State Champ Radio Reservoir
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Continued growth in music subscriptions and new Copyright Royalty Board mechanical royalty rates helped Reservoir Media improve revenue 31% to $31.8 million in the fiscal first quarter ended June 30, the company announced Wednesday. About two-thirds of the improvement came from organic revenue growth while the remainder stemmed from the acquisitions of music catalogs of The Spinners and Greg Kihn, among others.
Digital revenue improved 34% to $17.5 million due to “increasing demand trends for streaming music globally, something we saw evidence of in Spotify’s higher-than-expected subscriber numbers reported last week,” said CEO Golnar Khosrowshahi during the earnings call. Spotify’s premium subscribers rose 17% to 220 million in the second quarter, beating company expectations of 217 million subscribers. Monthly active users, which includes subscribers and listeners to the ad-supported service, climbed 27% to 551 million, easily topping the company’s 530-million target.
Those gains helped Reservoir’s adjusted earnings before interest, taxes, depreciation and amortization to climb 36% to $10.1 million and outpaced the 20% increase in administration costs in the quarter. CFO Jim Heindlmeyer expects operating leverage — the ability to increase earnings by increasing revenue — to improve in the coming quarters. “Looking ahead, we expect revenue to outpace operating costs as this has generally been the case during our time as a public traded company,” he said.
Reservoir sounded upbeat about Spotify’s decision last week to raise the monthly price of its individual plan in the U.S. and other markets. Spotify’s increase, like the similar increases by Apple Music in 2022 and Amazon Music earlier this year, “will impact our revenues on a pretty linear basis,” said Heindlmeyer. “In other words, a 10% price increase at a streaming service will flow through to us at around a 10% increase to our pool of money.”
Last quarter’s music publishing revenue of $20.8 million was up 26% from the prior-year period and accounted for 65% of total revenue, down from 67% in the prior-year period. New mechanical royalty rates from streaming services established by the CRB for 2023 to 2027 represented “a meaningful increase” and allowed Reservoir “to recognize higher revenue associated with mechanical royalties from digital sources,” said Khosrowshahi. Publishing’s digital revenue grew 41% to $11.9 million and performance revenue improved 28% to $4.5 million. Synch revenue declined 8%, from $3.3 million to $3 million.
Recorded music revenue grew 37% to $10.4 million and accounted for 33% of total revenue, up from 31% in the prior-year period. The segment’s physical revenue grew 176% to $3.6 million. Digital and neighboring rights revenues, which combined to account for about 12% of recorded music revenues, improved 23% and 25%, respectively.
The decline in synchronization revenues — down 8% in publishing and down 68% in recorded music from the prior-year period — were the results of a timing issue, not the strike by actor’s and writer’s unions that has stopped productions of many television shows and motion pictures. Khosrowshahi said the advertising placement and movie trailer businesses are both “strong” but could have varied impacts based on when the strike ends.
Reservoir maintained its earlier fiscal 2024 guidance for both revenue ($127 million to $132 million) and adjusted EBITDA ($49 million to $52 million). “We remain confident about the growth trajectory of the global music industry and how Reservoir is positioned to capitalize on it,” said Khosrowshahi.
Earnings highlights:
Total revenue increased 31% to $31.8 million. Adjusted EBITDA rose 36% to $10.1 million.
Publishing revenue increased 26% to $20.8 million. Publishing’s digital revenue rose 41% to $11.9 million. Performance revenue jumped 28% to $4.5 million.
Recorded music revenue grew 23% to $5.6 million. Physical revenue jumped 176% to $3.6 million. Digital revenue improved 23% to $5.6 million.
Guidance for fiscal 2024 (the year ending March 31, 2024) remained at $127 million to $132 million, representing 6% growth at the midpoint. Adjusted EBITDA guidance remained at $49 million to $52 million, representing 9% growth at the midpoint.
Reservoir Media on Wednesday reported that revenues grew by 13% during its most recent fiscal year, as investments in record labels and artists rights in the Middle East added to its growth from acquiring works by North American artists like Louis Prima and Dion.
