State Champ Radio Hipgnosis
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When the board of directors at Hipgnosis Songs Fund (HSF) cut the value of the company’s catalog by 26% last week, it admitted something investors had long believed. Although the London-listed royalty fund had amassed an enviable collection of songs since going public in 2018, changes in market conditions and the very nature of some of those rights may have merited a significantly lower fair value all along.
A new valuation by Shot Tower Capital put the portfolio of music rights — which includes Neil Young, Shakira and Red Hot Chili Peppers, among other A-list artists and songwriters — at $1.8 billion to $2.06 billion. As recently as Sept. 30, the catalog was given a fair value of $2.62 billion by HSF’s longtime valuation expert, Citrin Cooperman (previously Massarky Consulting). Six months earlier, it was said to be worth $2.8 billion.
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HSF’s new board of directors hired Shot Tower in the wake of investors’ Oct. 26 votes against continuation and a partial catalog sale — effectively a vote of no confidence in both the previous board and the investment advisor, Hipgnosis Song Management. Shot Tower will give HSF’s board its final due diligence by Mar. 25, and HSF will provide an update on those findings by Mar. 29.
Some longtime critics of HSF’s previous valuation found validation in Shot Tower’s lower number. Stifel analysts claimed the new number shows HSF “clearly overpaid for catalogs,” they wrote in a Mar. 4 investor note. To date, HSF has spent about $2.2 billion on acquisitions. It raised over 1.3 billion pounds ($1.67 billion) from an IPO and seven successive offerings and has drawn $604 million from a revolving credit facility.
Such a large decline in the valuation suggests the various experts had differing opinions on both the catalog’s revenues and the riskiness of those revenues. Shot Tower calculated HSF’s net revenue after third-party royalties and administration expenses at $121.7 million for the 12-month period ended June 30. The accounting firm BDO calculated a similar amount — $119.4 million for the 12-month period ended Sept. 30 — for a quality of earnings analysis.
The higher $2.62 billion valuation appears to be based on a higher annual net revenue. A July 2023 investor presentation put HSF’s annual revenue at $134 million (based on a $2.8 billion portfolio fair value and an implied historic net publishers share, or NPS, multiple of 20.89). That’s $12.3 million more than Shot Tower’s figure and $14 million more than BDO’s estimate. The difference in annual revenues, however, only explains part of the difference in valuations.
The discount rate appears to have also played a major role in HSF’s lower valuation. Shot Tower used a weighted average discount rate of 9.63% for the entire catalog, more than 1.1 percentage points higher than the discount rate used for previous valuations. Experts Billboard spoke with called the rate “on the high side” and “a particularly high number.” Some other recent valuations used a lower discount rate. Discount rates and valuations are inversely related: A higher discount rate will produce a lower present value of cash flows, and vice versa.
Until this week, HSF had been valued using an 8.5% discount rate since the Sept. 30, 2020, valuation conducted by Citrin Cooperman. FTI Consulting’s valuation of a Kobalt portfolio used in an asset-backed security (ABS) offering in February used an 8.5% discount rate for songs older than 18 months (and 11.75% for songs aged 3 to 18 months). FTI’s valuation of the portfolio behind Concord’s $1.65 billion ABS used an 8.25% discount rate for catalog songs (and 11.75% for recorded music frontline content and options for future releases).
The HSF discount rate has been a point of contention amongst analysts and investors in recent years. When HSF lowered its discount rate to 8.5% in 2020, analysts complained the valuation increased even though the investment manager had not yet added value and market assumptions hadn’t changed. When interest rates started rising in 2022, analysts wondered why HSF stuck with the 8.5% discount rate.
The discount rate depends on the riskiness of those future cash flows. Perfectly safe revenue is discounted using a risk-free rate of return such as a 10-year U.S. Treasury Rate. Because no business is without risk, a company’s revenues would merit a higher rate. If a company carries debt, its borrowing cost — also more than the risk-free rate — would also be baked into the discount rate.
