Big Machine Label Group, Taylor Swift’s Label Home, Reportedly Considering a Sale
Within the same week that Big Machine and Taylor Swift are on the verge of reaping their greatest sales accomplishment, comes word that label, founded by Scott Borchetta, is up on the sales block.
According to sources, Borchetta is testing the waters to see what kind of offer the Big Machine Label Group could get, should he decide to sell. But sources add any deal is contingent on the status of Taylor Swift's affiliation with it. Sources say that he is looking for a valuation in the $225 million-$250 million range. News of a potential deal for Big Machine appears to have been first reported by the New York Post.
Besides the Universal Music Group, other potential bidders for the label include Sony Music Entertainment and Warner Music Group, the Disney Co. and BMG. Private equity investors and other entertainment companies that possess the ability to create a potentially symbiotic relationship with the Big Machine assets are also in consideration.
According to sources, Borchetta was approached by a third party to sell the label, after that he decided to test the waters. He's also tossing around the value he thinks the label is worth in the process. Renowned entertainment lawyer Joel Katz of Greenburg Traurig is representing Borchetta in any potential sale, according to sources.
Executives at Universal Music Group, Big Machine and Greenburg Traurig couldn't be reached for comment over the weekend.
News of the sale comes as Swift's 1989 appears to be on the verge of accomplishing the best sales debut week the artist has ever accomplished. Industry sources say Swift is on track to scan 1.3 million units, which is a 7.6% increase over 2012's Red, which sold 1.208 units in its debut week.
So that means that even though this year's overall album sales are likely to be down about 20% from sales at the end of 2012, Swift still not only managed to scan a million units in a single week- when most sales and distribution executives thought it was no longer possible- but she also managed to beat her previous best debut week.
While some sources dismiss the asking price as pie in the sky, whatever price Borchetta ultimately gets will be tied to the fate of whether Swift comes with the deal. The New York Post reports she has one more album on her contract and has a slice of Big Machine equity, which other sources confirm. But she also has a greatest hits package due under her contract and an obligation to record some new material for that as well, sources suggest. If she re-ups with Big Machine, it makes a higher label sale more palatable. If she leaves, then the question becomes: does her catalog go with her; or does it remain with the label.
The answer to that question will also figure prominently in the label's sales potential. On the flipside, Big Machine will see its distribution contract with UMG expire at the end of the year. The label also has two joint venture deals with Universal through Republic Nashville, which has Florida Georgia Line and the Band Perry, and Dot. Whatever artists are signed to those labels are expected to stay with UMG, should Big Machine leave.
While sources believe that UMG is the most likely candidate to buy Big Machine, should Borchetta ultimately decide to sell, others say don't rule out Sony Music and Doug Morris, who was at UMG when Big Machine first signed with the company.