Scooter Braun’s Ithaca Holdings has agreed to acquire Scott Borchetta’s Big Machine Label Group in a blockbuster deal backed by the Carlyle Group.
Terms of the agreement were not disclosed, but a source told Billboard the deal topped $300 million and also includes the music publishing operation, Big Machine Music.
When completed, the deal will create yet another independent music company powerhouse with multiple capabilities and income streams through the Big Machine record label operations and School Boy Records, the recently acquired Atlas Music Publishing and the to be acquired Big Machine Music, and SB Projects, the artist management and services company.
The deal also brings together two powerful music industry executives, who are each as much forces of nature as they are successful entrepreneurs.
“The idea of Scott and I working together is nothing new, we’ve been talking about it since the beginning of our friendship,” Braun said in a statement. “I reached out to him when I saw an opportunity and, after many conversations, realized our visions were aligned. He’s built a brilliant company full of iconic songs and artists. Who wouldn’t want to be a part of that? By joining together, we will create more opportunities for artists than ever before, by giving them the support and tools to go after whatever dreams they wish to pursue.”
Borchetta added in a statement, “Scooter and I have been aligned with ‘big vision brings big results’ from the very first time we met in 2010. Since then I have watched him build an incredible and diverse company that is a perfect complement to the Big Machine Label Group. Our artist-first spirit and combined roster of talent, executives and assets is now a global force to be reckoned with. This is a very special day and the beginning of what is sure to be a fantastic partnership and historic run.”
According to the announcement, the deal is being financed by the Carlyle Group’s Carlyle Partners VI Fund, alongside Scooter Braun and Ithaca Holdings. Furthermore, the company announced that Carlyle will remain a minority shareholder in Ithaca and continue to support the combined company’s growth strategy with Carlyle Group global consumer, media and retail team head Jay Sammons remaining on Ithaca’s board. The Wall Street Journal reports that the Carlyle Group will make an additional investment in Ithaca Holdings, which will bring its valuation to over $800 million.
As part of the deal, Borchetta will acquire a minority interest in Ithaca and join its board while remaining president and CEO of BMLG.
Big Machine Label Group has been on the block since late last summer with sources suggesting Borchetta was seeking $300-350 million. That price tag was said to refer to only the Big Machine label operation, not the publishing operation. No word on a valuation for the latter company, but it has been very successful: it has appeared four times in the top 10 publishers for radio airplay over the last two years, and for 10 consecutive quarters in a row for the Top 10 country radio publishers, which tracks marketshare for the top 100 country radio songs.
Meanwhile, Braun’s SB Project — which serves some of the biggest pop-culture icons, including Ariana Grande, Justin Bieber, J. Balvin, Demi Lovato, Tori Kelly, Zac Brown Band, and Dan + Shay — also has partnerships with Jason Owen’s Sandbox Entertainment and Morris Higham Management. Ithaca also has a long-standing investment in and partnership with Aubrey “Drake” Graham and Adel “Future” Nur.
Rounding out the company’s capabilities, Ithaca launched Raised in Space, an investment fund focused on the intersection of music and technology led by former BMG President Zach Katz. Beyond music, Ithaca also started Mythos Studios in partnership with Marvel Studios founding chairman David Maisel. The various entities are expected to continue normal operations.
While Big Machine lost megastar Taylor Swift to Universal Music Group late last year, the label roster still includes such stars as Florida Georgia Line, Thomas Rhett, Reba McEntire, Rascal Flatts, Brantley Gilbert, Lady Antebellum, Cheap Trick and Jennifer Nettles, as well as acts like Justin Moore, Eli Young Band, Brett Young, Midland, Carly Pearce, Riley Green, Aaron Lewis, Badflower and The Voice winner Danielle Bradbery. The label also retains the Swift catalog.
So far this year, Big Machine has a market share of 1.17%, exactly what it had a year earlier at the mid-year point. Billboard estimated that the record label’s revenue has ranged from $80 million to $120 million averaging about $90 million-$95 million over the last four years.
Both companies have strong affiliations with UMG through distribution deals, something that will apparently remain in place going forward.
“In this new chapter, we could not be more excited to continue our respective relationships with [UMG chairman and CEO] Sir Lucian Grainge who has been nothing but supportive and a mentor in our careers,” Braun said in a statement.