Shot Tower’s discount rate took a variety of factors into account, according to the press release, which could explain how it got to 9.63%. For example, Shot Tower found that 65% of HSF’s revenue derived from passive rights where the company does not control publishing, administration or licensing. In many cases, HSF owns only a songwriter’s share rather than the publisher’s share, or the producer’s royalties from a sound recording. Investors might have assumed that HSF had more control over administration, distribution and licensing: In HSF’s annual report for the year ended March 31, 2022, it said it had 100% interest ownership in 96% of the songs in its catalog (138 of the 146 catalogs).
“That control has a lot of value,” explains an industry insider. Strategic buyers — usually music publishers and record labels — will pay a premium to control a song’s administration and licensing or a recording’s distribution. Passive rights typically trade at a discount because they carry more potential risks of counterparts (co-writers, for example) and potential collection risk (as is the case when royalties are re-directed from a label rather than received from a PRO). With a writer’s share, “you’re a lot more along for the ride,” this insider says. The producer royalties that HSF acquired — such as RedOne, Jimmy Iovine and Timbaland — are also passive.
For a company looking to bolster its credibility with investors, Shot Tower’s valuation was a double-edged sword. The lower number confirmed some investors’ long-held belief that the portfolio is worth less than HSF had claimed. But the decrease in valuation further hurt HSF’s share price. Shot Tower’s lower valuation prompted HSF’s board to commit to using its cash to pay down debt rather than resume the dividend it suspended in October. So, while the lower valuation better reflected HSF’s market capitalization, the continued loss of a dividend was the likely cause behind the stock dropping 11% the day of the announcement.
LONDON — Hipgnosis Songs Fund has cut the value of its portfolio by more than a quarter and told investors that it does not intend to recommence paying dividends “for the foreseeable future” as it focuses on paying down debts.
The London-listed fund, which owns full or partial rights to the song catalogs of Red Hot Chili Peppers, Neil Young, Justin Bieber and Blondie, among many others, announced the updated valuation on Monday (March 4).
It follows a detailed review of the company’s portfolio “on a bottom-up basis” by Shot Tower, which was appointed following a public fallout between the firm’s board and its investment advisor, the Merck Mercuriadis-led Hipgnosis Song Management (HSM), over the fund’s worth.
In a financial filing, Hipgnosis Songs Fund (HSF) said Shot Tower’s preliminary report estimates the fair market value of the company’s portfolio at between $1.8 billion and $2.06 billion (and $1.74 billion and $2 billion after deducting contingent catalog bonuses of just under $60 million).
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Shot Tower gave a midpoint valuation of $1.93 billion, reflecting a multiple of 15.9x net royalty income, which is around 26% lower than the valuation of September 2023.
Hipgnosis Songs Fund said the new valuation was based on a range of criteria, including whether a catalog was made up of publisher, writer, producer or artist’s share of rights royalties. Shot Tower’s report also took into account royalty income streams and administration rights or copyrights due to be returned to the firm in future years, the fund said.
The firm’s cash net revenue (after third party royalty reductions and administration expenses) was $121.7 million for the 12-month royalty statement period ended June 30, 2023, according to Shot Tower’s analysis.
When adjusted solely for the new valuation, the company’s operative net asset value would be approximately $1.17 (92p) per share, compared to the last reported net asset value of $1.7392 (137p) per share at the end of September, the firm reported.
As a result of the decrease, the board said that it would be using free cashflow to pay down debt “and, therefore, does not intend to recommence paying dividends for the foreseeable future.”
In a statement accompanying the filing, Hipgnosis Songs Fund chairman Robert Naylor said the company’s newly constituted board “is making good progress with the due diligence work” underpinning its ongoing strategic review and that the board “remains focused on identifying all options to deliver shareholder value.”
Hipgnosis Songs Fund’s share price initially fell by 11% to £0.56 on Monday morning following the news.
The slashed valuation represents another blow for HSF, which underwent a turbulent end to 2023 and just-as-rocky start to the year.
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.