Reservoir reported $122.3 million in revenue for their fiscal year 2023 ending March 31, driven by a 9% increase in music publishing revenue and an 18% increase in recorded music revenue, both helped by the digital release of De La Soul‘s first six studio albums in early March. The legendary rap trio’s catalog netted 12.5 million U.S. song streams and sold 28,000 albums in its first week streaming, according to Luminate.
Founded in 2007, Reservoir said it grew by 8% organically and finished at the top-end of its financial targets in fiscal 2023 despite a 1%-decline in fourth quarter revenue driven by lower performance, sync and other revenues in its music publishing division, which suffered from a tough comparison to a strong year-ago quarter.
Fourth quarter music publishing revenue of $23.2 million was off 8% from the year-ago quarter when Reservoir benefitted from a one-off event in Dubai. Recorded music revenue in the quarter rose 10% to $10.8 million, in part due to the outsized performance of De la Soul’s catalog.
Reservoir has made investing in emerging markets a key prong of its growth and diversification strategy, and on a call with analysts, Reservoir CEO Golnar Khosrowshahi referred to it as “highly important to our overall strategy … as we work to become the largest holder of Arabic music copyrights.”
With its partner PopArabia, an independent music company headquartered in the United Arab Emirates, Reservoir has acquired stakes in the Egyptian label 100COPIES, the Lebanese label and music publisher Voice of Beirut and signed publishing deals with Egypt’s Mohamed Ramadan, Lebanon’s Zeid Hamdan and Moroccan hip-hop star 7liwa. In January, Reservoir announced signed publishing deals for the catalogs and future works of Indian rappers MC Altaf and D’Evil and the producer Stunnah Beatz.
Funds like Reservoir also grow inorganically through acquisitions of song catalogs, and over its past fiscal year it acquired rights by “the Saxophone Colossus” Sonny Rollins and Dion, best known for “Runaround Sue” and “The Wanderer.”
Reservoir’s chief financial officer Jim Heindlmeyer told analysts that the company expects 6% revenue growth f 9% growth for adjusted earnings before interest, tax, depreciation and amortization for this fiscal year, compared to midpoint of its 2023 guidance ranges.
“Our outlook includes strong top-line growth expectations and margin expansion across our business segments as we continue to see a positive impact on profitability from our strategic acquisitions and benefit from secular tailwinds across the music industry,” Heindlemeyer said.
Indie music company Reservoir Media has acquired the rights to the full catalog of drummer and songwriter Enrique “Kiki” García. García, who was part of Miami Sound Machine, penned many of the group’s biggest hits in its heyday with Gloria Estefan as its lead singer, including the much synchronized “Conga.”
García also wrote Miami Sound Machine’s 1984 breakout “Dr. Beat” and co-wrote several tracks along Estefan, including “1-2-3,” “Give It Up,” and “Rhythm Is Gonna Get You” for the group’s final album, Let it Loose.
But García is best known for “Conga,” which he famously penned on a flight from Utrecht, in the Netherlands, after playing a successful club show the night before.
“The performance stayed on my mind all night,” García recounted in the book Decoding Despacito: An Oral History of Latin Music. “The next day, as we got on the plane and I sat down, this song comes flying out of my mind. I start tapping on the seat table in front of me and I’m singing, “Come on, shake your body, baby, do the song. The rest was sketchy, but by the time we landed I had it all put together. I got up and sang my idea to Emilio and he loved it from the start.”
“Conga” would go on to became an international hit, peaking at No. 10 on the Billboard Hot 100 on Feb. 8, 1986.
After leaving Miami Sound Machine, García continued working with top Latin musicians like Chayanne and Julio Iglesias, while “Conga” and his other hits remain widely and constantly licensed.
“Kiki has contributed so much to the face of modern music as we know it. His collaborations with the Miami Sound Machine brought Latin music to mainstream audiences,” said Golnar Khosrowshahi, Reservoir’s founder & CEO, in a statement. “Embarking on this deal with Kiki marks a notable expansion of our rights in Latin American music and is an exciting opportunity to further diversify our catalog while maintaining our focus on acquiring the rights to evergreen hits.”
