Prediction: The recorded music industry is likely to see at least $1 billion in distribution and service player acquisitions over the next 12-24 months.
surprise: Indicates that the company behind the acquisition is likely to be believe.
According to the founder and CEO of Believe, Denis Radgalleryspecifically for global music business.
loading shop Earlier today, after learning that his consortium— loading shop co-owned with EQT and TCV – Now have 95% of believe Through the recent share tender process
loading shop It was made clear that under the ownership of the new consortium, believe Planning to spend €200 to €300 million It develops its global business through acquisitions every year.
That is two to three times larger That’s higher than the company’s annual acquisition budget since its IPO, he said. (Believe has acquired similar companies in the past Tuning In the U.S, Centric Music in England, Venus music in India, nuclear explosion In Germany and other places.
“We will consider transformative [acquisition] Goals for the next 24 months,” said loading shopconfirming that such transactions would require additional capital on the current basis Believe’s M&A budget.
“you have a lot mid-level enterprise In the market, maybe it’s more the publishing side than the recorded music side.
noticed believe searching “The right strategic fit”, loading shop Praise was given to a number of recorded music businesses, including artist services companies and mid-sized independent companies.
He also noted that major companies with strong music publishing catalogs, including Kobalt and BMGmay be open to transformative partnerships in the coming months and years.
(Related companies recently reported in the news include: United States Create a music group just achieved US$1 billion Valuation, while sound cloud at a similar valuation, is seeking financial events that could lead to new investors or a sale.
“No company is necessarily for sale at any point in time, so you have to be pragmatic about these things,” he said. loading shop when discussing believable Potential “target for change”.
He added: “We need to feel strongly that any [acquisition] Goals can bring us Accelerated growth and improved positioning in the market.
Believe is particularly interested in accelerating its business in the following areas: United States and United Kingdomexplain loading shop.
“The number one driver of our acquisition strategy is global Top ten markets,” he said. “We’re already in the top three in four of those markets — France, Germany, Japan and India. But we haven’t achieved that in the US and UK yet [predominantly due] We didn’t have the level of investment we needed before.
Ironically enough, loading shop and company. Warner Music Group’s CEO faces potential competition from Warner Music Group’s “transformative” acquisition of a U.S. artist services company Robert Kinkel, Expresses his desire to grow rapidly WMG’s Exists in the so-called “middle class” artist market.
Of course, Kyncl and Warner almost came up with US$1.8 billion takeover offer believe (comparable to plans by Ladegaillerie’s own consortium to acquire the company), but WMG ultimately did not make an offer and withdrew from negotiations.
The extensive discussion was condensed into the following Q&A: MBW ask loading shop On his personal experience with the Warner process.
We also found out why he thinks Extraordinary growth is getting into the big companies that serve independent artists, and how believe – Under new ownership – plans to make the most of this opportunity…
Your consortium with TCV and EQT now owns 95% of Believe (technically 94.99%!). What will happen now? Will you buy the extra 5% at some point?
We’re almost where we want to be. Our goal is to have a new group of shareholders who can accelerate the development of the business. We have begun more in-depth discussions with larger institutions [acquisition] Goal, something we couldn’t do before.
Tomorrow, if we need to raise funds [additional] Capital, we have the ability to do this in a simple and effective way with our shareholder base.
To answer your second question, the grand plan is to take the company completely private. We will have conversations with market authorities about the best way and time to take this step, but there is no rush.
“We have begun more in-depth discussions with larger organizations [acquisition] Goal, something we couldn’t do before.
You’re talking about raising money. This shows that EQT and TCV are strategically aligned with you in investing heavily in the future of the music business.
Absolutely. Our thesis and the primary reason we are seeking new shareholders is the opportunity to accelerate our profitable growth story through acquisitions in multiple markets.
I’m talking about bigger acquisitions than we’ve made recently. we have been doing 100 million euros Annual bolt-on acquisitions. Our goal now is about two to three times that amount.
What are the characteristics of your current acquisition targets?
we and EQT and TCV Boost our existing organic growth. We will continue to invest in our organic growth strategy and make acquisitions to expand market share.
The first element of our acquisition strategy today is the top ten markets. We want to be number one in these markets. We are already the largest player France; The third largest player Germany; Largest player India; The third largest player Japan. We want to do more. this America England, and Japan All are our top priorities.
At the same time, we will continue to make very qualitative, targeted acquisitions in various areas [smaller] Markets you’ve recently seen Türkiye, Philippines, and elsewhere.
