SESAC Buys the Harry Fox Agency

The price tag: $20 million.

More than a year after SESAC made an unsolicited bid to buy the Harry Fox Agency for $20 million, the Nashville-based performance rights organization has closed on the deal, according to The New York Times.

The New York-based mechanical rights management firm boasts over 48,000 music publishing clients and was founded in 1927. In May, Billboard reported that HFA's owner, the National Music Publishers Assn., had hired an investment bank to shop the agency

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Sources say that other bidders for HFA included SOCAN and BMI, but SESAC prevailed in the end for a price that is somewhat under the valuation of the initial offer. The acquisition still needs to be approved by the NMPA membership, according to The New York Times.

In 2014, SESAC's revenue had grown to $182 million from $167 million in 2013, according to Moody's Investors service. Meanwhile, the HFA revenue base has been on a steady decline, sources say, even as streaming has increased. In a bid to capture some of the streaming pie, HFA began its streaming operation in which it helps digital music services sort out publishing, but even that strategy has failed to stem declining revenues, which sources place at under $150 million annually, almost half of what it was seven years ago.

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“Licensing is fragmented across both multiple types of rights, as well as multiple territories for the streaming services that represent the future growth opportunity of the music industry," SESAC chairman and CEO John Josephson said in a statement. "The result is a complex, opaque and currently inefficient licensing regime that fails to deliver the best outcomes for creators and publishers, as well as end users. What excites us about this transaction is the ability it provides to make the licensing process both simpler and more efficient, and in so doing create additional value for music creators and publishers, as well as the digital music platforms.”

In the changing publishing environment where the Dept. of Justice is expected to relax the consent decrees under which ASCAP and BMI -- SESAC's main competitors -- operate so that the two PROs can also license mechanical rights bundled with performance rights, the HFA acquisition is considered a key strategic move on the part of SESAC. While SESAC is private doesn't operate under a DOJ-imposed consent decree, up until now it hadn't also licensed mechanical rights.

Correction, July 7 2:44PM: This article originally stated that SESAC paid $35 million for the Harry Fox Agency -- the price is estmated at $20 million.