Primary Wave Music has acquired Skillet‘s music publishing interests as well as their recorded music royalties across five of their critically acclaimed albums, released from 2003-2016, in a multi-million dollar deal. Some of their biggest hits include “Whispers in the Dark,” “Awake and Alive,” “Feel Invincible,” “Monster,” “Hero,” and “The Resistance.”
Big Yellow Dog Music has signed BSAMZ (Brandon Sammons) to its publishing roster. With more than a decade of experience as a co-writer with artists like Lady Gaga, Kygo, Bryce Vine, Adam Lambert, Culture Club, Sam Feldt and many more, BSAMZ is still continuing to write hits, most recently with K-Pop group Girls’ Generation’s “You Think” off of their No. 1 album Lion Heart.
Reservoir has signed singer, rapper, and songwriter Armani White to his first-ever global publishing deal. The agreement entails both the artists’ back catalog and future works, including his viral hit “BILLIE EILISH” which reached No. 58 on the Billboard Hot 100.
Peermusic has signed singer-songwriter Alejo to an exclusive worldwide publishing deal. The deal encompasses all of the Puerto Rican artist’s catalog, including his new album El Favorito de las Nenas, released on May 4. The deal also includes his hit songs “Pantysito” with Feid and Robi; “Un Viaje” alongside Karol G, Jotaerre and Moffa; “Volar” by Wisin, Chris Andrew ft. Los Legendarios; and “Estrella” with boy band CNCO.
Warner Chappell Music has signed a global publishing deal with Canada-based country act Josh Ross. Named a Spotify Hot Country Artist to Watch for 2023, Ross has been building his profile with key opening slots, supporting talent like Bailey Zimmerman Nickelback, Lee Brice, Chase Rice, Brantley Gilbert.
Wise Music Group has signed a deal with DJ and producer Ron Trent. With almost 30 years of experience in the dance/electronic space, Trent first became acclaimed as a DJ with the release of Altered States at age 15. Under his new project WARM, Trent is still continuing to release enduring electronic works.
Reach Music has acquired master and publishing rights to Judas Priest‘s first two records, Rocka Rolla and Sad Wings of Destiny from Gull Entertainments. As part of their new purchase, Reach will work alongside the British metal legends to release a 50th anniversary edition of Rocka Rolla in 2024 as well as other special projects. This deal builds upon Reach’s existing relationship with the band — in 2021, Reach acquired a 50% copyright interest and the administration rights to guitarist Glenn Tipton’s song catalog, beginning with songs released in 1977.
Reservoir has launched a joint venture with American Idol producer, 19 Entertainment, which is part of Sony Pictures Television and already partnered with BMG on the master side. Through their new jv, the two will jointly sign new publishing deals with some of Idol’s contestants, and Reservoir will aid in the young writers’ development.
Peermusic Australia has inked a worldwide publishing deal with Sydney-based hip-hop/rock crossover group Triple One. The agreement includes both Triple One’s full back catalog as well as future works.
Position Music has signed artist and songwriter Sam Tinnesz to a worldwide publishing deal. The deal includes some selected catalog cuts as well as all of Tinnesz future releases, including those made under his artist project and those made as a songwriter.
Prescription Songs has signed Nashville-based artist and writer Josie Dunne. As an artist she played alongside artists like Julia Michaels, COIN, Ben Rector, and Andy Grammer. As a writer, she’s create songs with Natalie Imbruglia, Corook, Spencer Sutherland, and more. She was brought into the roster by A&R Chris Martingnago.
Warner Chappell Music has signed a global publishing deal with country sibling trio Voth. The deal was signed just ahead of their next single “You Own It,” out April 28th.
Reservoir Media said Wednesday it acquired the publishing and recorded rights to the catalog of jazz living legend Sonny Rollins — aka “The Saxophone Colossus.”
