2017 will go down in history as a year of massive deals in the music rights business.
Chuck in Warner’s acquisition of Spinnin’ Records ($100m+) and BMG’s purchase of Broken Bow Label Group (also $100m+), and you’re over a billion US dollars across four deals alone.
But the biggest acquisition of all may be yet go down.
Speculation is growing that EMI Music Publishing is officially on the block, and that some of its key investors are ready to sell the company for a pricetag of around $3bn.
That would represent a return on investment of $800m for the Sony-led consortium which acquired EMI’s publishing business for $2.2bn in 2012.
According to a story in today’s Sunday Telegraph newspaper in the UK, “Some existing backers are keen to bail out.”
EMI Music Publishing represents 1.3m copyrights including works from the likes of Beyoncé, Drake, Jay-Z, Norah Jones, Alicia Keys, P!nk, Scissor Sisters, Rihanna, Stargate, Usher, Kanye West, Pharrell Williams, Tinie Tempah, Duffy and Arcade Fire.
Adding spice to the story is the fact that Sony doesn’t currently own a majority stake in EMI Music Publishing.
Sony acquired 30% of EMI Music Publishing via the 2012 deal – with its then-partner in Sony/ATV, the Jackson Estate, acquiring a further 10%.
However, 60% of EMI Music Publishing is owned by other finance partners, led by Mubadala Development Company, alongside Jynwel Capital, the Blackstone Group’s GSO Capital Partners LP and David Geffen.
Sony/ATV has administered EMI Music Publishing since the buyout, receiving a 15% chunk of Net Publisher Share (NPS) each year for its trouble.
It’s also stripped a lot of cost out of EMI, making it a more attractive acquisition prospect: last year, MBW revealed that Sony had slashed 60% of EMI’s post-acquisition workforce following the 2012 buyout.
But Sony’s admin agreement is set to end in 2018 – and whispers are growing that a sale might be on the cards before mid-next year, or even by the close of 2017.
Will Sony’s fellow investors in EMI Music Publishing sell the remainder of the company to the Japanese giant?
Or does another music industry suitor – perhaps Len Blavatnik, BMG or Universal Music Group – have their hand up for the deal?
Sony Corp acquired the 50% in Sony/ATV it didn’t already own from the Jackson Estate last year in a $750m deal.
If Sony wants to buy out its fellow investors in EMI Music Publishing, at a $3bn total company valuation, it will have to cough up somewhere around $2.1bn (for 70%).
However, that presumes Sony/ATV’s music industry rivals – or private equity / pension fund interest from outside the music business – won’t drive the price up even higher…Music Business Worldwide