Blackstone Unveils Music Investment Deal With Merck Mercuriadis

(Bloomberg) -- Blackstone Inc. is partnering with music manager Merck Mercuriadis to invest about $1 billion in acquiring music rights and song catalogs.

The alternative asset manager said it would also take an ownership stake in Hipgnosis Song Management, the firm founded and run by Mercuriadis, according to a statement that confirmed an earlier Bloomberg News report.

The market for music copyrights become more competitive, thanks in part to the aggressive spending of Mercuriadis’s Hipgnosis Songs Funds Ltd., a publicly traded investment vehicle operated by his management firm. 

It’s also gotten more competitive, with music labels Universal Music Group NV and Warner Music Group Corp. buying catalogs too. 

Blackstone will be relying on Mercuriadis, a former manager of Elton John, Guns N’ Roses and Beyoncé, to use his deep connections in the music industry to strike deals with artists. 

Under these agreements, the firms make upfront cash payments to artists in exchange for rights to their songs, which they can then monetize for years to come in movies, video games and covers.

In an interview, Mercuriadis compared songs to limited resources such as gold and oil, though less dependent on the wider economy. With the fresh funding, he said he’ll be on the lookout for songs and records of cultural importance.

He’s aiming to purchase song catalogs outright, but he’s also willing to do deals such as one this year when he acquired 50% of Neil Young’s catalog. Mercuriadis has spent about $1.75 billion scooping up copyrights to more than 60,800 songs in three years.

Qasim Abbas, senior managing director at Blackstone Tactical Opportunities, said in an interview that the $1 billion is just a “starting point.” 

“We regard music rights as a very interesting asset class,” Abbas said. “We’ve spent a lot of time on it.”

Mercuriadis said that four other companies were interested in partnering with his firm but that he ultimately chose Blackstone. 

Blackstone was advised by Goldman Sachs Group Inc., FTI, Kirkland & Ellis LLP and Deloitte. Hipgnosis was advised by Royal Bank of Canada, Capstan Capital Partners and Stephenson Harwood.

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