Warner Music, Providence to Invest $650 Million in Old Songs

(Bloomberg) -- Warner Music Group is teaming up with private equity giant Providence Equity Partners to go shopping for hit songs.

The two companies plan to invest as much as $650 million in a new platform called Tempo Music Investments, which will acquire music catalogs, they said Tuesday. Providence has provided most of the capital, while Warner, the world’s third-largest music company, will provide expertise and resources in identifying and managing the songs.

The companies have already acquired copyrights from songwriters Jeff Bhasker, Shane McAnally and Ben Rector. Bhasker has won five Grammy Awards, including producer of the year, for his work with artists Bruno Mars, fun. and Kanye West, while McAnally won a Grammy this year for his work on Kacey Musgraves’s “Space Cowboy.”

The growth of streaming services from Spotify Technology SA and Apple Inc. has increased the value of music copyrights, attracting investment from financial institutions -- and private equity firms in particular. Global music sales have climbed four years in a row, rising to $19.1 billion last year from a nadir of $14.3 billion in 2014.

This has prompted a flurry of dealmaking, from sales of individual catalogs to combinations of smaller publishing companies, and talks surrounding the largest companies in the industry. Vivendi SA is in talks to sell a piece of Universal Music Group in a deal that would value the world’s largest music company at $33 billion. Warner Music is now worth more than double the $3.3 billion it sold for in 2011.

“More than ever before, the long-lasting value of music is being recognized outside the music industry,” Stu Bergen, the head of international at Warner Music, said in a statement. The company reported sales of $4.48 billion in the 2019 fiscal year, an increase of more than 10% from the year before.

Providence previously owned a stake in Warner Music Group. It has also invested in Superstruct Entertainment, a live-music company, and Tait, a set-design and production company.

To contact the reporter on this story: Lucas Shaw in Los Angeles at lshaw31@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III

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