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eOne Buys Audio Network for $215M
Old 18th April 2019
  #1
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eOne Buys Audio Network for $215M

Don't know what the implications are, but 150,000 fully owned tracks is sizable. At a purchase price of $215M, if they were using times revenue, Audio Network must have been doing quite well. That purchase price for any music library makes the knees wobble a bit. Guess it helps if you have a giant roster of productions to drop the music into from day one. Audio Network is touting this as a big win for composers/producers... and in most enterprise deals like this it might be, but I'm not so sure it isn't a calculated move to basically bypass syncs and royalties altogether. What do I know?

| Entertainment One to Acquire Audio Network
Old 18th April 2019
  #2
Quote:
Originally Posted by VitaEtMusica View Post
Don't know what the implications are, but 150,000 fully owned tracks is sizable. At a purchase price of $215M, if they were using times revenue, Audio Network must have been doing quite well. That purchase price for any music library makes the knees wobble a bit. Guess it helps if you have a giant roster of productions to drop the music into from day one. Audio Network is touting this as a big win for composers/producers... and in most enterprise deals like this it might be, but I'm not so sure it isn't a calculated move to basically bypass syncs and royalties altogether. What do I know?

| Entertainment One to Acquire Audio Network

Props to the owners of that music.
Old 18th April 2019
  #3
Gear Nut
 

Quote:
Originally Posted by VitaEtMusica View Post
Don't know what the implications are, but 150,000 fully owned tracks is sizable. At a purchase price of $215M, if they were using times revenue, Audio Network must have been doing quite well. That purchase price for any music library makes the knees wobble a bit. Guess it helps if you have a giant roster of productions to drop the music into from day one. Audio Network is touting this as a big win for composers/producers... and in most enterprise deals like this it might be, but I'm not so sure it isn't a calculated move to basically bypass syncs and royalties altogether. What do I know?

| Entertainment One to Acquire Audio Network
That is absolutely incredible. $215m. Audio Network must have been doing extremely well.

I don't know about this deal, but I have seen a lot of places say they care most about the artists, and then go and behave in a very different way.

By the way, it works out to about $1400 per track. Interesting.
Old 18th April 2019
  #4
I had heard they weren't doing that well for the last couple years and that is why they were looking to sell.

Not sure why they sold for so much. I don't think EOne really understands this industry so they probably valued the company incorrectly and will be paying for that mistake for decades to come.

I know AN used to do really well but have been losing deals and have had shrinking revenues, and they have had a hard time expanding into foreign territories. They've gone through something like 3 or 4 CEOs in the last 4 or 5 years or something like that.

I think they were making around $15~$20mil a year from what people have told me. Compared to Universal and KPM and stuff that is nothing. AN has always been considered a peripheral brand. So I'm surprised at the dollar value.
Old 18th April 2019
  #5
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Quote:
Originally Posted by Etch-A-Sketch View Post
I had heard they weren't doing that well for the last couple years and that is why they were looking to sell.

Not sure why they sold for so much. I don't think EOne really understands this industry so they probably valued the company incorrectly and will be paying for that mistake for decades to come.

I know AN used to do really well but have been losing deals and have had shrinking revenues, and they have had a hard time expanding into foreign territories. They've gone through something like 3 or 4 CEOs in the last 4 or 5 years or something like that.

I think they were making around $15~$20mil a year from what people have told me. Compared to Universal and KPM and stuff that is nothing. AN has always been considered a peripheral brand. So I'm surprised at the dollar value.
I was kind of suspecting something like this too. So it's even more incredible that it sold for so much.

I wonder why AN was starting to lose deals?
Old 18th April 2019
  #6
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Quote:
Originally Posted by Etch-A-Sketch View Post

I think they were making around $15~$20mil a year from what people have told me. Compared to Universal and KPM and stuff that is nothing.
How much do Uni and KPM make a year from library?
Old 19th April 2019
  #7
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How would the sale bypass syncs and royalties altogether?
Old 19th April 2019
  #8
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I wonder if they'll continue to produce material. They lay out A LOT of cash per album. And seem to pretty much keep Abbey Road in business. I know of people who have done very well from AN. Like becoming millionaires good.
Old 19th April 2019
  #9
Quote:
Originally Posted by lornemalvo View Post
How much do Uni and KPM make a year from library?
I've read between $60mil to over $100 mil a year.
Old 19th April 2019
  #10
Quote:
Originally Posted by ohwell View Post
I was kind of suspecting something like this too. So it's even more incredible that it sold for so much.

I wonder why AN was starting to lose deals?
in a fixed price system, when you are the only "cheaper" option then everyone flocks to you. Once there are a ton of other cheaper options and you've now created a race to the bottom it's hard to win that race. I had heard AN had a private VC firm propping them up this whole time... maybe that is why the sale was $215mil... the VC firm had to get paid back all the money it had sunk into them?

Who knows... we wouldn't really think much of a $215mil sale price if the article also said AN was $210mil in debt. With these deals they don't necessarily release all the details.

