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Indie Music Giant Concord, Worth Over $4 Billion, Eyes Potential Sale

Concord, one of music’s biggest independent companies, is exploring a sale, according to a source familiar with the situation – a deal that would likely top $4 billion if the full company were to trade, based on Billboard‘s estimates.

Concord has been trying to raise additional funding to fuel further growth for some time, without necessarily selling the company outright, other sources say. But if the record label and music publisher does hit the auction block, it would be an attractive target for one of the three major record companies, some industry sources say, and an acquisition by one of the smaller majors could potentially change the power dynamics between them. Concord generates about $500 million in annual revenue — about $200 million from recorded music, $200 million from music publishing and $100 million from a theatrical arm.

Concord is 93% owned by the gigantic Michigan State Retirement Systems, which has $94 billion in assets. The retirement system has already been collecting steady large dividends from Concord, but if Concord hits a $5 billion valuation— likely the upper bound of what it might fetch, another source says—that would represent more than a three-fold return on the pension fund’s investment, Billboard estimates.

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Concord could also simply try to raise more equity. Sources say that Concord had tried to get the Michigan State Retirement Systems to give it more funding through additional equity, but the pension fund offered less than what the company sought. In fact, in the summer of 2020, the company had turned to debt to raise additional $600 million in capital, a good chunk of which was used to pay down existing debt, leaving Concord with $380 million in availability at that time.

If Michigan State Retirement Systems is reluctant to bring more equity to the table, current efforts to raise equity capital could still result in a new equity sponsor and thus the sale of the company, according to those sources. Or it might just result in the dilution of the pension fund’s equity in Concord.

If the process turns into a sale, Concord is currently distributed by Universal Music Group and some sources speculate that UMG would be a natural potential buyer. Or, Sony Music Group — the No. 2 record label by market share — might be interested in an acquisition in order to gain market share and cut down on UMG’s lead. (In 2020, UMG generated $8.9 billion in revenue, while Sony Music and Sony Japan and their publishing companies collectively totaled $6.3 billion in revenue.) But both UMG and SMG would likely run into regulatory issues if they tried to buy Concord, industry sources say. Warner Music Group and BMG — which recently renewed its relationship with private equity firm KKR to acquire music rights with a $1 billion fund — would probably also be interested in buying Concord to boost their market shares. Sources say neither are unlikely to trigger an antitrust review if one of them bid and won a Concord deal.

Concord could also be a desired target of giant private equity firms like KKR, Blackstone and Apollo Global Management that have recently begun to establish beachheads in the music industry. Besides KKR’s partnership with BMG, the firm announced on Tuesday it had acquired the Kobalt Music Royalty Fund II for $1.1 billion with a group of investors including Dundee Partners, the investment office of the Hendel Family, through a new platform called Chord Music Partners. Blackstone has also been building a mighty presence in the music industry through its acquisition of SESAC and eOne Music — which was recently renamed MNRK — and its partnership with Merck Mercuriadis and his Hipgnosis Song Management platform announced last week. Apollo’s new music partnership backing HarbourView Equity Partners led by Sherrese Clarke Soares might also chase a Concord deal, if it was offered. While all of these private equity firms are targeting investments of $1 billion to $2 billion, they have the firepower to make much bigger music acquisitions too, should a deal prove attractive.

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Many industry executives believe these investment firms are preparing for a roll-up, whereby an investor buys up multiple small companies and merges them together into a larger entity, and Concord would fit nicely into such a strategy.

Concord’s current iteration is actually the product of such roll-ups: In the 2000s, the Concord bought record labels as Stax, Fantasy and Rounder, while Bicycle Music — founded by former Clear Channel executive Steve Smith — bought a number of artist catalogs, songwriter publishing catalogs and labels including Wind-Up Records. In 2015, the two merged to form what became the company that stands today. Since then, Concord has continued to pick up recorded music and publishing assets, including a $550 million acquisition of Imagem in 2017, which included the Rogers & Hammerstein and Boosey Hawkes theatrical and music publishing rights.

Since Concord’s merger with Bicycle Music, it has also acquired labels Razor & Tie, Kids Bop, Vee-Jay Records, Victory, Loma Vista, Fania and Musart. Its music publishing acquisitions include Pulse Music and a $350 million catalog acquired from Downtown Music last April, among others.

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Some of the company’s biggest acts across all imprints include St. Vincent, Nathaniel Rateliff and the Night Sweats, Keb’ Mo’, Elvis Costello, Ghost, Underoath, Steve Perry, Best Coast, Local Natives, Common, Big Star, Billy Strings, Dan Auerbach, Dawes, James Taylor, Evanescence, Tanya Tucker, Paul Simon, Manchester Orchestra and Lukas Nelson, Isaac Hayes, Joan Baez, John Coltrane, John Lee Hooker, Miles Davis, Margo Price, Nine Inch Nails, R.E.M., Santana, Soccer Mommy, Sylvan Esso, Yola and more.

One industry executive who advises big money players that there won’t be any shortage of suitors for Concord. “It’s big and meaty,” he says. “Someone –probably a major — will try and buy Concord.”

Concord declined to comment, saying it does not comment on “rumors.” A spokesman for the Michigan State Treasury Department responded to a request to comment with this e-mailed statement: “The State of Michigan Retirement Systems has a tradition of not discussing active investment strategies.”

This article has been updated.

Additional reporting by Melinda Newman.