Why a $1 billion deal for Queen’s catalog is possible – and what CNN and The Daily Mail got drastically wrong
MBW Reacts is a series of analytical (and sometimes opinionated) articles from Global Music Business written in response to recent major entertainment events or news stories.
This article is an analysis of an important music news story. It’s also partly an X-ray picture of the rotten shilling, table smashing supplement YouTubers likes to be mocked as “mainstream media”.
On Friday, May 26 – as you probably know – Global Music Business broke a Great global monopoly: Discussions have taken place between representatives of Queen and several companies, Popular music group including, on potential more than 1 billion dollars sell Queen’s catalog.
That catalog, we reported, combines both publishing and recording rights, all jointly and equally owned by the band’s surviving ‘classic’ lineup (Brian May, Roger Taylor , John Deacon) plus the property of Freddie Mercury.
We warned that any potential deal would be complicated by the fact that Disney (through ownership of Hollywood Records) owns the rights to Queen’s recorded music in North America; the band owns them everywhere else in the world.
Two days after MBW’s report was published, on Sunday, May 28, a report that looked eerily similar landed on CNN. Title: “Queen’s music catalog could sell for more than $1 billion, the source said.”
That report was basically, um, ‘mirrored’ for the most part MBW reported, but with a fallacy error: CNN reports that Universal Music Group is in discussions to acquire Queen’s catalog for $1 billion… from Disney.
This makes us wrinkle our foreheads: That’s band representatives, not Disney, are engaged in discussions regarding the sale queen catalog, according to MBW sources. (We’re not surprised Disney later denied the CNN story.)
Sadly, CNN’s reporting was later hit by a parade of media outlets, including Daily mail And Time – with that cry Disney’s misunderstanding front and center.
If any of these companies had better understood the modern music rights M&A, they might have smelled the rat here – because, in general, music copyrights are day-to-day blockbuster recordings. now exchanged lower multiples than blockbuster music publishing rights.
This can be seen very clearly in the famous two-part sale of by Bob Dylan Category: Universal Music Groups publishing rights with his songs in 2020 about $300 million – $400 million, according to sources; The next year, Sony Music Corporation buy Dylan’s catalog of recorded music for approx 150 million USD.
The reason why publishing catalogs often require larger conversion multiples can be complicated, but one key factor is clear: If you buy a publishing catalog, you’ll receive royalties for it. each monetized version of a song is owned (whether live or recorded…or AI-generated) for decades to come.
With a catalog of recorded music, remixes omitted, you only receive royalties for the use of that particular recording.
Sources indicate that the portion of queen Disney-owned catalog of recorded music is worth approximately one-third of the annual global royalties of said catalog of recorded music.
Is it possible that by 2023, a fraction of any single artist’s recorded music catalog could be worth nearly a billion dollars? Are not.
On the other hand, could it be that much of an artist’s recorded music portfolio – plus their ownership total music publishing rights, worldwide – maybe worth over a billion dollars?
In the Queen’s case, especially when you factor in name and image rights, yes, it can.
Why that $1 billion+ figure could make sense
MBW understands that the Queen’s royalty income flows into two separate UK-based companies: Queen Music Company Limited (for publication only), and Queen Production Company Limited.
Royalties from Queen’s record Music rights definitely flow in Queen Production Company Limited.
Likely royalties from Queen’s music publish rights also belong to Queen Productions Ltd, through Queen Music Ltd.
That’s because UK Companies House filings reveal that Queen Music Ltd. transfer a substantial amount of money – £23 million in 2021, and 27 million pounds in 2020 (see below) – into “entities controlled by [Queen’s members]” each year.
Said “entities” may refer to a company: Queen Productions Ltd, where – and this is a well-founded guess – Queen’s music publishing royalties and recorded music are both appear in a set of annual accounts.
If we consider all of that to be true, estimate the value of the record-plus-publishing catalog that Queen Selling is a worthwhile exercise.
First, here are the recent annual numbers for Queen Production Company Limitedas reported by that company on UK Companies House in GBP.
The purple bar is a key piece – a reported specific figure of how much royalties Queen’s company collects each year.
You can see, Queen Production Company Limited revenue in 2019 suddenly increased (the company’s fiscal year lasts until the end of September every year), due to the influence of Bohemian Rhapsody film about the company’s coffers (and the band’s popularity.)
