MBW Reacts is a series of analytical commentaries from Music Business Worldwide written in response to major recent entertainment events or news stories. Only MBW+ subscribers have unlimited access to these articles. The below article originally appeared within the latest MBW+ Review email, issued exclusively to MBW+ subscribers.
A guess: For years, Irving Azoff‘s name was mud in the offices of for-profit PROs in the United States.
Since being founded in 2013, Azoff’s Global Music Rights (GMR) has been a competitive needle in the side of the likes of SESAC and Kobalt‘s AMRA, not to mention BMI.
But mention Azoff’s name in the offices of these companies right now – more accurately, perhaps, in the offices of their owners – and people might just start cracking smiles.
As reported by MBW last month, GMR has just been valued at USD $3.3 billion via a deal that sees US-based private equity company Hellman & Friedman become its new majority-owner.
My sources suggest that Hellman & Friedman (H&F), which previously invested in Getty Images, valued GMR at a multiple of approximately 18X annual profit.
H&F bought out TPG’s stake in GMR in accordance with that $3.3 billion company valuation. It also bought some shares from Irving Azoff, again in accordance with the valuation – though Azoff retains a minority slice of equity in GMR.
MBW broke the news of the GMR stake sale on September 19.
Soon after, the likes of SESAC, AMRA, and BMI (and their owners) would have realized the same thing: “Thanks to Azoff’s deal, and that multiple, we’re now all worth more than we were yesterday.”
Which company is enjoying that realization most of all?
Possibly New Mountain Capital, which completed its acquisition of BMI in a ten-figure deal as recently as January 2024. (BMI went for-profit in 2022.)
Sources differ on what New Mountain (and its minority fellow investor, Google/Alphabet) paid for BMI, but the consensus amongst sources seems to land between $1.2 billion and $1.5 billion, at an 8-10X multiple of profit.
(In February, iHeartRadio publicly announced it received a $101.4 million windfall from the BMI sale, having previously told analysts that it owned “a little under 10%” of the PRO. This implies a USD $1.1bn valuation for BMI in the New Mountain deal, but there are additional considerations, such as a $100 million pot of funds that BMI distributed to songwriter members following the sale. BMI and GMR isn’t an apples-to-apples comparison, either: BMI has a much larger member base, and is constrained by US consent decrees when GMR is not.)
The bigger story here? Private equity is all-in on music’s collection societies.
US-based PE companies now control BMI (New Mountain), GMR (Hellman & Friedman), AMRA (Francisco Partners, via Kobalt), and SESAC (Blackstone).
These firms have cumulatively spent multiple billions making this happen:
- Blackstone acquired SESAC at what I have now confirmed was a $1.15 billion valuation seven years ago (at a 19X multiple, according to sources who have seen details of the deal);
- A consortium led by Francisco Partners valued Kobalt (including AMRA) at around USD $750 million in a 2022 acquisition;
- BMI, as mentioned, was sold in a $1bn+ deal earlier this year;
- And Hellman & Friedman’s majority-acquisition of GMR must have cost a minimum (for 51% at a $3.3bn valuation) of $1.68 billion.
Across these four deals, in transaction value alone, I’d expect that more than $5 billion has changed hands.
This collection of PE firms would only have allowed themselves to spend that much on PROs if they all believed the same three things: (i) the measurable use of music around the world is exploding; (ii) that usage is trackable and chargeable via technological improvements; and (iii) the resultant financial spoils are there for the taking.
Another interesting angle on this: the billions spent by private equity companies on PROs is happening as we see a marked slowdown in the money being spent by PE firms (and other private investment cos) on blockbuster music rights deals.
Actually, let me qualify that. Investment firms are still spending big on portfolios of songs – they’re just buying them from owners who have already bought them once before.
In the past nine months alone, we’ve seen:
- Litmus Music, funded by Carlyle Group, splash a nine-figure sum to buy Opus, a music rights portfolio previously backed by Elliott Investment Management. (Fun fact: an ex-Portfolio Manager at Elliott, Adam Katz, now runs Irenic Capital – the activist investor which owns 8% of Reservoir, and is currently putting pressure on that firm’s management team to “maximize shareholder value”);
- Shamrock announce the acquisition of a music rights portfolio from Vine Alternative Investments, including a Calvin Harris song catalog for which Vine had previously splashed $105 million;
- Blackstone acquire the rights portfolio of Hipgnosis Songs Fund – previously owned by public (including institutional) shareholders – in a $1.58 billion transaction;
- Universal Music Group and Dundee Partners join forces to buy out KKR‘s majority stake in Chord Music, valuing the company at $1.85 billion and giving UMG a 25.8% stake.
This buyers-becoming-sellers trend isn’t going to disappear, as PE owners of music rights bundles look to cash out – and consolidation takes hold.
Names in the rumor mill as potential sellers include Tempo Music (owned by Providence, and which previously tried to sell itself in 2022) and Round Hill. The latter firm sold its public fund to Concord for $469 million last year, but still owns a private catalog via its New York HQ.
Oh, and if you’re looking for a sizeable future music M&A deal that doesn’t involve music rights or PROs?
Keep an eye on Stem.
Rumors are flying in the market that the L.A-headquartered indie artist services company, run and founded by Milana Rabkin-Lewis, is attracting heavy acquisitive interest both from major music companies and from global distribution companies.
That’s no real surprise. Just as US major labels have begun striking more service-company-esque deals, so too have frontline-savvy services companies like Stem increased their challenge to the majors. Stem’s ability to pay substantial advances to artists was boosted by a $250 million credit agreement with Victory Park Capital last year.
Raine Group, as is often the case these days with this kind of story, is understood to be representing Stem in any potential sale.Music Business Worldwide