The same month’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, while last month shareholders passed 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 fund hopes that the enticement of a large fee will help draw potential bidders to acquire some of the company’s catalogs.
February also saw Mercuriadis step down as chief executive officer of Hipgnosis Song Management to take up a newly created chairman role with Ben Katovsky replacing him as CEO.
Shot Tower is due to present its final due diligence findings to the firm’s board later this month.
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.
Merck Mercuriadis will step down as chief executive officer of catalog investment advisor Hipgnosis Song Management, the company announced on Friday (Feb. 2). The executive, who spent years managing the careers of artists like Elton John, Beyoncé and Guns N’ Roses before launching Hipgnosis, will transition to a newly created chairman role and will continue to “lead engagement” with industry stakeholders on behalf of the business, it said.
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Taking on the CEO role will be Ben Katovsky, HSM’s president and chief operating officer since joining the company in October 2022. He boasts almost two decades of experience in the music industry, most recently in a seven-year tenure as chief operating officer at BMG.
“One of our most important goals has been to bring an institutional rigor to Hipgnosis Song Management,” Mercuriadis said. “Over the last 16 months, Ben has done an amazing job building the team and HSM’s capabilities to deliver the best possible service to our clients and I’m certain this appointment makes us stronger.”
Added Katovsky, “I am proud to be asked to lead HSM through its next chapter, building on all Merck has achieved. In my time in the music industry I haven’t come across anyone who can match his rapport and relationships with songwriters and artists.”
Hipgnosis Song Management is the investment advisor for Hipgnosis Songs Fund, the publicly-listed royalty fund with a catalog that includes stakes in songs by Neil Young, Justin Bieber, Journey, Lindsey Buckingham, Blondie, Justin Timberlake and many other artists and writers. HSF capped a turbulent 2023 by lowering the value of its catalog following what new board chair Robert Naylor described to investors as a strained relationship with the Mercuriadis-led HSM over the catalog’s value.
A third Hipgnosis, Hipgnosis Songs Capital, is a joint venture between HSF and investment giant Blackstone. It is wrapped in a proposal to acquire 29 catalogs for $440 million to help the public fund reduce its debt and improve its share price.
In January, the public fund’s board of directors leveled several complaints against its namesake advisor, calling into question its ability to field competitive bids for its trove of assets. A main sticking point is the investment advisor’s call option — a right to purchase the company’s catalogs if its contract is terminated with less than 12 months’ notice, among other scenarios — which the board contends harms the fund’s ability to receive competitive bids.
The fund’s board wants to make the bidding process more attractive and on Jan. 18 announced a proposal to pay bidders a 20-million-pound ($25.4 million) fee to cover due diligence and acquisition costs when they pursue a purchase of HSFs assets. Shareholders will vote Feb. 7 on that proposal.
HSM said in its announcement that it has sought approval from the fund for the management transition.
In further comment, Katovsky praised HSM’s two clients — HSF and HSC — for their “vision, ambition and on-going commitment to grow music as an asset class through HSM,” and said he hoped to collaborate well with the fund’s board going forward.
“I particularly hope we will be able to work constructively with the Board of Hipgnosis Songs Fund Ltd, as I believe that HSM is best able to deliver value for their shareholders whether they decide the Company has a future as a long-term operation or wish to pursue the sale of assets following their strategic review,” he said.
Added Mercuriadis, “Having invested almost $3 billion on behalf of our clients in extraordinarily successful songs we are at an important juncture in our development where the services we provide to our clients are of paramount importance. Our commitment remains stronger than ever. We look forward to continuing our work with songwriters and the creative community to create the greatest possible opportunities from the iconic and culturally important Songs which we manage on behalf of HSM’s clients.”
Hipgnosis Songs Fund capped off an eventful 2023 by lowering the value of its music catalog amidst internal conflict over exactly what the company’s star-studded catalog is worth.
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The publicly listed royalty fund said its operative net asset value per share declined 9.2% to $1.74 on Sept. 30 from $1.92 on March 31, according to its half-year earnings report on Thursday (Dec. 21). The sharp decline stemmed primarily from a “material reduction” in expectations for CRB III and CRB IV income.
