Music industry

The Kobalt Sale: 3 takeaways from the biggest music industry story of the moment

MBW doesn’t assume you often spend your days rummaging through UK Companies House records like we do.

But if you did, and if you clicked on the correct documents from Kobalt Music Group Ltd (still a UK registered company), you could learn a lot about one of the most powerful music service companies of the modern era.

One of the things you would learn, for example, is that Kobalt’s current shareholder list is looooooong.

Kobalt had more than 210 separate shareholders as of mid-May this year, according to a confirmation statement filed at the time, made up of a mix of venture capitalists, executives, employees, former employees and more.

That list just got considerably shorter, with today’s big news that Kobalt Music Group is being sold.

When this sale officially closes, private equity firm Francisco Partners will own a majority stake of approximately 90% in Kobalt.

The rest ≈10%, it is understood, will be split between just three parties: Matt Pincus’ MUSIC, Dundee Partners (the family office of former Goldman Sachs partner Steve Hendel) and Kobalt founder Willard Ahdritz.

This will be a much simpler ownership structure for Kobalt than what we’ve seen before.

(Kobalt’s institutional investors over the past 22 years have included Hearst Entertainment, Michael Dell’s MSD Capital and Google Ventures.)

Here are three other important takeaways from today’s announcement that will influence the shape of Kobalt Music Group going forward…


  1. Expect Kobalt to get greedy

Following the sale of AWAL and Kobalt Neighboring Rights to Sony Music for $430 million last year, Kobalt found itself with two main businesses – Kobalt Music Publishing and management company AMRA – as well as a good sum of money on its balance sheet.

That cash pile has been bolstered over the past two years by fees related to the sale of a pair of catalogs – for a total of $1.4 billion – by the now-defunct investment management arm. of Kobalt (Kobalt Capital).

Last year, Kobalt Chairman Willard Ahdritz and CEO Laurent Hubert told MBW that Kobalt Music Group had begun targeting music catalog acquisitions on its own assessment for the first time.

This meant that Kobalt Music Group itself – best known as a music publisher that allows creators to dungeon their rights – was also moving towards own rights, by buying lots from the talents.

“We will pursue our hybrid strategy of acquiring intellectual property while serving songwriters. but there will also be [company] MY. Anything that will allow us to increase our services and amplify our USP position in the market is something we will consider.

Laurent Hubert, Kobalt

With the additional injection of investments into Kobalt in 2022 by Francisco Partners, this mission moves on to the next step: the acquisition of companies that complement Kobalt’s service offering.

Today, in announcing the deal with Kobalt, Francisco Partners partner Mario Razzini noted that FP would seek to drive Kobalt’s growth “both organically and inorganically”.

Laurent Hubert then explained to MBW what this means.

“We will pursue our hybrid strategy of acquiring intellectual property [catalogs] while serving songwriters,” he said, “but there will also be [company] MY.

“Anything that will allow us to increase our services and amplify our USP position in the market is something we will consider.”

2) Expect AMRA to be overloaded

Another interesting quote to emerge from Francisco Partners today in the Kobalt acquisition announcement came from the investment firm’s Matt Spetzler.

He said: “Our investment should help bring more resources, experience and alignment to continue making Kobalt a destination of choice for creators, further develop AMRA as the only global digital licensing platformand supporting and investing in technology innovation across the Kobalt ecosystem to meet the needs of creators and publishers. »

The audacity is MBW’s, but it was interesting to see FP echo Kobalt’s longstanding assertion that AMRA – which collects royalties directly from digital services for songwriters and publishers – has a growth hockey stick in front of her.

AMRA’s potential can perhaps be best summed up by Kobalt’s own published financials for fiscal year 2021 (the 12 months to the end of June 2021). That year, AMRA’s annual revenues topped $100 million for the first time, reaching $109.8 million – until 40.2% compared to the previous year.



Laurent Hubert told MBW today: “Until now, the vast majority of AMRA’s revenue has been related to Kobalt. We see a more ambitious strategy with AMRA that will go outside of the Kobalt ecosystem.

He noted that Kobalt’s M&A strategy going forward may well involve a takeover to “overburden AMRA as a service provider and collection company.”

“We are very profitable, our [IP acquisition strategy] is now on our own balance sheet, and we have a $45 billion private equity fund behind us; we are even more beautiful! It really is Kobalt 3.0.

Willard Ahdritz, Kobalt

Willard Ahdritz, discussing the future after the Francisco Partners deal, said: “We have selected this particular partner [FP] for this summary.

“Today Kobalt is very profitable, our [IP acquisition strategy] is now on our own balance sheet, and we have a $45 billion private equity funds behind us; we are even more beautiful! It really is Kobalt 3.0.

“We put new tires on our Formula 1 car,” added Ahdritz. “Let’s get out of the pits!”


3) Kobalt X Matt Pincus (again)

In 2017, Kobalt – on behalf of a private fund – acquired SONGS Music Publishing from Matt Pincus for a nine-figure sum.

Under Kobalt’s new ownership structure, Pincus’ MUSIC – which recently raised $200 million – will acquire a minority stake in the company, while Pincus himself will join Kobalt’s board of directors.

Willard Ahdritz told MBW: “I met Matt in 2005 and saw him create SONGS in partnership with the Kobalt platform. [which has always administered the SONGS’ repertoire]. We know him well, and he really knows the music and the music industry.

“It’s always good to have ‘musicians’ on the board. Matt understands music, he was a respected board member of the NMPA, and he made good investments in Splice and other companies.

“Matt really knows the music and the music industry…Steve [Hendel] is a finance guy but with a deep passion for music.

Willard Ahdritz, Kobalt

Ahdritz added: “I am delighted that he has joined the consortium with Francisco Partners, with Dundee Partners and [Steve] Hendel, whom I have known for six years.

“Steve [backed] the FÉLA! musical, and he has his own record label. He’s a finance guy but with a deep passion for music.

Dundee Partners/the Hendel family teamed up with KKR last year to acquire a portfolio of rights from Kobalt Capital – including, coincidentally, the SONGS Music Publishing catalog – for a total consideration of $1.1 billion.The music industry around the world