A recipient of the Lifetime Achievement Award at the 2004 Grammys, Rollins is perhaps best known for his 1956 album Saxophone Colossus and its track, “St. Thomas,” which has been deemed “culturally, historically…significant” by the Library of Congress’ National Recording Registry.
A regular collaborator of other jazz giants Charlie Parker, John Coltrane, Thelonious Monk, Miles Davis and Dizzy Gillespie, among others, Rollins continued to release music, including his 2001 Grammy-winning album This is What I Do and 2006 Grammy-winning solo “Why Was I Born?”
“I’m happy that Reservoir will be helping to maintain my musical legacy, which was created in concert with so many great musicians I’m proud to be associated with,” Rollins said in a statement announcing the acquisition.
Terms of the deal were not disclosed, with Reservoir adding that it includes a “mix of rights across Sonny’s entire catalog.”
Rollins catalog is a body of work spanning more than 70 years of “musical innovation,” Rell Lafargue, Reservoir president and chief operating officer, said in a statement.
“I first learned of Sonny through his music, playing ‘St. Thomas’ as a young jazz student, and it’s incredibly meaningful that Reservoir and I can now commit to preserving Sonny’s musical legacy and amplifying his contributions to the artform for audiences old and new,” Lafargue said.
Uber Eats’ commercial featuring Diddy, Montell Jordan, “The Fox (What Does the Fox Say?),” the guy who sings “What Is Love,” an oddly-timed haircut and two pineapples may be the first clue that Super Bowl ads are going lighter in 2023 — a pattern reflected in the music synchs for the big game.
After three years of the pandemic, Jordan’s 1995 smash “This Is How We Do It” and Kelis’ 2003 hit “Milkshake,” both Universal Music Publishing Group synchs used in the Uber Eats spot, represent a shift from apocalyptic and inspirational Super Bowl commercials and soundtracks starring old-timey crooners and string sections to familiar, upbeat hits and plentiful comedy.
“Humor remains the dominant theme this year,” says Tom Eaton, senior vp of music for advertising for UMPG, which represents the Jordan and Kelis tracks and suggested them to the brand’s music supervisors. “There have been a few sentimental commercials, but the vast majority have trended towards humor — and music can be such an important aspect of creating that mood.”
“I haven’t seen that heightened seriousness, which I think is a good thing,” adds Keith D’Arcy, senior vp of sync and creative services for Warner Chappell Music, whose synchs at this year’s Super Bowl include DMX‘s “What’s My Name,” for a Downy spot starring Danny McBride. “The country is in a good place where we’re more inclined to want to laugh and celebrate.”
That means lots of feel-good tracks, many of which were released in the ‘90s – from “What’s My Name” and “This is How We Do It” to a Clueless throwback ad for Rakuten starring Alicia Silverstone and Supergrass‘ 1995 U.K. hit “Alright.” The ’90s trend may have begun last year with Doja Cat‘s cover of Hole‘s “Celebrity Skin” for Taco Bell, says Rob Christensen, executive vp and head of global synch for Kobalt, whose lone synch this year is soul singer Lee Fields’ “Forever” for pet-food brand The Farmer’s Dog. “The ’90s are back,” he says. “That seems to be around pop culture everywhere right now.”
“It’s cyclical,” adds Scott Cresto, executive vp of synchronization and marketing for Reservoir Media, which has three synchs, including a Pringles spot with Meghan Trainor singing Tina Turner‘s “The Best.” “Most folks’ favorite music is from [ages] 13 to 30. They’re down the line in their careers and making the decisions and picking their favorite songs.”
Although not all final synch tallies for nationally televised spots were available at press time — publishing execs say permissions and requests for songs were unusually late this year, including a rush job that came in from an agency this past Monday — Sony Music Publishing (SMP) scored the most with 15, UMPG had seven, Warner Chappell Music had six or seven, BMG landed five, Primary Wave and Reservoir had three apiece and Kobalt had one.