The company’s self-reported valuation has long exceeded the value implied by its share price and estimates of equity analysts. In recent months, Hipgnosis Songs Fund has proposed and completed partial catalog sales at discounts to their net asset values.
New board chair Robert Naylor‘s statement to investors described a strained relationship with the fund’s investment advisor, the Merck Mercuriadis-led Hipgnosis Song Management, over the valuation of the five-year-old company’s catalog that includes stakes in songs by Neil Young, Journey and Fleetwood Mac.
Two days earlier, the board postponed the release of half-year earnings after the investment advisor produced a “heavily caveated” opinion on the catalog valuation provided by independent firm Citrin Cooperman that was “materially higher than the valuation implied by proposed and recent transactions in the sector.”
Internal conflicts continued while the results were delayed. According to Naylor, the board’s request of Hipgnosis Song Management about “the matter to be published on the Company’s website in order to provide transparency for shareholders” was rebuffed “under the confidentiality clauses of the Investment Advisory Agreement.”
On Thursday, Naylor urged Hipgnosis Songs Management to provide an opinion on the valuation of Hipgnosis Songs Fund “without caveats” to provide greater transparency to shareholders. In the absence of a caveat-free opinion, the board urged investors to use “a higher degree of caution and less certainty” than normal when considering its fair value and operative NAV.
Hipgnosis Songs Fund shares fell 1% to 0.70 GBP on Thursday.
Gross revenue from continuing operations declined 26.9% to $63.2 million from $86.4 million in the six-month period ended March 31, 2023.
Net revenue from continuing operations declined 29.7% to $54 million from $76.8 million. About half of the decline came from a $11.9 million reversal of accrued royalties in October. Excluding those accrued revenues, net revenue grew 14% to $65.8 million.
Pro-forma annual revenue (PFAR), which measures gross royalties received and excludes revenue accruals, grew 10.4% to $64.9 million.
Following shareholders’ vote against continuation at the annual general meeting on Oct. 26, Hipgnosis Songs Fund transformed its board of directors by naming Naylor to succeed Andrew Sutch as chairman and adding Francis Keeling, a former Universal Music Group executive, and Christopher Mills, CEO and investment manager at North Atlantic Smaller Companies Investment Trust, to replace Andrew Wilkinson and Paul Burger, both of whom left prior to the annual general meeting.
The new board undertook a strategic review and named Shot Tower Capital as lead advisor to conduct due diligence on the catalog. On Thursday, Naylor said he was pleased with the strategic review’s progress thus far. “This process will help the new Board bring forward proposals for delivering value to shareholders,” said Naylor.
But Naylor also described “ongoing failures in the financial reporting and control process” since he joined the board. “Whilst we consider substantial progress has been made in identifying and rectifying these issues,” Naylor added, “we have had to suspend the dividend for at least the remainder of the year in order to ensure compliance with our banking covenants.”
Just one day after announcing a delay in publishing interim financial results for the six months ended Sept. 30, Hipgnosis Songs Fund has announced the appointment of a new auditor.
In a press release on Wednesday (Dec. 20), the Merck Mercuriadis-led company said it had appointed KPMG Channel Islands Limited as its new auditor, “with immediate effect for the financial year ended” Mar. 31, 2024. KPMG succeeds PricewaterhouseCoopers (PwC) in the role.
The release notes that the appointment of KPMG will be subject to approval by the company’s shareholders at a general meeting “to be convened in due course.”
“The previous auditor, PwC CI, has deposited with the Company a statement confirming that there are no matters to be brought to the attention of the Company’s members or creditors,” the release adds.
On Tuesday, Hipgnosis Songs Fund said it would delay publishing its financial results over concerns about its valuation, explaining that the valuation it received from an independent firm was “materially higher than the valuation implied by proposed and recent transactions in the sector.” These transactions include the proposed $417.5 million sale of 29 catalogs to Blackstone-backed Hipgnosis Songs Capital — a price reflecting a 24.3% discount from a valuation dated March 31 — and last week’s sale of 20,000 “non-core songs” to an undisclosed buyer for $23.1 million, which the company said reflects a 14.2% discount on the songs’ valuation as of early fall.
