finance
In December, Influence Media Partners, the music investing company backed by BlackRock and the Warner Music Group, joined the growing music industry trend of using asset-backed securitization to finance acquisitions and operations by raising about $360 million through a private placement in a deal lead by Goldman Sachs, sources say.
Besides the Influence Media deal, the waning months of 2024 also saw Concord raising $850 million through its third asset-backed bond offering run by Apollo Global Management in October; while Blackstone led a $1.47 billion securitization for its Hipgnosis Song Asset company. In each deal, the bonds and notes are collateralized by the music assets and income streams of the respective companies. The offerings from Concord and Hipgnosis have public filings with the appropriate regulatory agencies, but the Influence Media offering, as a private placement, does not have to file with the U.S. Securities and Exchange Commission.
As interest rates rise, asset-backed securities (ABS) are expected to become increasingly popular funding vehicles for music companies because they have fixed, five-year interest rates. In the past, Concord CEO Bob Valentine has compared these securitizations to fixed, low-interest-rate loans.
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Influence Media co-managing partner Lynn Hazan, the former CFO for Epic Records, worked with BlackRock executives on the deal, according to sources.
Influence Media, which was founded in 2019, has since bought stakes in some 30 music catalogs, and in early 2022 received additional funding to the tune of $750 million provided by BlackRock and the Warner Music Group. The acquired catalogs include music by Enrique Iglesias, Future, Logic, Julia Michaels, Ali Tamposi, Tainy and Harry Styles collaborator Tyler Johnson. The new funding is expected to be deployed in buying more music catalog assets.
Initially, it looked like the Influence Media Partners asset-backed securities offering was slow in coming together as bond investors looked at the Concord and Hipgnosis offerings, but in the end, the Influence offering — which also had Truist as the co-structuring and co-placement agent — came together nicely for the New York-based music investment company, attracting funding from about a half-dozen investors, sources say.
South Korea’s Financial Supervisory Service is investigating HYBE and its chairman, Bang Si-hyuk, over allegations he earned $285 million from the company’s 2020 initial public offering through profit-sharing deals with three large shareholders.
HYBE, then named Big Hit Entertainment, went public in 2020 after building its primary act, BTS, into global stars. The IPO raised approximately $820 million and confirmed HYBE’s arrival as a major player in the global music business. But while the IPO was a success for the company, many individuals who bought shares for well above the IPO price lost money as the price retreated in the following weeks.
Last week, The Korea Economic Daily broke the story that Bang personally pocketed about 400 billion won ($285 million) from agreements made with private shareholders STIC Investments, Estone Equity Partners and New Main Equity a few years before the IPO. Those agreements, according to the report, called for Bang to receive 30% of the shareholders’ profits from their sale of Big Hit shares following the IPO. But if Big Hit failed to go public before an agreed-upon time, Bang would have had to repurchase the shares plus interest.
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In a statement posted to HYBE’s investor relations website on Friday (Nov. 29), the company confirmed the existence of a shareholder agreement but dismissed the notion that Bang broke any securities law. “During the process of preparing for the listing, our company provided the relevant shareholder agreement to the listing underwriters, and the listing underwriters also reviewed the relevant shareholder agreement in accordance with the listing-related laws,” the statement reads. “In this regard, we have determined that our company did not violate any relevant laws during the listing process.”
A HYBE official provided more detail about the shareholder agreement in a statement to The Korean Herald. Prior to the IPO, one of HYBE’s investors requested to know the IPO timeline, which HYBE refused to share. Worried about unnamed uncertainties, the shareholder demanded a “put-back option,” or a right to sell an equity at a pre-determined price and time. But HYBE “couldn’t sustain itself under such conditions,” this person stated, and Bang “took on the risk himself” and personally agreed to the option.
South Korea’s Financial Supervisory Service was quoted in media reports as saying it’s investigating HYBE and Bang for possible violations of the country’s Capital Markets Act, including how a private equity fund acquired Big Hit shares prior to the IPO and whether Big Hit omitted information from its securities filing. The Korea Exchange stock market is also examining relevant documents for potential violations.
When Big Hit shares debuted on the Korea Exchange on Oct. 15, 2020, strong demand drove the share price from the 135,000 won ($118) IPO price to 351,000 won ($308) on its opening day. But Big Hit’s price fell 22.3% the next day and dropped another 29% over the next two weeks, leaving many individual investors with losses. (The stock rebounded over time. An investor who bought at the peak on the stock’s opening day could have sold for a profit had they waited one year.) The Korea Economic Daily article contended the drop-off was “largely driven” by the private equity fund’s “massive selloff” of Big Hit shares after the IPO.