Despite inflation, layoffs, high interest rates and sporadic recession talk, synch rates were stable this year, according to publishers. “It’s in line with past Super Bowl campaigns,” says Marty Silverstone, partner/senior vp creative/head of synch for Primary Wave, whose synchs include Missy Elliott‘s “We Run This” for Google Pixel. Adds Dan Rosenbaum, vp of licensing and advertising, for BMG, whose synchs include Supergrass’ “Alright” and co-writes for Turner’s “The Best” and Elliott’s “We Run This”: “Recognizability is so important in commercial usage. If that song is going to work for them, they’ll pay the price.”
Super Bowl LVII is the first since Kate Bush‘s “Running Up That Hill (A Deal with God)” landed on Stranger Things in May 2022, became a No. 1 hit and unexpectedly dominated the synch business. Do publishers believe the big game, for which 30-second ads cost a reported $7 million, will have a similar impact for their songs? Yes and no.
“That Kate Bush song wasn’t well-known and the show blew it up. On the Super Bowl, they play it a little more safe by using more tried-and-true hits,” says Brian Monaco, president/global chief marketing officer for SMP, which represents Len‘s “Steal My Sunshine” (for a Sam Adams spot), Sarah McLachlan‘s “Angel” (Busch) and Olivia Rodrigo‘s “Good 4 U” (Pepsi). “On a TV show, it’s a little easier, because the fees are lower. If it doesn’t work, you’re on to the next one.”
Despite SMP’s success at landing Super Bowl synchs this year, Monaco’s staff was unable to successfully pitch one key artist: Bruce Springsteen, who sold his music rights to the company for a reported $550 million in 2021. “It just didn’t fit,” he says, while noting that even for a superstar like Springsteen, getting a Super Bowl synch is a coveted career highlight: “Everyone’s hope — every writer, every artist — is the Super Bowl platform. We need more big events like this to get more music played.”
Reservoir Media’s revenues rose and profit margins expanded last quarter, as the strength of its music publishing business helped offset a $4 million net loss, the company reported Wednesday (Feb. 8).
Reservoir reported that its top-line revenues rose by 16% to $29.9 million for the third quarter of its fiscal year 2023, which ended Dec. 31. The main drivers of that jump were the music publishing division, where revenues of $22 million jumped 14% from a year ago on strong digital streaming revenues, and Reservoir’s small artist management business, which delivered a year over year revenue increase of more than 200% from touring and merchandise sales at live events.
Reservoir founder and chief executive Golnar Khosrowshahi said the firm, which recently bought Dion‘s catalog and signed publishing deals with popular Indian rappers MC Altaf and D’Evil, has $2.3 billion in prospective catalog acquisition deals in its pipeline.
“We will continue to benefit from the overall momentum in the music industry,” Khosrowshahi said on a conference call discussing the quarterly results. “We are approaching the last fiscal quarter of the year with confidence.”
Reservoir raised its guidance for the fiscal year 2023, which ends March 31, for the second straight quarter. Executives said they now expect to report full-year revenue in the range of $120 million to $122 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of $46 million to $47 million.
The company reported that its adjusted EBITDA for the third quarter rose 24% to $10.9 million.
“While we are happy with our continued strength in the top line and operating margins, we did experience some pressure on the bottom line due to elevated costs during the quarter,” said Reservoir CFO Jim Heindlmeyer during the earnings call.
Reservoir reported a net loss of $4.1 million, stemming from a one-time non-cash tax expense related to the higher U.K. tax rate for 2023 and the extinguishment of some existing debt. That resulted in a diluted loss of 7 cents for the quarter compared to earnings of 2 cents per share for the quarter.
Depreciation and amortization costs also rose due to catalog acquisitions, while company administration expenses rose 19%, mainly due to Reservoir’s expanding management business division.
In the recorded music division, Reservoir reported revenue of $7.6 million, up just 1% over last year. While digital revenues in the division rose 17% to $5.3 million, declines in physical and synchronization revenue resulted in roughly flat growth year over year.
Reservoir Media has purchased the catalog of Bronx-born talent Dion Francis DiMucci, better known as Dion. The deal includes his publishing catalog and future works as well as synchronization rights to his master recordings.
