Tempo Music’s catalog is for sale – and we predict it will gross over $500 million

Tempo Music, a music rights acquisition fund launched by private equity giant Providence, is selling its music portfolio.

MBW has been informed by three senior industry sources that the US-based Tempo’s rights portfolio is now in the block. A deck of cards containing information about the purchase was distributed to potential buyers across the business.

Since it Released in 2019Tempo Music has get a portfolio of rights / income streams from stars including Wiz Khalifa, Twenty One Pilots (via Tyler Joseph), KornFlorida Georgia Line, and renowned producer/musician Philip Lawrence.

Our sources tell us that Tempo’s portfolio is said to have an annual NPS (Net Publisher Share, i.e. gross profit) of “$30 million plus”. This allows MBW to make an educated guess about the potential future selling price of the portfolio.

Chart A: Hipgnosis Song FoundationTempo Music’s UK-listed competitor, told its investors in December that its rights portfolio has been independently valued at $2.55 billion.

That independent valuation is based on the NPS multiple of 19.03Xconsidered to reflect the fair modern market value of a high-end music rights company.

If Providence could sell Tempo Music’s portfolio by the same multiple (19.03X), it would sell for about $570 million.

Even if it locks in a sale 17 times many NPS, it will be able to sell Tempo for more price 500 million dollars.

However, Tempo could have hoped for a significantly higher multiple, especially when we consider what has been achieved by selling legendary artist/writer catalogs in recent years.

These have often been sold in excess of 25 times multiples and – reported in case last year sold David Bowie’s catalog to Warner – even more than 30 times.

A multiple of NPS in the mid-twenties will push up the selling price of Tempo Music $750 million and more.

One big question for all of this: Why would Providence want to sell Tempo’s portfolio now, when all instructions suggest that music copyright revenue – and thus the value of consistently popular music – continue to grow and increase?

Private equity investors tend to seek shorter returns than other types of investments (retirement funds, etc.). Some private equity investors are happy to keep up to 7-10 years and above, while others seek profit only 3-5 years after deploying their initial capital.

The sale of Tempo’s rights, then, could mark the abrupt end of Providence’s entry into the world of music rights trading.

However, with large-scale investors like Pimco, KKRBlackstone and BlackRock both recently committed large-scale funding to purchase music rights, perhaps less likely to be Providence – the company that has built valuable institutional knowledge of the music market over the past three years. last year – won’t work music in a nice way.

One possibility is that Providence will ‘re-energize’ after selling existing rights, launch a new fund (or refresh Tempo Music) with new backers, and continue to compete in the music rights space. music.

Another compelling factor in the sale of the rights to Tempo Music: When Providence Initial launch of the fund In 2019, it cooperated with Warner Music Group.

Tempo often purchases music rights from/associated with talent signed to Warner Music Group, including Wiz Khalifa, Florida Georgia Line, and Twenty One Pilots.

As a reciprocal benefit, Warner Music Group can keep these rights ‘in the family’, frequently partnering with Tempo as the worldwide distribution and/or publishing management arm.

With Tempo Music currently blocked, will Warner Music Group get the first look/disapproval right away when purchasing the catalog?

Maybe, or maybe not: MBW learned that Tempo’s sales floor had certainly fallen into the hands of a number of acquisition companies well beyond Warner’s walls.

(Tempo Music and Warner Music Group declined to comment for this story.)

Tempo Music has been run by the CEO, Josh Empson, since early 2021 by the exit by predecessor CEO Sherrese Clarke Soares (who now runs Apollo Global-backed HarborView).

Empson, a longtime Providence executive who shaped the founding of Tempo Music in 2019, told MBW last year: “Providence has competed with Blackstone and KKR and Apollo for decades in other areas. So I have a lot of respect for them.

“But competing with the very same people we’ve competed with in other areas for decades… doesn’t frighten us. It represents really healthy growth, professionalization [music rights] space is really dominated by smaller players than before. “

Tempo Music has raised a billion dollars in total investment, but is not believed to have come close to exhausting that number.

Last year, Empson tell MBW that Tempo prides itself on being picky in the deals it closes, and that it is following a strategy of catalog buying from active modern artists/writers with contemporary hits to their name.

Empson of Tempo’s strategy says: “We’ve been slow and steady and very picky:“ We’re trying to pursue a very specific strategy; We are not trying to buy every category, we are not trying to index the market. ”

In addition to the Tempo deal, Warner Music Group recently partnered with a second third-party fund focused on buying music rights.

That fund, Managed by an Influencer Media Partnerhas about $750 million in backing from BlackRock and Warner themselves.

Influence says it spent $300 million of this new Warner/BlackRock fund on 20 categories, including one from Bad Bunny and J Balvin collaborator Tainy.Worldwide music business

https://www.musicbusinessworldwide.com/tempo-musics-catalog-is-up-for-sale-and-we-expect-it-to-go-for-more-than-500-million/ Tempo Music’s catalog is for sale – and we predict it will gross over $500 million

Fry Electronics Team

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