Inside the Deal: Concord's Majority Stake in Pulse Fills a Catalog Void, Sets Stage for Future Moves

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Courtesy of Concord

     

It's the biggest music publishing company acquisition in ages and while terms of the deal were not disclosed, sources say Concord Music Publishing acquired about two-thirds of the Pulse Music Group in a deal that valued the indie music publishing firm in the range of $150 million to $165 million.

As part of that deal, Pulse principals Scott Cutler and Josh Abraham retain about a third of the firm they founded; and while its longtime financial partners FujiPacific Music may have sold its stake to Concord, it still will act as the sub-publisher for the Pulse catalog for most of Asia. The new joint venture will continue to operate under the Pulse brand with the Pulse management team staying intact.

Sources say that Pulse had about $6.5 million in net publisher share, which would suggest that Pulse is valued at about 23-25 NPS multiple, which is at the high end of what some view as inflated multiples that trophy music publishing assets are trading at now days. But sources say that was not merely viewed through a valuation lens by Concord but also through a strategic prism that would bring aboard a vibrant A&R machine that would produce benefits beyond the front-end metrics of the deal.

First off, sources say that may not be the ending valuation when all is said and done because Pulse had a big pipeline of revenue still expected to come in. Moreover, the company has a strong going-forward slate of songs scheduled for release, other sources suggest.

But beyond that, Pulse's position in the marketplace fills a void in the Concord music publishing catalog, which up to now has been dominated largely by classic hit songs from yesteryear, although Concord made its debut in the rankings for the first time in the second quarter of 2019, a feat it repeated in the next quarter too. 

But the Pulse catalog not only gives Concord a bigger taste in the current hit marketplace that generates billions of streams, the deal brings Concord fully into the frontline, hot hit music publishing business because of the A&R acumen of Cutler, Abraham and their team to sign upcoming hot songwriters earlier in their career.

It also provides another benefit to Concord in that data collected from the performance of the Pulse catalog will provide added insight into the valuation of current hit music, not only for acquisition but for advances should Concord decide to engage with the likes of Hipgnosis in buying more such catalogs. And while Pulse engages in front-line signing to compete with the majors and indies like Downtown, Reservoir, and others, the Pulse deal will provide insight into Concords own future signings, should it too decide to add more current songwriters to its own catalog.

While Pulse hasn't appeared in Billboard's Top 10 publishers rankings for the top 100 radio songs so far in 2019—the fourth quarter rankings will be published probably in early February—the company made five consecutive appearances in the ranking from the third quarter of 2017 through the third quarter of 2018. In fact, Pulse was named the 2018 AIMP Music Publisher of the Year.  The Pulse catalog includes stakes in such hits as "Havana" by Camila Cabello and "Girls Like You" by Maroon 5,  the "Despacito (Remix)" by Luis Fonsi and Justin Bieber, "Sorry" by Justin Bieber (BloodPop), "Roar" and "California Gurls" by Katy Perry and "Sicko Mode" by Travis Scott. Moreover, during 2019, Pulse also signed such songwriters as James Blake, Chad Hugo (The Neptunes/N.E.R.D.), YBN Cordae/YBN Nahmir, Mitchy Collins (lovelytheband), Bhad Bhabie, and Albert Hammond Jr. (The Strokes).

Finally, this deal — engineered with the help of Reed Smith and Squarefield Capital on the Concord side; and by Shot Tower Capital, Myman Greenspan Fox Rosenberg Mobasser Younger & Light LLP, and Venable LLP on the Pulse Side — marks a major return to buying music publishing assets for Concord, which in the past had been very active in that sector. But in 2017, after it made its biggest publishing acquisition yet in buying Imagem, it began concentrating more on recorded masters deals when music publishing valuations multiples started headed toward the stratosphere.

While neither company provided comments for this story, the press release announcing the deal outline Concord's growth plans going forward. “While the broader market remains hyper-focused on deep publishing catalog and passive income-stream deals, Concord has chosen to differentiate itself with partnerships that greatly expand its abilities to create frontline content across compositions, recordings and theater," Concord's chief business development officer Steve Salm said in a statement.

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