Why are you so interested in the United States, when you have not traditionally been overinvested in the United States? What’s your plan? It’s not easy to make a splash in the world’s largest market!
we believe US market Begin the transition to independence [services companies].
We are considering a transformative [acquisition] Next target 24 months. There are many mid-level enterprise In the market, maybe it’s more the publishing side than the recorded music side.
“We are considering a transformative [acquisition] Next target 24 months”.
No company is necessarily for sale at any point in time, so you have to be pragmatic about these things.
We need to feel strongly any [acquisition] Goals can bring us Accelerated growth and improved positioning in the market.
That’s big news—and a sign of your ambition. Surely you need more than €300 million per year to achieve this?
Warner period [discussions] Someone actually asked me: “Hey Dennis, don’t you really want to buy Warner, instead of Warner buying Believe?!” [laughs]. This gives you a sense of how big our ideas are.
this 300 million euros The one-year figure is a “business as usual” acquisition figure. What we are talking about here is separate. We wouldn’t stop ourselves from finding any company.
“What you see now is a very active market with many mid-level companies US$1 billion to US$2 billion Consider their strategic choices.
What you are looking at now is a very active market with many mid-level companies US$1 billion to US$2 billion Scope consider their strategic options.
I think the possibility of transformative, very important things happening at scale in the future 12-24 months very high.
We want to be a reliable, better alternative to major brands in the world’s largest market.
Believe and BMG have similar annual income levels. In the midst of all the Believe/Warner/acquisition hoopla, did it concern you that Thomas Rabe, CEO of BMG parent Bertelsmann, suggested that BMG might consider a merger with a rival music company?
[Laughs] Yes of course! As I said, we are looking for capable businesses [combine] And really accelerate business growth.
us There is some synergy with BMG But we are very different in terms of geo-targeting and so on.
Now that the dust has settled, what are your thoughts on what happened at Warners? For a moment, it looked like their hostile takeover attempt might take Believe away from you—and then it was all over.
This process has produced some positive results.
That’s a Our model is very strongly validated and our position as a modern, innovative, well-structured and technically sound music company.
“Watch Warner [negotiations] I appreciate it very muchbelieve Have a very smart team Very experienced in music.
I like Robert; I like Warner team. They are very smart people and we had a great discussion. I personal opposition to hostility [takeover] Because I think the opportunity before us is huge. I don’t want to be dragged into consolidation for the next two years because there’s this Big opportunity in front of us [as an independent company].
My final takeaway: Watch Warner Bros. [negotiations] I appreciate it very muchbelieve Have a very smart team Very experienced in music.
I believe there will be an IPO in the summer of 2021, which is an exciting time. Now that you appear to be on the road to going private again, how do you feel about the experience of going public? What did you learn from this?
Generally speaking, it’s expensive – going public means paying hefty fees to lawyers and bankers! – but it is also very positive in raising the level of requirements for our business operations.
It also helps us understand how investors view the music market. even as [potentially] Going forward, as a private company, we will strictly adhere to the same standards as public companies.
A few quick questions about recent industry topics/headlines: What do you think about major music companies suing Suno and Udio for alleged massive copyright infringement?
Tech companies are using copyrighted music as Raw materials for machine learning Then create valuable products. If you do this, you must ask for consent [from the copyright owners] and reward them. Defending this is part of our responsibility to artists.
“These [lawsuits] is a logical result.
Other companies such as Google, yuan, Wait, admit it if they use music [for gen AI], they need to compensate artists and collaborate with the industry. For companies that don’t have this conversation and steal content to build their models, these [lawsuits] is a logical result.
Pursuing businesses that behave inappropriately while engaging in constructive dialogue with businesses that act reasonably; this is the right thing to do.
Sony boss Rob Stringer recently suggested that in some mature markets, especially the United States, it was time for Spotify to charge for its free tier, effectively ending “free” interactive audio streaming. What are your thoughts on this?
I think Rob asked the right question: When is it time to strike a balance between free and paid? This is an ongoing conversation with Spotify.
exist Indiafor example, we have discussed with Spotify the fact that there are still some players locally with very generous free tiers, which may prevent [adoption] The number of subscriptions in this market.
“Rob asked the right questions.”
My view on this is always the same: whether Sony may believe that we and Spotify In a sense, we all benefit from maximizing the value of music that people listen to.
if [changing] The free package will be through incentives [currently free] The user subscribes and then SpotifyLike us, we have a vested interest in doing this.global music business