Hipgnosis Songs Fund now expects to announce its financial results on New Year’s Eve, according to the regulatory filing.
Hipgnosis is composed of three companies: Hipgnosis Song Management, Hipgnosis Songs Capital and Hipgnosis Songs Fund, the latter of which has been the subject of controversy for months. On Oct. 16, the London-listed trust revealed that it would not pay its investors a dividend due to new, lower revenue projections. On Oct. 26, more than 80% of the fund’s investors demanded structural changes to the music rights company, voting 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.”
Last month, it was also announced that the fund will not declare dividends before the fiscal year, which begins in April, to ensure it has enough on its ledger to pay contractually mandated catalog bonuses.
Hipgnosis Songs Fund owns full or partial rights to the song catalogs of artists including Justin Bieber, Neil Young, Bruno Mars, Jimmy Iovine, 50 Cent, Shakira, Blondie, Justin Timberlake and Lindsey Buckingham.
Hipgnosis Songs Fund ended the day up 1.43% on the London Stock Exchange following the announcement of the new auditor.
Hipgnosis Songs Fund has announced a last-second delay in publishing interim results for the six months ended Sept. 30, citing concerns over its valuation following a series of hiccups for the Merck Mercuriadis-led company.
The 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, was scheduled to publish it financial results on Tuesday (Dec. 19) but now expects to announce on New Year’s Eve, according to a regulatory filing.
In explaining the delay, the Hipgnosis board said the valuation it received from an independent firm was “materially higher than the valuation implied by proposed and recent transactions in the sector,” namely two deals involving itself: a proposed $417.5 million sale of 29 catalogs to Blackstone-backed Hipgnosis Songs Capital, a price reflecting a 24.3% discount from a valuation dated March 31, and last week’s sale of 20,000 “non-core songs” to an undisclosed buyer for $23.1 million, which it said reflects a 14.2% discount on the songs’ valuation as of early fall.
Due to the disparity between the independent valuation and the “implied” one tied to recent trends and proposed sales, the board sought advice from its in-house investment advisor, Hipgnosis Song Management Limited, which delivered a “heavily caveated” opinion that led to the board’s concerns as to the valuation of HSF listed in the interim results scheduled to be disclosed today.
Hipgnosis is comprised of three companies: Hipgnosis Song Management, Hipgnosis Songs Capital and Hipgnosis Songs Fund. The latter of the three has been mired in controversy in recent months after it was announced that the London-listed trust would not pay its investors a dividend because of new, lower projections for revenue. On Oct. 26, investors of the fund overwhelmingly demanded structural changes to the music rights company, with more than 80% of Hipgnosis investors voting 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.”
Last month the company announced that the fund will not declare dividends before the new fiscal year, which begins next April, in order to ensure it has enough on its balance sheet to pay contractually-mandated catalog bonuses.
Investors are still processing the news, with the company’s stock only slightly down, roughly 2%, in mid-day trading on the London Stock Exchange.
Hipgnosis Songs Fund has found a buyer for a batch of “non-core songs” that have been up for sale since earlier this fall. In a filing Monday with the London Stock Exchange, where it is listed, HSF announced the sale of 20,000 tracks for $23.1 million, which it said reflects a 14.2% discount on the songs’ valuation as of late September.
The company said the sale of the songs, acquired in 2020 from Kobalt, is expected to net $22.6 million, which will be used to pay down a revolving credit facility and provide “greater headroom under its future covenant compliance reporting.” The buyer or buyers were not disclosed. The sale price represents a multiple of 9.6x net publisher share, according to a statement, and makes up approximately 1% of HSF’s investment portfolio value.
The specifics of these “non-core” songs have also not been disclosed. When the proposed sale was announced in September, the company’s board said the songs “require ongoing accounting and reporting obligations that take up significant bandwidth which can be better focused on active song management.”
