Sony Music’s mystery Queen catalog co-investor is Apollo, say sources

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Sony Music Group is on the verge of pulling off the biggest artist catalog deal in music history.

The company has reportedly agreed to acquire the catalog of legendary rock band Queen in a landmark deal reportedly worth approximately GBP £1 billion (USD $1.27 billion at current exchange rates).

Sony is understood to be buying the band’s global music publishing rights, their ‘name and likeness’ rights, plus their recorded music interests — including their recording copyrights outside of North America, where their masters are owned by Disney Music Group.

(Sony already administers Queen’s publishing rights, while the band’s recorded music is currently globally distributed via Universal Music Group.)

At the end of May, Bloomberg reported that Sony was negotiating a deal with Queen and that the major music company was “working with another investor” on the transaction.

According to MBW’s sources, noises are getting louder that said investor is Apollo Global Management.

It’s currently unclear how much of the $1 billion+ Queen catalog pricetag Apollo is involved in, and whether its participation in the deal with Sony is based on a debt agreement, equity agreement, or a combination of the two.

Sony has teamed up with outside capital for catalog investments before.

The firm’s ~$550 million acquisition of Bruce Springsteen’s publishing and recorded music catalog in 2021 was (on the publishing side) part-financed by Eldridge Industries. On a smaller scale, in 2022 Sony co-invested with Domain Capital to acquire the publishing catalog of hit country writer Ashley Gorley.

Apollo’s mooted involvement in Sony’s Queen catalog deal comes after the investment giant recently backed Concord in the latter company’s bid to acquire the assets of Hipgnosis Songs Fund (HSF).

Concord officially pulled out of the HSF bidding war in May, leaving global investment giant Blackstone as the frontrunner in the takeover battle for HSF.

Before that outcome, Apollo had committed both debt and minority equity to a bidding entity (Concord Chorus Ltd) that offered $1.51 billion to acquire HSF.

Meanwhile, in May, Sony Music‘s sister company, Sony Pictures, was reportedly in talks to partner with Apollo on a potential $26 billion bid for Paramount. (Currently, it looks likely that Paramount will end up merging with Skydance.)

Apollo Global Management has also been active elsewhere in the music rights market in recent years.

In 2022, Apollo Global Management led what it claimed to be the “largest-ever” ABS (asset-backed securities) transaction for Concord, when the latter company priced a $1.8 billion bond offering backed by over 1 million music copyrights.

Meanwhile, in 2021, former Tempo Music CEO Sherrese Clarke Soares set up HarbourView Equity Partners with backing from Apollo. HarbourView has since amassed roughly $1.6 billion in “regulatory managed assets”.

As of March 31, 2024, Apollo itself – across multiple industries – had approximately $671 billion of assets under management.

Queen’s catalog, including both publishing and recorded music rights, is jointly and equally owned by the band’s surviving ‘classic’ line-up (Brian May, Roger Taylor, John Deacon) plus the estate of Freddie Mercury.

Disney Music Group  (via its ownership of Hollywood Records) owns Queen’s recorded music rights in North America; the band owns them everywhere else in the world. (DMG has a global distribution agreement with Universal Music Group.)

Hits reported last month that UMG, as Disney’s distributor, will retain distribution rights in North America, although Sony will receive the royalties.

UMG’s worldwide distribution rights will then transfer to Sony in 2026 or 2027, making Sony Music the sole distributor and owner of all Queen content globally.

Queen band members Brian May, Roger Taylor, and John Deacon – plus the Freddie Mercury estate – each own equal shares in the company Queen Productions Ltd, which owns the group’s recording catalog outside the US and Canada.

Queen’s members (plus Mercury’s estate) also own the global rights to Queen’s music publishing catalog via their company Queen Music Ltd, which is administered by Sony Music Publishing.

Queen Productions Ltd posts its annual financials on the UK Companies House. The latest, published last week, shows the company’s fiscal performance in FY 2023 (to the end of September last year).

The company reported GBP £39.47 million in revenue for the fiscal year ended September 30, 2023. At the average exchange rate for 2023, that’s equal to USD $49.1 million.

That represents a small YoY revenue decline of 3.5% from the £40.89 million ($50.41 million) that the company reported for the 2022 fiscal year, according to the financial report filed with the UK’s Companies House.

Of the £39.47 million in revenues for FY 2023, royalties accounted for £36.1 million, down 2.0% YoY from fiscal 2022.Music Business Worldwide