You’ll see a drop in sales after that year, as the Queen’s time on the media sun naturally diminishes. And that’s what happens.
But in fiscal year 2020 and fiscal year 2021, Queen Productions Ltd’s royalty income is fairly stable: 41.7 million pounds in fiscal year 2020, and 38.9 million pounds in fiscal year 2021.
If we call the raw average of those two numbers 40 million poundswe can start applying the standard biz musical coefficient to the figure: A 20X Many, for example – a common occurrence in the music publishing M&A scene in recent years – will provide that. 40 million pounds up to 800 million poundsor 996 million USD at the current exchange rate.
A 27x multiple – in the region supposedly paid by Universal for Bob Dylan’s publishing portfolio in 2020 – would take that 40 million pounds to 1.08 billion pounds or 1.35 billion USD.
However, perhaps any potential buyer of queen portfolios (including UMG… possibly with the benefit of outside capital) will seek to push this multiple below 20X using arguments such as:
- Queen’s music royalty ‘curve’Bohemian Rhapsody movie release is not over yet and will result in annual royalties in the coming years that will be smaller than we saw in fiscal 2021;
- The Disney the situation is an obstacle to any potential buyer’s ability to control Queen’s recorded music rights and exploit them to their fullest potential;
- balance of rmusic recording vs publishing music annual royalty income; if this changes in favor of the former, it is likely to drag down the natural returns offered;
- The macroeconomic situation in 2023, especially higher interest ratesand this overall pressure on the cost of capital for borrowers.
Assuming all of that reduces the multiple a company is willing to pay for the Queen’s right to 17X.
on our recommendation GBP 40 million pounds average annual royalty income figure, a multiple of 17X would bring the hypothetical offer on our table £680 millionor 845 million USD.
However, MBW understands that the Queen’s rights ‘pack’ is currently for sale in the market But also band included name and portrait permission.
In case Queenthese are clearly of considerable value – as demonstrated by the global success of Bohemian Rhapsody the movie has taken over 900 million USD at the Ticket Office.
How much will be a copycat queen of ABBA’s journey valuable in the years to come?
Enough for Freddie Mercury’s name and likeness to surpass our 17X-many-hypothetical proposal 1 billion USD?
Michael Jackson case
All of the above hypothetical math may ultimately be meaningless in the quest to prove the value of queen directory, however – because arguably there is a much more useful proxy at work.
According to the report of Diversity And access times and supported by MBW sources, Sony Music Corporation completed, or nearly completed, an agreement to obtain approx 50% Later Michael Jackson estate – includes Jackson’s publishing rights to songs written by him, plus his music recording rights, plus his name and likeness.
Price reported for this acquisition of MJ (via Diversity) between 800 million USD ARRIVE 900 million USD.
MBW has heard from a reliable source that the real price is lower – almost 750 million USD. But another of our sources argues that it is on a higher level breed of estimate.
Regardless, if we broadly estimate that the price sony set to pay for half Jackson’s rights is about 800 million USDobviously we can also imagine that the total estimated value included in the Jackson catalog (remember: publication, plus recorded music, plus name and likeness) is approximately 1.6 billion USD.
Will queen Is the price for a similar package of rights – even if it doesn’t include Disney’s share of the band’s North American music royalties – really much lower than this?
There are considerations in favor of Jackson catalog (and MJ’s similar name & rights) offers more premium than Queen’s.
For example, Jackson’s big budget biopic is still being madewhile Queen’s has already hit theaters and is already in operation.
In addition, Jackson’s new stage show, MJ: Musical, was a box office success, lost more than 100 million USD in ticketalthough it hasn’t launched outside of the US yet.
However, there was one big factor that influenced the Queen’s catalog compared to Jackson’s: The Queen, if considered a unit, wrote 100% their biggest hits; Jackson wrote most of his standards, but certain (Horror, She’s Out of My Life, Man in the Mirror, Rock With You) written by external musicians such as Stick Temperton.
Either way, both Queen And Michael Jackson remain the giants of modern music, comfortably more than 50 years since their entrepreneurial careers began.
As you read this, the Queen has 47.8 million won monthly listeners on Spotifyand is the service’s 49th most popular artist globally; Jackson has 37.0 million wonand is Spotify’s 77th most popular app globally.Global Music Business