Billionaire hedge funder and Universal Music Group board member Bill Ackman called for UMG to move its stock listing and legal headquarters to the United States from Amsterdam after violent attacks on Israeli soccer fans overnight in the Dutch capital. Amsterdam’s Mayor Femke Halsema said fans of Maccabi Tel Aviv were attacked and “pelted with […]
Concord is raising $850 million through an existing asset-backed security (ABS), according to a new report by Kroll Bond Rating Agency (KBRA). These new notes are the third series of notes of a $2.6 billion ABS. The proceeds will be used to acquire approximately $217 million of assets that will be contributed to the ABS’s collateral […]
Universal Music Group Nashville has appointed Robert Kilduff as chief financial officer. Kilduff brings to the role more than three decades of experience in financial leadership, strategic financial planning, operations, and corporate development.
Kilduff previously served as CFO for non-profit organization, the Gary Sinise Foundation. He has also served as CFO of New Form Entertainment, vice president of financial planning & analysis for WME, and vice president of financial planning & analysis for Universal Music Group North America. Kilduff has also helmed financial strategy for Broadramp, Inc. as an early tech start up, spearheaded the launch of an international software division for special effects company Digital Domain, and directed international financial teams and operations integration for the Viacom subsidiary Neopets.com/ Kilduff’s other finance roles have included PricewaterhouseCoopers Strategy Consulting, Warner Bros. Studios, and former Big Six accounting firm, Coopers & Lybrand. Kilduff holds degrees from UCLA and Columbia Business School.
“Having helped lead the financial growth strategy of businesses in music, film/television, and technology sectors, Bob has a wealth of knowledge that will be instrumental in the growth strategy of Universal Music Group Nashville,” said Universal Music Group Nashville Chair/CEO, Cindy Mabe in a statement. “He is the unicorn we were looking for to help grow the next era of UMGN. I am so excited for him to join our team.”
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Kilduff added, “I am thrilled to rejoin UMG, a company with such a rich history of creative excellence, and eager to contribute to its ongoing success and future growth.”
The addition of Kilduff is the latest shift for UMG Nashville, following the appointment of Derek Anderson as senior vp of commerce last month. The label group also recently teamed up with Timbaland’s Mosley Music.
The label group Universal Music Group Nashville consists of imprints Capitol Records Nashville, EMI Records Nashville, MCA Nashville, and Mercury Nashville, as well as comedy label Capitol Comedy Nashville, which launched last year. In February, UMG Nashville revealed the launch of its distribution arm Silver Wings Records, as well as the launch of its film/tv production unit Sing Me Back Home Productions.
UMG Nashville’s artist roster includes Alan Jackson, Anne Wilson, Billy Currington, Brad Paisley, Brothers Osborne, Bryce Leatherwood, Carrie Underwood, Carter Faith, Catie Offerman, Caylee Hammack, Chris Stapleton, Dalton Dover, Darius Rucker, Dierks Bentley, Dillon James, Eric Church, George Strait, Hootie & The Blowfish, Jon Pardi, Jordan Davis, Josh Ross, Josh Turner, Kacey Musgraves, Kassi Ashton, Keith Urban, Little Big Town, Louie TheSinger, Luke Bryan, Luke Grimes, Maddie & Tae, Mickey Guyton, Parker McCollum, Priscilla Block, Reba McEntire, Sam Hunt, Sam Williams, The War And Treaty, Timothy Wayne, Tucker Wetmore, Tyler Hubbard, Vince Gill, Vincent Mason, and more, as well as comedian Nate Bargatze.
Global investment giant Blackstone said on Monday it would pay a penny more to take over Hipgnosis Songs Fund (HSF), the London-listed company that owns Red Hot Chili Peppers’ catalog, because in a revised takeover plan disclosed Monday it is paying less in advisory fees. In a joint announcement, Blackstone and HSF’s board of directors said they approved the offer […]
Suno, a generative AI music company, has raised $125 million in its latest funding round, according to a post on the company’s blog. The AI music firm, which is one of the rare start-ups that can generate voice, lyrics and instrumentals together, says it wants to usher in a “future where anyone can make music.”
Suno allows users to create full songs from simple text prompts. While most of its technology is proprietary, the company does lean on OpenAI’s ChatGPT for lyric and title generation. Free users can generate up to 10 songs per month, but with its Pro plan ($8 per month) and Premier plan ($24 per month), a user can generate up to 500 songs or 2,000 songs, respectively, on a monthly basis and are given “general commercial terms.”
The company names some of its investors in the announcement, including Lightspeed Venture Partners, Nat Friedman and Daniel Gross, Matrix and Founder Collective. Suno also says it has been working closely with a team of advisors, including 3LAU, Aaron Levie, Alexandr Wang, Amjad Masad, Andrej Karpathy, Aravind Srinivas, Brendan Iribe, Flosstradamus, Fred Ehrsam, Guillermo Rauch and Shane Mac.
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Suno is commonly believed to be one of the most advanced AI music models on the market today, but in past interviews, the company has not disclosed what materials are included in its training data. Expert Ed Newton-Rex, founder of Fairly Trained and former vp of audio for Stability AI, warned in a recent piece for Music Business Worldwide that it seems likely that Suno was trained on copyrighted material without consent given the way he has been able to generate music using the model that closely resembles copyrights.
