According to sources, last year SONGS produced just under $8 million in net publisher share, or gross profit, which in typical times would carry a 12 times multiple, or about $95 million. But lately copyright owners shopping music publishing asset have been looking for a 15 times multiple, and SONGS is no exception, sources say. Moreover, SONGS has an aggressive estimate for this year’s NPS, projecting it to reach about $12 million, those sources add.
While SONGS principals are keeping close to the vest what the magic number is that would induce them accept a bid, marketplace sources say they expect them to look for a pretty penny, well above current market place prices.
Music Publishing assets generally trades hands on a multiple of a three year average, and if NPS hits $12 million this year, had almost $8 million last year; and just above $5 million the year before, that would give the company an NPS average of about $8 million. A 15 times multiple of $8 million is $120 million; while a 15 times multiple of $12 million is $180 million.
Sources speculated if SONGS could command top dollar. On the one hand, those sources say that the publisher has a lot of hot pop songs but sometimes those types of songs have a decay factor, which means that they might not be worth as much down the line. Sometimes, some buyers hesitate to pay top dollar for those types of hits. On the other hand, sources say SONGS has a lot of good songwriter contracts, which means there is more mileage to be had beyond the existing catalog of songs.
SONGS comes up for sale at a time when two other big indie publishers are on the block, Carlin Music and Ole. Will the crowded market for publishing assets deplete potential bidders financial recourses; or fuel aggressive bids as the suitor vie to land a deal.
Sources say that the reason the company may be coming up for sale is it received a buyout offer and decided to test the market, but may not sell if the pricing isn't right. But others suggest that if there was an initial buyout offer that sparked the hiring of LionTree to shop the company, then the offer came from either Sony Music Entertainment CEO Rob Stringer or Warner Music CEO Steven Cooper because both covet SONGS A&R guru Perry to head up, respectively, Columbia Records and Warner Bros. Records. Spokespersons for both those companies didn't immediately respond to a request for comment.
Through a company spokesperson, Pincus declined to comment.