Universal Music Buys $240 Million Stake In The Weeknd, John Legend Catalog
The value of music catalogs soared over the last decade thanks to the growth of paid streaming services and low interest rates.
(Bloomberg) -- Universal Music Group NV is buying a minority stake in Chord Music Partners, a company that owns more than 60,000 songs, including ones written by artists like the Weeknd, John Legend and Lorde.
Universal is paying $240 million for a 25.8% stake in the business, the companies said in a statement Tuesday, joining a consortium led by Dundee Partners, the investment firm of the Hendel family. Private equity giant KKR & Co. is selling its stake in Chord to Universal and Dundee in a deal that values the entire entity at about $1.85 billion, including debt.
Chord will provide Universal an outlet to invest in music catalogs without being the primary owner. Universal is already one of the largest music publishers in the world, working with millions of recordings and songs from artists such as Bob Dylan, Ariana Grande and ABBA.
The value of music catalogs soared over the last decade thanks to the growth of paid streaming services and low interest rates. Universal acquired the entire catalog for Dylan’s songs in 2020.
Deals for song rights have slowed down as interest rates have risen, but valuations have remained relatively high and many parties are still looking to invest in music.
“No one can do more with music rights than our teams,” Lucian Grainge, chairman and chief executive officer of Universal, said in the statement. “We look forward to creating maximum commercial and creative value for the songwriters and artists in Chord and building for the future.”
KKR and Dundee created Chord as a holding company for their investments in music copyrights. In 2021, they paid $1.1 billion for a catalog of songs administered by the independent distributor Kobalt Capital Ltd. that accounts for most of Chord’s holdings. They later folded in works from Legend and Ryan Tedder, among others.
Universal has been looking for a way to invest in music without being the sole owner and met with several potential partners. It eventually settled on Dundee, which has also invested in the Broadway hit and the movie distributor Kino Lorber.
Dundee will increase its stake in Chord from a minority share to 74.2%. Dundee and Universal will have the option to partner on future acquisitions.
“By combining a best-in-class financial acquisition vehicle with the world’s leading music company, we are creating both a premier platform for music investment as well as a permanent home for premier artist’s legacies and their iconic cultural works,” said Sam Hendel, Dundee’s managing principal.
(Updates value of deal in second paragraph.)
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