Music Catalog Giant Hipgnosis Is Sold, and Merck Mercuriadis Exits

By wazup on July 9, 2024 Comments Closed / 39 views

The company, whose pricey acquisitions kicked off a rush on catalog sales, sold its assets to Blackstone for $1.6 billion, and its outspoken leader will step down.

Six years ago, an outspoken music executive named Merck Mercuriadis kicked off a new wave of dealmaking in the industry when his company, Hipgnosis, began buying up the song catalogs of artists like Neil Young, Shakira, Justin Bieber and the Red Hot Chili Peppers.

Now, Mercuriadis, who once managed Beyoncé and Elton John, is stepping down from the company after its assets have been sold to the private equity giant Blackstone, following a tumultuous year that has involved a shareholder revolt, an accounting scandal and a bidding war.

In the company’s complex structure, Hipgnosis Songs Fund is an “investment trust,” which is listed on the London Stock Exchange and owns the rights to tens of thousands of songs. A separate company, Hipgnosis Song Management — which has been run by Mercuriadis — is its “investment adviser,” doing much of the dealmaking and administration work for those songs. In 2021, Blackstone invested $1 billion to take majority control over the adviser firm.

The board of Hipgnosis Songs Fund voted on Monday to accept Blackstone’s offer of $1.6 billion for the company’s assets, the company announced early Tuesday.

After going public in 2018, Hipgnosis got off to a bright start, beginning a spending spree for artists’ song rights that ultimately exceeded $2 billion, and making an attention-getting pitch to investors that the royalties from pop songs could be “more valuable than gold or oil.”

Mercuriadis also regularly attacked the corporate conglomerates that dominate the music industry, portraying them as owning too much content to properly manage it. Privately, others in the industry complained that Hipgnosis was overpaying for catalogs, driving up prices all around. In 2021 alone, the music industry had $5.3 billion in catalog transactions, many from deals with individual artists, according to an estimate by Midia, which studies digital media and the music industry.