Hipgnosis is comprised of three companies: Hipgnosis Song Management, Hipgnosis Songs Capital and Hipgnosis Songs Fund. The latter of the three has been mired in controversy in recent months after it was announced that the London-listed trust would not pay its investors a dividend because of new, lower projections for revenue.
On Oct. 26, investors of the fund overwhelmingly demanded structural changes to the music rights company, with more than 80% of Hipgnosis investors voting 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.”
Last month the company announced that the fund will not declare dividends before the new fiscal year, which begins next April, in order to ensure it has enough on its balance sheet to pay contractually-mandated catalog bonuses.
In its latest filing announcing the sale of unspecified songs, HSF also said it had appointed Singer Capital Markets as sole corporate broker and financial adviser, and Shot Tower Capital as lead adviser of the company’s strategic review.
Sony Music Publishing ruled the Top Radio Airplay, Hot 100 Songs and Country Airplay publisher rankings for its third consecutive quarter of 2023, and Warner Chappell Music surged to No. 2 on the Hot 100 Songs chart — the first time it has held the position since the Hot 100 ranking began in 2019.
For the period spanning July through September, all of the big three publishers benefited from shares in the Afrobeats radio hit “Calm Down” by Rema and Selena Gomez. Sony also benefited from stakes in “Last Night” by Morgan Wallen, which hit No. 5 on the Top Radio Airplay chart, and Taylor Swift’s surprise hit “Cruel Summer,” which reached No. 3 on the quarter’s Hot 100 Songs ranking, four years after its initial release due to its placement as the opening song of Swift’s The Eras Tour.
Last quarter, Tracy Chapman’s Purple Rabbit Music publishing company broke into the Hot 100 and Top Radio Airplay charts (ranking No. 7 and No. 10, respectively) for the first time, thanks to Luke Combs’ cover of her 1988 song “Fast Car.” This quarter, her market share as a publisher/songwriter grew even higher. Chapman finished the quarter as the top songwriter on all three charts, propelling Purple Rabbit Music to No. 5 on Top Radio Airplay and No. 6 on both Hot 100 Songs and Country Airplay.
But she wasn’t the only self-published songwriter to make the charts this quarter. As the sole writer of “Rich Men North of Richmond,” Oliver Anthony Music’s publishing company, Christopher Anthony Lunsford Pub Designee, placed at No. 8 on Hot 100 Songs with a 1.49% market share, surpassing such top 10 perennials as Downtown and Reservoir. Like Chapman, Anthony is the sole songwriter of his breakthrough song.
This is the first time that two independent songwriters have broken into the Hot 100 Songs chart at the same time.
Warner Chappell rose to No. 2 on the Hot 100 ranking for the first time in 19 quarters. Previously, it often ranked third or fourth. “Last Night” by Morgan Wallen, “Calm Down” by Rema and Selena Gomez, and 49 other Hot 100 Songs hits accounted for its strong showing of 18.18% of the market share. The publisher held steady in third place on the Top Radio Airplay chart with 15.87% of the market share, and ranked second on the Country Airplay chart with a 26.2% share.
Universal Music Publishing Group took second place on Top Radio Airplay — where its song placements increased to 52 from 49 in the second quarter — and third on Hot 100 Songs. Combs’ “Love You Anyway,” No. 3 on Country Airplay; “Cruel Summer”; and “Calm Down” were UMPG’s highest-ranked songs.
Kobalt held fast to No. 4 on both Top Radio Airplay and Hot 100 Songs but slid to No. 5 on Country Airplay behind BMG. The latter publisher’s share in Jelly Roll’s “Need a Favor” helped it edge past Kobalt’s 4.59% market share with 4.93%.
BMG and Big Machine Music both climbed in the ranks on the Country Airplay charts this quarter. BMG rose from fifth to fourth ranking, thanks to its share of 12 songs on the chart this quarter, including Jelly Roll’s “Need a Favor.” BMM climbed from eighth last quarter (2.57%) to seventh this quarter (2.97%), thanks in part to Luke Bryan’s “But I Got a Beer In My Hand.”