In a recent Rolling Stone story about the company, investor Antonio Rodriguez mentioned that Suno’s lack of licenses with music companies is not a concern to him, saying that this lack of such licenses is “the risk we had to underwrite when we invested in the company, because we’re the fat wallet that will get sued right behind these guys.… Honestly, if we had deals with labels when this company got started, I probably wouldn’t have invested in it. I think that they needed to make this product without the constraints.”
Suno representatives have previously said, however, that their model will not let anyone create music by using prompts like “ballad in the style of Radiohead” or employ the voices of specific artists.
Many AI companies, including OpenAI, argue that training on copyrights without licenses in place is “fair use,” but the legality of this practice is still being determined in the United States. The New York Times has launched a lawsuit against OpenAI for training on its copyrighted archives without consent, credit or compensation, and Universal Music Group, Concord, ABKCO and other music publishers have filed a lawsuit against Anthropic for using its lyrics to train the company’s large language model.
In the Suno blog post, CEO Mikey Shulman wrote: “Today, we are excited to announce we’ve raised $125 million to build a future of music where technology amplifies, rather than replaces, our most precious resource: human creativity.”
“We released our first product eight months ago, enabling anyone to make a song with just a simple idea,” he continued. “It’s very early days, but 10 million people have already made music using Suno. While GRAMMY-winning artists use Suno, our core user base consists of everyday people making music — often for the first time.
“We’ve seen producers crate digging, friends exchanging memes and streamers co-creating songs with stadium-sized audiences. We’ve helped an artist who lost his voice bring his lyrics back to life again after decades on the sidelines. We’ve seen teachers ignite their students’ imaginations by transforming lessons into lyrics and stories into songs. Just this past weekend, we received heartwarming stories of mothers moved to tears by songs their loved ones created for them with a little help from Suno.”
Spotify reported on Tuesday that first quarter revenue jumped 20% and gross profit topped 1 billion euros ($1.08 billion), returning the now 18-year-old streaming company to profitability and putting it on track to meet its 2024 growth target.
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Spotify reported 3.6 billion euros ($3.9 billion) in first quarter revenue, up from 3.04 billion euros ($3.3 billion) a year ago, and gross profit rose 31% to 1.004 billion euros ($1.08 million) from 766 million euros ($833 million), according to filings.
Spotify chief executive Daniel Ek said that revenue growth accelerated and the company had record-high profits in the quarter, while total monthly active users grew 19% to 615 million and premium subscribers increased by 14% to 239 million — both compared to last year’s first quarter.
“As an adult company we are now consistently profitable, which is great news,” Ek said in a video posted to LinkedIn.
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Spotify raised prices by $1 — to $10.99 a month for individuals, $16.99 a month for families — in the U.S., one of its largest markets, last year for the first time, and it is reportedly considering increasing prices again later this year, Bloomberg reports. The initial round of new price hikes — $1 a month for individuals, $2 a month for duos and families — will hit the U.K., Australia, and Pakistan, among others, according to Bloomberg.
Those price increases helped Spotify reach profitability in the third quarter of last year. But in the fourth quarter it reported an operating loss of 75 million euros ($82.7 million). In the first quarter earnings reported on Tuesday, Spotify was again profitable with 168 million euros ($181 million) in operating income.
While revenue from premium subscribers of 3.247 billion euros ($3.5 billion) grew by 20% compared to the first quarter last year, it inched up just 2% from the fourth quarter. Ad-supported of 389 million euros ($419.8) revenue rose 18% from the first quarter last year, but it declined by 22% from the fourth quarter.
Monthly active users of 615 million for the quarter was up 19% from a year ago and up 2% from the prior quarter but missed the company’s target of 618 million in the quarter.
Total Revenue grew 21% year over year, or 20% to €3.6 billion on a constant currency basis.
Premium ARPU grew 7% year over year on a constant currency basis.
Gross margin was up 27.6%, and gross profit surpassed €1 billion for the first time in Spotify’s history.
Operating Income finished at a record high of €168 million (a 4.6% margin)
Monthly active users grew 19% year over year to 615 million on annual and quarterly growth in all regions.
Premium subscribers grew 14% to 239 million, led by growth in the streaming giant’s bundles–Family and Duo plans.
Kobalt Music Group, the publishing home to such names as Paul McCartney and Karol G, has landed a new $450 million revolving credit facility (RCF), the independent music publisher announced Tuesday (March 19). Explore Explore See latest videos, charts and news See latest videos, charts and news Coupled with the previously announced joint venture with […]
The radio business’ slog through a slow advertising market appears to be improving in 2024. “As we look to the year ahead, we see 2024 as a recovery year and we expect a return-to-growth mode,” iHeartMedia CEO Bob Pittman said during the company’s Thursday (Feb. 29) earnings call for the fourth quarter of 2023. Explore […]