But I wouldn't be surprised if EOne screwed up and valued it wrong. Look at Ole's purchase of JP... they totally screwed up that valuation and the business structure with that one. It messed Ole up so much they had to buy 5 Alarm just to keep them afloat.

Also the founder of AN Robert Hurst isn't a music guy, he's an investment banker. He's been an investment banker long before he started AN... and he openly admits (at least he did at the PMC a couple years ago) that he was working for an investment firm and was just shocked at how much money music publishing companies make... so he decided to start one with a friend, they went out and found a VC company to give them the capital to start and so they started AN with the idea that they were going to just undercut everyone else's prices. They really didn't know much about the industry itself. They just knew there was potentially a lot of money in it.

I wouldn't be surprised if Hurst had a hand in presenting their financials in the best possible light, so to speak. Investment bankers have a way about them. I've seen it first hand with the sale of Dragon Systems to Lernout and Hauspie back in the late 90's when I worked at Dragon.

Lernout & Hauspie Acquires Dragon Systems for $700mil

Lernout & Hauspie sentenced to five years jail

Anyway... all I'm saying is that from the outside this sale of AN looks amazing... under the hood it could be a completely different story... only time will tell.
Old 19th April 2019
  #11
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Quote:
Originally Posted by Jeff Hayat View Post
How would the sale bypass syncs and royalties altogether?
Because eOne owns the production company, is partners with the company that owns networks, and now owns the music. They don't need to pay themselves a sync, and a direct license deal is now easier than ever.
Old 19th April 2019
  #12
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Quote:
Originally Posted by Etch-A-Sketch View Post
I've read between $60mil to over $100 mil a year.
Wow. That's more than I thought.

I wonder how much these crappy RF libraries make? Any figures on Pond5 or Audio whatever the name of it is? They must a tidy sum. I mean, the quality is dire (unless prospective clients have a penchant for midi strings and sample CDs) but there's lots of stuff to choose from!

With gazillions of trax they only have to sell a small proportion of licenses to make a few $$$
Old 19th April 2019
  #13
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Quote:
Originally Posted by Etch-A-Sketch View Post
They really didn't know much about the industry itself.
Hehe... except both Robert & Andrew were executives at highly regarded British music publisher - Boosey & Hawkes !!!
Old 19th April 2019
  #14
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Quote:
Originally Posted by Droid9 View Post
Hehe... except both Robert & Andrew were executives at highly regarded British music publisher - Boosey & Hawkes !!!
Yeah, but Droid9, you're ignoring the what's been heard, could be and maybe. I wouldn't be surprised if you're presenting that information in the best light. Maybe.
Old 19th April 2019
  #15
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Quote:
Originally Posted by Etch-A-Sketch View Post
I've read between $60mil to over $100 mil a year.
Interesting. Can you tell me where you read that? Was it in an industry mag or something?

I will send it to some of my collagues who write for EMi and Uni. I think they will be quite surprised!

I guess we all though it was high but maybe not that high
Old 19th April 2019
  #16
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I’m never really sure where these stories of woe about composers being ripped off by ANW come from, presumably from people who were turned down by them and have an axe to grind. I am one of five musicians who provided the initial tracks for the ANW library when they were starting out and know how they work. This deal with eOne is not the first deal to be considered, other deals that were better financially were turned down because too much creative control would have been given up. The eOne deal means ANW composers like myself can take things up a gear.

It’s no surprise to me that ANW sold for $215mill as that was a much lower valuation than the other deals.
Old 19th April 2019
  #17
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Quote:
Originally Posted by Amber View Post
I wonder if they'll continue to produce material. They lay out A LOT of cash per album. And seem to pretty much keep Abbey Road in business. I know of people who have done very well from AN. Like becoming millionaires good.
I had a new album released this week and have three others on the go so yes, material very much still being released.
Old 19th April 2019
  #18
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Quote:
Originally Posted by Marineville View Post
I have a new album released this week and three others on the go so yes, material very much still being released.
Good to hear! Friend of mine was recently worried about submitting a new album to them and was asking me if I had any alternatives so will let him know. AN are one of the few publishers I've not written for but was hopefully planning to change that this year. So glad to know things are still business as normal!
Old 19th April 2019
  #19
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Quote:
Originally Posted by Amber View Post
Good to hear! Friend of mine was recently worried about submitting a new album to them and was asking me if I had any alternatives so will let him know. AN are one of the few publishers I've not written for but was hopefully planning to change that this year. So glad to know things are still business as normal!
Much more than business as usual, this is a hugely exciting time for ANW composers!
Old 19th April 2019
  #20
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Quote:
Originally Posted by Marineville View Post
Much more than business as usual, this is a hugely exciting time for ANW composers!
I do hope it's great for all of you. Certainly has that potential.

I would suggest reading all you can on Discovery's purchase of Scripps and how Discovery Music Source (a library with 110,000 individual titles) specifically has been affected by that purchase. There's plenty of correlation and it's always good to see things from several angles.

