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Hipgnosis buys Big Deal Music

Hipgnosis buys Big Deal Music – Hipgnosis Songs Fund Limited has acquired the entire share capital of Big Deal Music Group. Big Deal Music is a boutique full-service song company which owns a portfolio of copyright interests in global hit songs including Shawn Mendes’ ‘Stitches’ and ‘Treat You Better’, One Direction’s ‘Story of My Life’, Panic at the Disco’s ‘High Hopes’, Niall Horan’s ‘Slow Hands’ and Thomas Rhett’s ‘Die a Happy Man’ all of which are multi-million sellers and amongst the most streamed songs of the last 5 years.

Big Deal Music will be rebranded to Hipgnosis Songs Group effective immediately. Kenny MacPherson will act as CEO of Hipgnosis Songs Group and will report directly to Hipgnosis Songs’ Founder, and CEO of the investment adviser, Merck Mercuriadis. Kenny is joined by co-presidents Casey Robison and Jamie Cerreta and executive vice president Dave Ayers (New York) as well as senior vice president Pete Robinson (Nashville) all of whom have signed new 5 year contracts.

The consideration for the purchase is to be funded from the proceeds of Hipgnosis’ equity fundraise in July 2020 and through the issue of 17,609,304 new ordinary shares issued at a price of 120.65p each.6,248,351 of these shares will be subject to lock up restrictions to 1 October 2020, with 10,123,219 shares subject to lock up restrictions to 1 April 2021.

About Big Deal

Founded in 2012 by Kenny MacPherson, Jamie Cerreta and Dave Ayers, Big Deal Music Group has operations in Los Angeles, New York, and Nashville. Big Deal Music has built a roster of recognised artists including Teddy Geiger, Julian Bunetta, John Ryan, Joe London, Kamasi Washington, Sharon Van Etten, Sylvan Esso, Jake Sinclair, Dan Wilson, St Vincent and My Morning Jacket.

Big Deal Music has also created and acquired a catalogue of over 4,400 songs, written by over 160 songwriters, now producing predictable and reliable revenue. The catalogue includes songs achieving 5 Grammy Awards, 126 NMPA, BMI and ASCAP awards, and 27 Recording Industry Association of America (RIAA) Certifications. Highlights of the catalogue include:

  • Shawn Mendes’ ‘Stitches‘, 7x RIAA platinum, ‘Treat You Better‘, 4x RIAA Platinum, and ‘Mercy‘ 3x RIAA Platinum
  • Thomas Rhett’s ‘Die A Happy Man‘, 5x RIAA Platinum
  • Panic at the Disco’s ‘High Hopes‘, 3x RIAA Platinum, which was arguably the most synced song of 2019
  • One Direction’s ‘Story of My Life‘, 3x RIAA Platinum
  • Niall Horan’s ‘Slow Hands‘, 3x RIAA Platinum
  • St Vincent’s ‘Masseducation‘ which won the 2019 Grammy Award for “Best Rock Song”

Big Deal Music Group, significantly, also has a US administration function through its Words & Music Brand which will be part of the rebranding as Hipgnosis Songs Group effective immediately. In addition to in-house administration for Big Deal Music’s catalogue, Words & Music is also responsible for US administration for several significant third party catalogues including Beggars Music, Mushroom Music Publishing, Gary Numan, Notable Music, Native Tongue, Goo Goo Dolls, Hottie & The Blowfish and Underworld. This represents a full service music platform, bringing significant expertise and resource for managing and promoting Hipgnosis’ portfolio.

The two companies had some interests in common. In particular, the acquisition consolidates Hipgnosis’ ownership over hit songs including Shawn Mendes’ ‘Stitches’, ‘Treat You Better’ and ‘Mercy’; Panic! At The Disco’s ‘High Hopes’, One Direction’s ‘Story of My Life’ as well as over 30 other songs performed by the group; and Niall Horan’s ‘Slow Hands’. By acquiring additional copyright interests in these songs, the company increases its control to successfully manage and promote the songs.

US team

Big Deal Music has a highly experienced team of 35 employees who have worked together for the last eight years with a proven track record of identifying and developing new songwriters and artists as well as promoting and marketing songs. This team, led by CEO Kenny MacPherson, is expected to further enhance the investment adviser’s already established UK team.

The addition of in house US administration is expected to have the following benefits in due course:

  • Greater control of, and reduced, third party administration costs;
  • Faster collection of royalty income;
  • Creation of a direct relationship with Digital Service Providers (such as Spotify, Apple Music, Tencent, etc) to allow Hipgnosis to leverage its Portfolio to obtain better rates;
  • Receiving credit for the portfolio’s market share in royalty settlements (e.g. Peloton / Facebook) and black box income. Hipgnosis’ share of settlements is currently bundled into third-party administrators’ market shares.

New song creation platform

The acquisition will also provide Hipgnosis with a song creation platform  – the board and adviser believe that this will deliver attractive returns for shareholders.

The acquisition includes ongoing joint ventures with The Big Family – with Julian Bunetta, John Ryan and Damon Bunetta; Nice Life – with Ricky Reed, Larry Wade and Brad Haering; Mad Decent – with Diplo and Kevin Kusatsu; and the And The Writer Is podcast – with Ross Golan, Joe London and Megahouse Music.

Change to investment policy

In connection with the acquisition, the company has made a non-material change to its investment policy to permit the advance of monies to songwriters in connection with the acquisition of, and secured against, rights to future songs written by such songwriter. The aggregate amount of such advances is limited to 5% gross assets, calculated at the date of making the relevant advance. No other changes are being made to the investment policy.

 

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