Publishing

Concord Buys Downtown Music's Publishing Copyrights

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Courtesy of Concord

The deal is estimated at $350 million for rights including shares in "Dancing in the Streets," "Moves Like Jagger" and more.

Concord has acquired Downtown Music's 145,000-song publishing copyrights, the companies announced Monday (April 26), including shares in "Dancing in the Streets," "Moves Like Jagger," "Green Onions," "Halo," "Stay With Me" and "Shallow." Concord also gets the contracts of Downtown Music's existing songwriter roster.

Terms of the acquisitions were not disclosed, but Billboard estimates the assets being sold carry a $350 million valuation based on an 18–20 times multiple.

Downtown is only selling the portion of its publishing catalog that it has an ownership stake in and not the songs and catalogs where it serves as administrator. Billboard estimates that the owned portion of the Downtown catalog has a net publisher share, or gross profit, of $18 million to $20 million, and revenues of about $25 million to $30 million. At an NPS multiple in the range of 17-19 times, that works out to $306 million to $380 million, with other sources putting the valuation at about $350 million.

Concord now owns or controls music assets for over 600,000 songs, establishing it firmly as the sixth biggest music publisher. And after 2017's acquisition of Imagem Music and last year's deal for a majority stake in PULSE Music Group — each at about $550 million and $150 million valuations, respectively — the company has invested nearly $1 billion in acquiring and signing music assets over the last four years.

"The incredible catalog of songs is an excellent complement to the timeless and valuable copyrights upon which Concord has built a successful business," said Jim Selby, Concord's chief publishing executive, in a statement. "Our global publishing team is honored to now represent these songwriters and their works to the world."

While Concord already has a diverse music publishing catalog that includes iconic songs from the 1940s to more recent rock hits, the deal helps strengthen the company's contemporary songwriter portfolio with such acts and songwriters as the 1975. The Downtown deal also boosts Concord's '80s rock portfolio with songs from Mötley Crüe's Nikki Sixx.

In 2015, Concord Music Group merged with Bicycle Music Company, establishing itself as a leading independent music company. Over the past decade, Concord has acquired such catalogs and brands as Rounder Records, Vee-Jay Records, Razor & Tie, KIDZ BOP, Wind-Up, Fearless Records, Rodgers & Hammerstein, Boosey & Hawkes, Sikorski Music Publishing, Savoy, Varése Sarabande, Fania, Independiente, Musart, Victory Records and Publishing, the publishing catalogs of Imagine Dragons and Spirit B-Unique, theatrical licensors Samuel French and Tams-Witmar. The company has also partnered with Andrew Lloyd Webber and has done the previously mentioned joint venture with the PULSE Music Group.

This deal appears to help bring Concord's music publishing operation to parity with its record label operations. Last year a Moody's Investor Services report on Alchemy Copyrights (the investment vehicle that Concord uses to own copyrights that serve as collateral for the company's debt) noted that Concord's operations had almost $450 million in revenue. That broke out to about $200 million for the label, $170 million for the publishing operation and $77 million for the theatrical arm. The Downtown deal brings in about $30 million in revenue, so the music publishing operation might also now stand at about $200 million in revenue.

Selby says that Concord will add some staffing in order to support the copyrights coming over from Downtown. "We will add some A&R, synch and royalty staffers to make sure we are effectively servicing" the acquired assets. Downtown will continue to manage global royalty collections for the copyrights sold to Concord through the end of 2021.

For Downtown, which sources say was up for sale in its entirety at one point last year but then pulled back to only shopping the owned-publishing catalog, the deal shows the company transforming its mission from being a copyright owner that also provides services to a full-fledged, multi-faceted service organization for established and D-I-Y indie unsigned artists and songwriters. (Downtown denies the entire company was up for sale.) Downtown will continue to serve as publishing administrator for the song catalogs of John Lennon and Yoko Ono, Miles Davis, John Prine, the Wu-Tang Clan and others, but it's pledged an increased focus on its CD Baby, Songtrust, Fuga, Downtown Neighboring Rights, and DashGo business operations — into which it says it will reinvest profits from the copyright sale. In the first phase of the company's realignment, DashGo and Downtown Music Publishing will be rebranded Downtown Music Services.

Downtown says that all its operations will generate over $600 million in revenue and collections for 2021. A large component of that revenue base is generated by its operations servicing independent artists and songwriters through CD Baby and Songtrust — and its the part of the operation that is growing at the fastest pace, sources suggest. But these and other components of Downtown's operation, including its administration services, also support established songwriters and artists as well as some labels and publishers. In all, the company says it serves 1 million creators and 2,500 enterprise clients, which combined have more than 23 million music assets.

"Our strategic review confirmed a clear opportunity in the market for a truly neutral provider to meet the changing needs of creators and their partners," said Justin Kalifowitz, Downtown founder and CEO, in a statement. "The idea of serving creators has been core to Downtown's ethos since our founding in 2007. Divesting our owned IP enables us to advance our position as the world's leading music service provider, empower a rapidly expanding global creative class and, ultimately, is the most expedient way to help realize our vision of a more equitable music industry."

In closing the deal, the Raine Group acted as the financial advisor to Downtown on the transaction, with legal counsel coming from Wilson Chu, Joanna Lin, and Thaddeus Chase, Jr. of McDermott Will & Emery LLP, and Jeff Biederman and Beau Stapleton of Manatt, Phelps & Phillips LLP. Concord and its affiliates were advised by Steve Sessa and Chris Sheaffer of Reed Smith and Rob Sherman of DLA Piper, while Lisbeth R. Barron and the team at Barron International Group acted as the financial advisor on the transaction, the transaction announcement states.