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Hunting for the next big music deal.
Whether a music catalog is snapped up by a niche investor or behemoth money manager, the buzz around these investments continues to be hot.
“People’s relationships and the experience with the artist is closer and more important than ever,” Reservoir Media (RSVR) founder and CEO Golnar Khosrowshahi told Yahoo Finance executive editor Brian Sozzi in a new episode of the Opening Bid podcast (see video above or listen below).
As a firm in the music industry, Reservoir Media wears several hats.
“We are a music publisher, record label, [and] management company. The best way to summarize [us] is that we are rights holders and managers who are constantly looking not just to protect IP, but also to license that IP,” Khosrowshahi said.
The company has been a dealmaker for years, however.
One recent deal in 2021 was for hip-hop and electronic label Tommy Boy for $100 million. Since its inception in 2007 by the classically trained pianist Khosrowshahi, Reservoir Media has spent nearly a billion dollars — giving it access to catalogs for iconic musicians such as Joni Mitchell and John Denver.
The deals have allowed Reservoir Media to profit from songs being played on streaming platforms like Spotify (SPOT) and Apple Music (AAPL).
Competitors also haven’t been shy spending big dollars in a bid to capture recurring revenue streams from the streamers and live events.
In 2021, rocker Bruce Springsteen turned many heads after his catalog sold for $550 million to Sony Music. Bob Dylan’s catalog sold for an equally impressive $300 million in 2020 to Universal Music.
BlackRock has announced a $750 million fund with Warner Music (WMG) that would acquire music stakes in artists such as Bruno Mars and David Bowie.
Reservoir Media has demonstrated the growth potential within the category.
It recently reported fiscal third quarter earnings rose 19% to $42.3 million year-over-year. The increase was mainly driven by revenue from its existing catalog, which benefited from price increases at multiple music streaming services and acquisitions.
At close: February 28 at 4:00:01 PM EST
Shares of Reservoir Media are up 11% over the past year. The company’s market cap stand at around $510 million.
In addition to being outside the box as an investment, music catalogs also give music lovers the opportunity to nurture their individual choices and tastes.
“We’re listening to the music that we choose to listen to because we have an emotional relationship with the music,” said Khosrowshahi.
