18 November 2018

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There’s Big Money In Music Publishing, and SESAC Proves It…

A private equity firm just sold SESAC to another private equity firm.  Guess that means there’s money in music publishing, after all.

Once upon a time, everyone thought that music publishing was safe from the catastrophic record industry implosion.  Recordings were CDs, publishing was an endless river of micro-pennies, safe from the storm.

Or that was the thinking around 2005 or so.

Then, everyone realized that music publishing and music recordings were more intertwined than originally thought.  Dangerously intertwined.  And cratering recordings were really, really bad news for music publishers.

Maybe that explains the ruthlessness of mega-publishers like Warner Chappell Music Publishing.  The company’s unethical shakedown of companies for using ‘Happy Birthday to You’ was ultimately corrected by a judge.  But desperation may have motivated the cut-throated attacks.

That said, the music business may have hit its bottom, with an entirely new digital music industry springing up.  And publishing assets may survive as juicy, long-term plays.  Enter Blackstone Group LP, a private equity firm that just made a surprisingly long bet on SESAC.

Who’s SESAC?

Similar to competitors ASCAP, BMI, and GMR, it’s a performance rights society that also tracks mechanical licenses.  Basically, that includes royalties for music ‘performed’ in public, like malls, offices, and political rallies (yeah).

The mechanical license is a bit more complicated.  But it includes royalties for downloads, streaming, and physical formats like vinyl and CDs

Those ‘micro-pennies’ are tracked by SESAC for their member artists, which include Bob Dylan, Zac Brown, Neil Diamond, Lady Antebellum, and Mariah Carey (not sure if she has to be singing).  All of which sounds like a strong revenue stream with potential, at least to Blackstone.

In fact, Blackstone is aiming to grow SESAC over a 12-15 year span.  In this environment, that’s ‘long’.  “We view SESAC as an attractive fit for our core private equity investment platform and are pleased to partner with the company’s experienced, highly capable management team to help support their growth strategy over the long term to continue to serve their key affiliate and licensee constituents,” said Blackstone managing director David Kestnbaum.

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