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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n Warner Music is in talks to acquire the Red Hot Chili Peppers\u2019 catalogue for more than $300mn, as the record label seals a $1.2bn joint venture with private equity group Bain Capital to make a big push into buying song rights. <\/p>\n Talks to acquire the rock group\u2019s repertoire \u2014 which includes hits such as \u201cCalifornication\u201d \u2014 are ongoing, according to people familiar with the matter, who cautioned a deal might not materialise. <\/p>\n A deal would be a coup for the partnership between Warner and Bain, announced on Tuesday, which they hope will expand an additional \u201cmultibillions\u201d of dollars over the next several years.<\/p>\n Warner Music chief Robert Kyncl said the arrangement would combine the label\u2019s \u201cdeep expertise\u201d with Bain\u2019s \u201cfinancial prowess\u201d to \u201cmake us the destination of choice for pre-eminent catalogues\u201d.\u00a0<\/p>\n Songs have become an attractive asset class to professional investors over the past several years as streaming resuscitated the music industry. Wall Street groups such as Blackstone, Apollo and KKR others have invested billions of dollars in songs. <\/p>\n Warner \u2014 the major record label behind artists including Charli XCX, Megan Thee Stallion and Dua Lipa \u2014 has in recent years acquired song catalogues such as David Bowie\u2019s for $250mn and David Guetta\u2019s for $100mn.<\/p>\n For Bain, the joint venture marks a re-entry into music, after the private equity group was one of the investors that helped buy out Warner Music in 2004, when the industry was ravaged by online piracy. <\/p>\n As part of the agreement, Bain and Warner will each contribute half of the $1.2bn in equity and jointly search for music to buy. Warner would handle marketing, distribution and administration of the catalogues they acquire.\u00a0<\/p>\n After an influx of entrants to the music rights space, Bain and Warner anticipated consolidation among these investors and hoped to be a big player in that, said people close to the joint venture. <\/p>\n Some investors had feared the music rights market, which bubbled up with a series of frothy deals during the period of ultra-low interest rates, could crash when the Federal Reserve increased interest rates. <\/p>\n But songs have proven a resilient investment, even during the Covid-19 pandemic and the subsequent rise in borrowing costs.<\/p>\n \u201cHow these assets performed during the Covid period\u2009.\u2009.\u2009. They were rock solid and actually grew because people flocked to forms of entertainment, and music is still a relatively inexpensive form of entertainment,\u201d said Angelo Rufino, a partner at Bain Capital.\u00a0\u00a0<\/p>\n \u201cSo from our perspective, we are interested in the long term \u2014 and that\u2019s iconic copyrights\u00a0with\u00a0good cash flow profiles\u00a0that can be materially grown over time,\u201d he added. <\/p>\n Catalogue prices have softened slightly from the peak in 2022, but there has not been a big correction. In 2024, music catalogues fetched a price of 17.4 times their annual net royalties, down from 18.8 in 2022 but well above 13.7 in 2019, according to investment bank Shot Tower Capital.<\/p>\n Recommended<\/p>\n The major record companies \u2014 Universal Music, Sony Music and Warner Music \u2014 have increasingly partnered with investment groups as a way to avoid taking on the full financial cost of buying song catalogues. Apollo last year helped Sony Music buy Queen\u2019s catalogue for more than $1bn.\u00a0<\/p>\n Warner Music is controlled by billionaire Sir Leonard Blavatnik, whose Access Industries acquired the group in 2011 in a deal worth $3.3bn. Shares in Warner Music have fallen 13 per cent this year, underperforming the broader stock market.\u00a0<\/p>\n A representative for the Red Hot Chili Peppers did not immediately respond to a request for comment. <\/p>\n Additional reporting by Antoine Gara in New York<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Warner Music is in talks to acquire the Red Hot Chili Peppers\u2019 catalogue for more than $300mn, as the record label seals a $1.2bn joint venture with private equity group Bain Capital to make a<\/p>\n","protected":false},"author":1,"featured_media":9819,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[2399,2398,2402,2400,696,109,686,2401,1411,1741,2035],"class_list":{"0":"post-9818","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-300mn","9":"tag-bain","10":"tag-catalogue","11":"tag-chili","12":"tag-deal","13":"tag-hot","14":"tag-music","15":"tag-peppers","16":"tag-red","17":"tag-target","18":"tag-warner"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/9818","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9818"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/9818\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/9819"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9818"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}