to a single buyer and then distributing those proceeds to shareholders minus any debt repayments.
The deliberation over which direction to take the fund will also rely on an updated valuation of the portfolio, which Hose says will likely see a downgrade since the disclosure in October that the fund’s valuers had inaccurately estimated certain CRB III royalty funds.
“We see the potential for weakness in the portfolio,” Hose says. “An independent valuation of the portfolio by a new valuer that gains the trust of the market … could be crucial here.”
Investors in Hipgnosis Songs Fund on Thursday overwhelmingly demanded a new board make structural changes to the troubled music rights company in ways that don’t include selling off part of its 65,000-song catalog, which includes compositions by Neil Young, Shakira and the Red Hot Chili Peppers.
At the company’s annual meeting of shareholders in London, a majority of investors voted no on a resolution “to continue running the fund in its current form”–what’s known as a continuation vote — and they rejected a plan to sell a package of 29 song catalogs to Hipgnosis’ Blackstone-backed sister fund, according to the fund.
The ‘no’ vote signals unequivocal shareholder anger with the company founded by Merck Mercuriadis, and it kicks off a 6-month countdown for the board to come up with a plan “for the reconstruction, reorganisation, or winding-up of the company,” possibly “liquidating all or part of the company’s existing porfolio of investments,” according to the board’s statement.
“While shareholders have not supported our proposed transaction or the continuation vote, it is clear that they share our belief in the inherent quality and potential of these assets,” Sylvia Coleman, senior independent director of Hipgnosis Songs Fund said in an emailed statement. “Directors are now expediting the appointment of a new chair who will drive the strategic review we have already announced, with a clear focus on delivering improved shareholder value.”
Investors voted against the re-election of Hipgnosis Songs Fund board Chair Andrew Sutch at the meeting, speeding up the timetable for his departure. Sutch had already announced he would step down before the company’s next annual general meeting in 2024. On Wednesday, the day before the company’s annual meeting, fund directors Andrew Wilkinson and Paul Burger resigned, and last week, the board embarked on a strategic review into the company’s management team.
“Shareholders have spoken and sent a clear message that the status quo is unacceptable and that a total reset is required,” Tom Treanor, the head of research at Asset Value Investors, which owns a roughly 5% stake in the fund, said in an email. “We look forward to a refreshed board working closely with shareholders to turn the company around.”
Mercuriadis, the former manager of Elton John and Guns N’ Roses, will continue as Hipgnosis Songs Fund’s investment advisor. Mercuriadis founded Hipgnosis in 2017 and took it public on the London Stock Exchange (LSE) in July 2018.
Hipgnosis Songs Fund’s share price rose 1.2% to 75.90 British pence ($0.92) at 11:20 in London.
Litmus Music, a catalog rights company backed by private-equity giant Carlyle Group LP, said on Monday (Sept. 18) it acquired the rights to Katy Perry’s five studio albums released for Capitol Records, including her Grammy-nominated Teenage Dream.
According to sources, Litmus paid $225 million for Perry’s stake in the master recording royalties and music publishing rights to her five albums released between 2008 and 2020—One of the Boys, Teenage Dream, PRISM, Witness and Smile. Litmus declined to comment on the deal terms.
Perry’s catalog sale, finalized earlier this year, follows other 2023 music rights deals like Justin Bieber’s $200-million sale to Hipgnosis Songs Capital, demonstrating that household name artists can still command top dollar even as high interest rates moderate investors’ appetites for song rights.
From her breakout single “I Kissed A Girl” in July 2008 to the five chart-topping songs from 2010’s Teenage Dream, Perry has notched a total of nine No. 1s on the Billboard Hot 100. During a musical era that saw major hits from other female pop stars like Lady Gaga, Beyoncé, Rihanna, Taylor Swift, and Adele, Perry remains the first woman and only second artist ever (after Michael Jackson) to send five songs from the same album to the summit of the Hot 100. Those songs are “California Gurls,” “Firework,” “E.T.,” “Last Friday Night (T.G.I.F.)” and “Teenage Dream.”
In addition to releasing 2017’s Witness and 2020’s Smile, Perry is winding down a blockbuster Las Vegas residency that she started in late 2021.
The “Roar” singer’s professional relationship with Dan McCarroll, Litmus co-founder and chief creative officer, dates back to 2010 when McCarroll was president of Capitol Records, the company said.
“Katy Perry is a creative visionary who has made a major impact across music, TV, film, and philanthropy,” McCarroll said. “I’m so honored to be partnering with her again and to help Litmus manage her incredible repertoire.”
Launched in August 2022 with a $500-million-investment from Carlyle’s Global Credit Platform, Litmus has acquired publishing and recording rights of artists from a range of genres, including Keith Urban‘s master recordings and a package of publishing and performance copyrights from super producer benny blanco.
Hank Forsyth, Litmus co-founder and chief executive officer, called Perry’s “essential” songs “part of the global cultural fabric.”
“We are so grateful to be working together again with such a trusted partner,” said Forsyth, an industry veteran previously of Warner Chappell and Blue Note.
“We believe this is a testament to the team’s ability to partner with the world’s top artists. Katy’s iconic songs have not only achieved outstanding commercial success but have significantly influenced popular culture,” said Matt Settle, managing director at Carlyle.
