Pink Floyd: simply one other brick within the wall of the profitable music rights trade

Rates of interest are rising however the music trade isn’t lacking a beat. Ageing rockers Pink Floyd are hawking their again catalogue for about $500mn; Warner Music and KKR-backed BMG are amongst these circling a trove of anthems from The Darkish Facet of the Moon and The Wall.

These belongings are the antithesis of the flashy artists behind them. Successfully annuities, valued on a reduced money move foundation, they’ve been a beneficiary of low rates of interest on one hand and income development from streaming on the opposite. The pandemic inspired gross sales: unable to carry concert events, some songsters fell again on promoting out.

Personal fairness, hedge funds and specialised automobiles similar to Hipgnosis and Spherical Hill have all piled in. Outcome: rising multiples. UK-listed Hipgnosis went from paying 13 occasions revenues in 2019 to twenty.5 occasions two years later, calculates Jefferies.

Rising rates of interest ought to thus change the calculus. But Citrin Cuperman, His Grasp’s Voice in relation to valuing music belongings, thinks in any other case. It’s leaving its low cost charge at 8.5 per cent, it instructed Music Enterprise Worldwide, reckoning enough leeway is baked in.

Different components counsel there’s nonetheless room to social gathering. Rising income streams is one. The US Copyright Board and trade are thrashing out an settlement on mechanical royalties, for downloads and the like.

Rights are broadening out from songs and grasp recordings to call, picture and likeness. Tina Turner sold these rights to BMG final 12 months. Assuming it takes off, the metaverse will provide loads of scope to take advantage of such rights.

For positive, not all of the temper music is upbeat. Each Spherical Hill and Warner Music Group took small markdowns in latest reviews, with out detailing causes. However high quality enduring belongings like Bruce Springsteen, who offered his catalogue to Sony Music for a reported $550mn, or Pink Floyd — each of which have huge canons — have little to worry from The Fed.

Pink Floyd has presumably sussed you don’t want no training to work that one out.

Lex recommends the FT’s Due Diligence e-newsletter, a curated briefing on the world of mergers and acquisitions. Click on here to enroll.

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