Media and Entertainment giant Warner Bros. Discovery is reportedly scaling back plans to sell its music assets, because the bids it received fell short of the price it was hoping for.
That’s according to a new report from the Financial Times, which, citing sources, reports that the company, led by CEO David Zaslav, was hoping for bids of “as much as $2bn” for the music assets, but that they came in at around $1.2 billion to $1.3 billion.
The FT reports that Warner Bros. Discovery “has held informal talks with potential buyers over the past few months to gauge what valuation they could achieve”.
This news arrives over two months after the Financial Times originally reported that Zaslav was exploring a sale of the company’s music library.
Included in that vast catalog of music assets are the soundtracks to classic movies and TV shows, from the Batman films to Singin’ In The Rain.
In February, our own sources told us that powerful music industry lawyer, Allen Grubman, is running point on this sale, and that discussions had already begun across Major Music Company Land.
As reported by MBW at the time, Warner Bros. Discovery was potentially looking for a 20-times multiple on NPS for the library, we were told – which, if reached, would have put its price comfortably above USD $1 billion (aka: a ten-figure deal).
The merger combined entertainment and media properties ranging from the Discovery Channel, to Warner Bros. Entertainment, CNN, DC, Eurosport, HBO, HBO Max, HGTV, the Food Network and more.
The FT reported in January that the potential sale was being explored by CEO David Zaslav in an effort to reduce debt at the media giant following the formation of the new company. Warner Bros. Discovery has total debt of around $50 billion.
Zaslav said in November that the company would be looking to cut costs by $3.5 billion over the next two years.
The FT’s sources said in that original report that the timing of the sale exploration comes as Warner Bros. Discovery wants to “capitalise on a hot market for music copyrights”.
Indeed, as pointed out by MBW in February, in spite of reports about a slowdown in the catalog acquisition space in recent months, a flurry of M&A activity in the music rights market suggests investor confidence around the capitalization of music rights could be returning.
The FT, in its latest report, says that Warner Bros. Discovery may only sell “a piece” of its music portfolio or scrap the deal completely.
It also notes however, citing people familiar with the matter, that “no final decision has been made”.
One potential cause for the lower-than-hoped-for bids was that Warner Bros. Discovery reportedly asked buyers to agree that “any sale give it control over how certain soundtracks are used and requested other stipulations”.
Citing three people familiar with the matter, The FT added: “The conditions damped the value of the catalogue for potential buyers”.Music Business Worldwide