Best known for releasing defining, R&B-infused rock in the 1950s and ’60s, Dion’s catalog includes “Runaround Sue,” “The Wanderer,” “Ruby Baby” and “Dream Lover,” which he released with his band Dion and the Belmonts. Over the course of his career, he has accrued 11 top 10 Billboard Hot 100 hits and was inducted into the Rock and Roll Hall of Fame in 1989 and the Grammy Hall of Fame in 2002.
Despite his many decades of success, Dion continues to tour and release music today. In 2021, he released the album Stomping Ground featuring Eric Clapton, Peter Frampton, Bruce Springsteen, Mark Knopfler and more.
Dion’s songs have continued to permeate pop culture, particularly via their placement in films and TV shows, including Diner, Peggy Sue Got Married, Little Big League, The Sopranos, Behind Enemy Lines, The West Wing, The Wire and Ozark. Additionally, his life and songbook inspired the creation of The Wanderer, a musical that had a successful pre-Broadway run at Paper Mill Playhouse in April 2022.
“I am most pleased to enter into this great new relationship with Reservoir,” Dion said in a statement. “I know how much the Reservoir team appreciates my work, and I am looking forward to some exciting times ahead with them. I want to thank the entire Reservoir team for helping to make it happen, particularly Rell Lafargue, Jonathan Sturges and Faith Newman. I also want to thank Marvin Katz, my attorney, who introduced me to Reservoir and represented me in the transaction.”
Reservoir’s executive vp of A&R and catalog development, Faith Newman, added, “Dion is a pillar of early rock and roll music and wrote and recorded songs that are universally loved and recognized. He continues to make music with and inspire the genre’s biggest names today. It’s an honor to support both his evergreen catalog and future hits.”
Reservoir Media reported higher quarterly profits and revenues on Tuesday (Nov. 8), as the acquisition of “Sing, Sing, Sing” legend Louis Prima’s catalog and Lebanese label Voice of Beirut helped boost the company’s full-year growth forecast.
From July to September, Reservoir’s net income rose 3% to $4.5 million, or $0.07 per share, while top-line revenues rose 10% to $33.3 million from the year-ago quarter. Executives said they now expect both revenue and adjusted EBITDA (earnings before interest, tax, depreciation and amortization) to rise by 11% for the full fiscal year of 2023. For revenue, that is a range of between $118 million and $122 million, and for adjusted EBITDA, a closely watched metric of profitability, that will range between $45 million and $47 million.
“While the broader economy is facing challenges, the music industry as a whole remains healthy,” Golnar Khosrowshahi, Reservoir founder and chief executive, said on a call with analysts.
Reservoir is mid-way through the fiscal year 2023, during which it aims to spend $100 million on strategic acquisitions. In addition to acquiring Prima’s publishing and recorded music catalogs and the Voice of Beirut, Reservoir signed publishing deals with Naughty By Nature’s KayGee, writer-producer Nick Lee and country singer-songwriter Brit Taylor.
“We are pleased by the quality and volume of deals that we have executed in the past few months,” Khosrowshahi said, adding they have a pipeline of around $2.1 billion of prospective deals “at various stages of development.”
Music publishing revenue rose 9% to $24.1 million for the quarter, driven by a 15% increase in digital revenues and a 6% increase in synchronization revenues.
Recorded music revenues rose 11% to $8.9 million, helped largely by assets under the Tommy Boy label as well as increased digital and synchronization revenues.
Within recorded music, digital revenues rose by 35% to $6.3 million, while synch revenues surged 224% to top $1 million. Physical revenues fell 66% to $900,000 as vinyl and CD sales fell on a lighter release schedule this quarter, executives said.
Operating income fell 15% to $6.6 million and OIBDA (operating income before depreciation and amortization) fell 5% to $12.0 million on higher expenses from employee compensation and running a public business.
“We are confident in our long-term ability to grow our top line at a faster past than our costs moving forward,” Jim Heindlmeyer, Reservoir’s CFO, said on the call.
