Blackstone in Talks to Back Merck Mercuriadis’s New Music Fund
(Bloomberg) -- Blackstone Inc. is about to give music manager Merck Mercuriadis around $1 billion in firepower to buy music catalogs.
The alternative asset manager is in discussions to partner with Mercuriadis, who runs U.K.-based Hipgnosis, on a new fund dedicated to buying copyrights, according to people familiar with the matter. Mercuriadis’s company would manage the fund, which will be backed by about $1 billion in equity and debt from Blackstone’s tactical opportunities business, the people said, asking not to be identified because the matter is private.
The plans aren’t finalized and talks could still fall apart. A representative for Blackstone declined to comment. Mercuriadis declined to comment.
The market for music copyrights has soared in recent years, thanks in large part to the aggressive spending of Mercuriadis’s Hipgnosis Songs Funds Ltd., a publicly traded investment vehicle operated by his management firm. Mercuriadis has spent about $1.75 billion scooping up copyrights to more than 60,800 songs in three years through the fund. Earlier this year, he bought a 50% stake in Neil Young’s songwriting catalog, 100% of Lindsey Buckingham’s work and a full share of Jimmy Iovine’s entire production catalog.
The agreement under discussion between Mercuriadis and Blackstone is similar to the management agreement Mercuriadis has to run Hipgnosis. Blackstone will not be acquiring the listed entity of Hipgnosis but it could invest in the management company, the people added.
A former manager of Guns N’ Roses and Beyoncé, Mercuriadis’s buying spree caught the music industry off guard, and led many rivals to insist he was overpaying. Mercuriadis has argued that streaming will continue to boost industry revenues, as it has for the past several years.
His acquisitions have prompted copyright owners to cash in, and encouraged, or forced, other music companies and private equity firms to join the fray. Universal Music Group NV paid more than $300 million for the song catalog of Bob Dylan, and Warner Music Group just did a deal with Madonna. Blackstone’s fellow private equity firm KKR & Co. formed a joint venture with BMG, and acquired the catalog of songwriter Ryan Tedder.
©2021 Bloomberg L.P.