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NEAR TRUTHS:
WAVES OF VALUATION

CRESTING WAVE: Goldman Sachs’ recent report valuing UMG at $50b+ is as clear a statement as one could ask about future prospects for the music biz. Of course that value is driven by streaming, and of course those who bet that streaming will continually elevate value are already collecting handsomely on that bet.

15 years ago, when nobody else was considering the asset value of song catalogs, along came Larry Mestel with a business plan. The biz attitude at the time was that his was an OK idea but not really part of the mainstream marketplace.

Mestel, who developed his branding chops during his 11 years at Island under the masterful tutelage of Chris Blackwell, was an early exponent of brand expansion for creators (he developed everything from e-greeting cards for Smokey Robinson to an animated series about John Oates’ mustache).

Since first making a splash with the purchase of Kurt Cobain’s catalog—for a reported $50m—in a 2006 deal with Courtney Love, Mestel’s Primary Wave has had its ups and downs, notably some rocky years with partner BMG. That relationship ended in 2013, concluding what many observers saw as an unsatisfying partnership and providing a typical example of the German-owned company’s shortsightedness.

But now Mestel—in sync with longtime associates Justin Shukat and Adam Lowenberg and the rest of the PW team—is really rolling. Along with serial disruptor Merck Mercuriadis, he’s setting the pace for the music-asset explosion, demonstrating the ever-escalating value associated with song catalogs. With projects like the high-profile Whitney Houston biopic, he’s confirming the company’s expansive reach. Mestel has amassed an enormous war chest and now reliably numbers among the biggest bidders as the plums of modern songwriting hit the auction block; the company is said to have north of $1.5b in cash and assets under management and has spent more than $1b on its acquisitions to date. Mestel and team most recently inked a deal for a trove of songs by Sturken & Rogers (Rihanna, *NSYNC, Nick Jonas). What’s his next move?

GREEN FOR PEPPERS: While it wasn’t yet official, word leaked out via the Bible that Red Hot Chili Peppers had done a big catalog deal with Merck Mercuriadis’ Hipgnosis. The leak may have come from one of the other bidders in the contest; insiders say the story is accurate. The Peppers, newly managed by Guy Oseary, have been repped for legal by Eric Greenspan for some three decades. The deal was valued in the neighborhood of $140-150m.

For his part, Merck announced a new deal with hitmaker (and Grammy Producer of the Year) Andrew Watt, who has co-penned five of the 100 top-streaming songs of all time. It was a brisk week for such pacts, as Warner Chappell simultaneously marked an extension of its deal with Belly (The Weeknd), in which it acquired 50% of his catalog.

An interesting sidebar to this saga: It’s become nearly impossible to enforce NDAs in the present, highly competitive marketplace, where upsetting the apple cart for the competition is just sportfucking by the savvy.

REMEMBER: Meanwhile, wonderers continue wondering: What’s up with the renegotiation for Todd Moscowitz’s Alamo? The hot imprint is believed to be valued at around a quarter-billion. These complicated negotiations (said to be with all three majors) seem to have dragged on forever.

 

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