The board of Downtown Music Holdings, the guardian firm of impartial distributors CD Child and FUGA in addition to a variety of different publishing and rights administration companies, is exploring a sale, sources acquainted with the deal inform Billboard.
The publishing administrator for the catalogs of John Lennon and Yoko Ono, Miles Davis and the Wu-Tang Clan, amongst many others, Downtown has held talks with non-public fairness corporations and not less than one main music firm, as its longtime backer, the household of the late Douglas Myers, appears to be like to exit its funding, in keeping with two of these sources who spoke on situation of anonymity as a result of the talks are non-public.
The fast-growing impartial sector of the music business has seen a flurry of dealmaking exercise previously 12 months, as each outdoors traders and conventional music firms store for methods to manage extra of the market that providers and distributes the music of do-it-yourself artists, songwriters and indie labels.
In June, the consortium composed of Denis Ladegaillerie, EQT and TCV purchased 95% of the excellent shares of of French music firm Consider after Warner Music Group backed out of an acquisition bid the most important floated earlier within the 12 months. Later that very same month, the Chicago-based non-public fairness agency Flexpoint Ford purchased a stake in Create Music Group for $165 million. Final 12 months, Apple veteran Larry Jackson raised about $1 billion and bought distributor Vydia because the engine to launch his new firm gamma, whereas Exceleration Music purchased indie distributor Redeye for an undisclosed sum.
Downtown declined to touch upon a doable sale past an emailed assertion that stated, “There has at all times been robust market curiosity in and pleasure for our platform. We stay steadfastly centered on serving our purchasers and increasing our enterprise by persevering with to drive innovation throughout the worldwide music business.”
The market share of recorded music income generated by labels and artists that launch music outdoors of the major-label system has been rising globally for round a decade. Non-major labels and self-releasing artists’ collective share of the recorded music income market grew from 28.6% in 2015 to 36.7% in 2023, in keeping with analysis by MIDiA.
Based by Justin Kalifowitz in 2007 as a writer in New York, Downtown rapidly grew into a world firm with greater than 20 places of work all over the world, and its scale makes it among the many extra engaging acquisition targets on this section of the music business. It reaches greater than 4 million creators and providers some 50 million tracks from 5,000 enterprise purchasers.
Downtown has explored a sale earlier than, and that course of led it to promote its 145,000-song publishing catalog in 2021 to Harmony for round $400 million. Lately, Downtown has reworked from a number one indie writer to a full-stack music firm.
It has revamped a dozen acquisitions lately, together with the direct-to-creator distributor CD Child, and the direct-to-business expertise and distribution platform FUGA, in addition to rights administration firm AdRev and repair suppliers DashGo, Soundrop, Simbals, Discovered.ee, Curve and Sheer Music Publishing.
Operated in 4 divisions — artist & label providers, which incorporates CD Child; distribution providers, which incorporates FUGA; publishing providers, which incorporates administrator Songtrust; and royalty and monetary providers, which incorporates Curve — Downtown is anticipated to generate about $40 million in EBITDA on about $130 million in web income, or $900 million in complete revenues, in keeping with three sources acquainted with the corporate’s financials.
Sources say Downtown makes use of the company accounting mannequin to document its financials, which counts solely the charges from firms like FUGA towards the corporate’s general income.
Sir Douglas Myers was a New Zealand businessman and longtime chief government of the beverage firm Lion Nathan, who bought his stake in that firm to Japanese brewer Kirin in 1998. Myers, who died in 2017, reportedly invested in Downtown due to his son Campbell Myers‘ love of music. Cambell Myers served as Downtown’s director of enterprise improvement for a 12 months from 2009-2010, in keeping with his LinkedIn profile.
Billboard was unable to find out which firms are in talks with Downtown. However Warner Music Group CEO Robert Kyncl informed traders in Could it’s exploring mergers and acquisitions that would broaden its “lower-touch” providers for impartial creators and labels, and in June, it employed Goldman Sachs’ world head of music & stay leisure funding banking Michael Ryan-Southern to steer M&A.
Kyncl stated on a convention name discussing WMG’s quarterly earnings on Could 9, “We have now a transparent plan to develop this space of our ecosystem, and we’re constructing options in-house whereas staying vigilant about M&A alternatives, which might speed up our capabilities.”