Concord finished 10th on Top Radio Airplay with 1.37%. That percentage might rise in the fourth quarter due to its acquisitions of Round Hill Music and Mojo Music & Media in September. If Concord’s third-quarter market share was combined with those of Round Hill and Pulse, which Concord also owns but lists separately, it would have finished at No. 5 on Top Radio Airplay with 4.96% and at No. 7 on Hot 100 Songs with 3.1%.
Rounding out the top 10, Reservoir fell to No. 8 on Top Radio Airplay with 1.82%, though it improved on its No. 7-ranked second-quarter share of 1.62%. It rounded out the Hot 100 Songs top 10 with 1.17%. Hipgnosis (1.76%) and Downtown (1.44%) finished at No. 9 on Top Radio Airplay and Hot 100 Songs, respectively.
Additional reporting by Ed Christman.
Hipgnosis Song Management (HSM) has announced that Daniel Pounder will become the company’s next chief financial officer, replacing Chris Helm by the end of this year. HSM has also created a new position of general counsel, tapping Jonathan Baker for the job. Both join from BMG.
The news arrives after a number of personnel changes to the company in recent weeks, including Hipgnosis Songs Fund board chair, Andrew Sutch, and two other board members who either resigned or failed to win re-election to their seats.
Hipgnosis — which owns rights to songs by Journey, Bruno Mars, Justin Bieber, Rihanna, and many more — is comprised of three branches: Hipgnosis Song Management, Hipgnosis Songs Capital and Hipgnosis Songs Fund. The latter of the three has been mired in controversy in recent weeks after it was announced that the London-listed trust would not pay its investors a dividend because of new, lower projections for revenue.
During a shareholder continuation vote on Oct. 26, where investors were asked to vote on whether they wanted to keep the investment trust going or liquidate the fund, selling $440 million worth of catalogs to the private side of the company — Hipgnosis Songs Capital — which is backed by Blackstone, more than 80% of 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.”
In his role as CFO, Pounder will oversee the finances and investment functions of all three. He has over two decades of experience in music finance and accounting, including senior roles at BMG, Viacom, Famous Music and Sony Music Publishing. He completed his accountancy training with Deloitte and was admitted into the Institute of Chartered Accountants in England and Wales in 2003. By 2013, he was admitted as a fellow.
Current CFO, Chris Helm, will pass the responsibilities to Pounder over the next month and a half. According to a press release, the two will be “working closely” together to do a complete hand over until then. Helm will then be leaving to “launch a new business of his own early next year.”
Baker will oversee the legal affairs of the company’s catalog acquisition and day-to-day legal and business affairs for Hipgnosis. He will coordinate with the company’s outside counsel, including Bill Leibowitz, and will hold the responsibility for governance and compliance matters for the company and the fund’s clients.
Previous to this, Baker has 20 years of legal experience. He joins from BMG, where he has been general counsel in the U.K. and evp legal and business affairs international since 2012. Prior to that role, he worked at Simkins, a media and entertainment law firm.
Merck Mercuriadis, CEO and founder of Hipgnosis Song Management, says of the appointments: “It is always a priority for me to continually strengthen our executive leadership team to ensure we have the best institutional investment, finance and music capabilities and experience to deliver the next stage of development for Hipgnosis and our funds. This was the case starting with the appointment of Ben Katovsky as president and Chief Operating Officer one year ago and we’re delighted to welcome Dan and Jon to round out this process, particularly as this group of leaders have a proven successful chemistry of working together.
He adds, “Dan’s extensive experience and expertise in global music finance, ability to leverage data and technology and proven track record in supporting and enabling growing businesses will be of significant value to HSM and our fund clients as we work to further institutionalize the reporting and rigor of the song asset class. Likewise, Jon’s experience and expertise in global music legal affairs will support our funds while allowing us to prioritize responsible governane and compliance for Hipgnosis.”