Best of luck!
Old 20th April 2019
  #21
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Quote:
Originally Posted by VitaEtMusica View Post

I would suggest reading all you can on Discovery's purchase of Scripps
Perhaps you could give us the bullet points? Thx
Old 21st April 2019
  #22
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Quote:
Originally Posted by Marineville View Post
I’m never really sure where these stories of woe about composers being ripped off by ANW come from, presumably from people who were turned down by them and have an axe to grind. I am one of five musicians who provided the initial tracks for the ANW library when they were starting out and know how they work. This deal with eOne is not the first deal to be considered, other deals that were better financially were turned down because too much creative control would have been given up. The eOne deal means ANW composers like myself can take things up a gear.

It’s no surprise to me that ANW sold for $215mill as that was a much lower valuation than the other deals.
I too think its a low valuation. Know the senior team at eOne so will try and get info - dont hodl yoru bvreath.

When ANW lauched, as you remember, I had a pretty negative view. That came from working in the biz the previous 20 years or so when money was a lot different - I was providing music for EMI for money in a very different league to today with the model of a majority share of sync and 70/30 in my favour publishing. Of course that was the late 80s and 90s... a different world. Nowadays I see ANW as truly disruptive and ground breaking - I think this is a great exit for them but also a new set of opportunities with eOne. Cant see a negative on this.
Old 22nd April 2019
  #23
Quote:
Originally Posted by Droid9 View Post
Hehe... except both Robert & Andrew were executives at highly regarded British music publisher - Boosey & Hawkes !!!
yes but what were they execs of and how long were they there? The way Hurst told the story... He was only there for a very short time as CFO, and he accepted the job because he wanted to start his own library and figured after being there a few months he'd be able to know everything there is to know and do it himself...

If he was the CFO for Boosey and Hawkes for maybe 15 or 20 years... then yeah...

But being an investment banker and seeing how much money music publishers make so you decide to start your own, but first decide to take job as CFO at a music publisher for a short time to "learn the ropes" really does not prepare you for all the facets of running a music publishing company. And instead of making himself CFO of AN (what he knows how to do and is good at), he made himself CEO...

just food for thought there. Even two years ago, listening to him speak as CEO of AN, he really had no clue what he was talking about. He was basically trying to take retail commercial product strategy for physical product and apply it to creative licensing for intangible property.

There is a difference in approach for "I make a thing, and then I sell that thing and I'm done with it... and then I make that very same thing again, and then I sell that thing again and am done with it" vs "I make the idea of a thing, and then I rent out the use of that single idea over and over again for 50 years".

The reason I use "idea" because the music is not a tangible physical "thing". It's intangible. Nowadays even the master recording is intangible because it is not a physical object you can hold in your hand.

Licensing (ownership is retained by the licensor) vs selling (ownership is transferred to the buyer) is a huge issue and its the reason music publishers fail (not understanding the difference).

Anyway... I've said this numerous times here in the forums. Hurst, while being a brilliant and "savvy" investment banker... did not seem like he could completely understand music publishing when I listened to him speak on a panel of music publishers. It really sounded like he was trying to be the Folgers of the music publishing world.

Fears for Folgers | 2018-04-16 | Food Business News

Quote:
“While the company has leading brands in two big, growing categories (coffee and pet food), the dynamic changes in consumer preferences have significantly devalued or commoditized its legacy brands and impaired its competitiveness...”

"...while the overall coffee category has grown at a 3% rate over the past three years, Smucker’s coffee sales have grown at only 0.5%, and market share has declined 2%.

One area of concern, Mr. Moskow said, has been the declining appeal of the Folgers brand. 'We view Folgers' declining sales as the biggest threat to the company’s margin structure,” he wrote in the report. “Millennials view the brand as too stodgy and low in quality to add to their pantries. As the brand’s appeal declined, it became more commoditized in the eyes of consumers and more sensitive to private label. Walmart expanded its range of private label offerings and upgraded the quality of the product line to try to fend off competitive incursions by European hard discounters Aldi and Lidl.”
I feel the same thing that was happening to Folgers, was/is happening to AN.
Old 22nd April 2019
  #24
Quote:
Originally Posted by lornemalvo View Post
Interesting. Can you tell me where you read that? Was it in an industry mag or something?

I will send it to some of my collagues who write for EMi and Uni. I think they will be quite surprised!

I guess we all though it was high but maybe not that high
I was trying to find where I read that and can't. It was in an article talking about how much money is in music publishing. I remember the big headline was that Universal was making $7bil a year ($19mil per day) total and it briefly in passing mentioned that the Unippm division made somewhere between $60~$100mil worldwide for Universal...
Old 22nd April 2019
  #25
Quote:
Originally Posted by Marineville View Post
I’m never really sure where these stories of woe about composers being ripped off by ANW come from, presumably from people who were turned down by them and have an axe to grind.
Not for me. The stories of woe about AN I hear comes from composers I work with who were hired and worked with AN... and even after AN blatantly screwed one of them over, AN came back and asked him to work for them again! LOL

And in talking to multiple composers who write a lot for them and other catalogs... all of them, totally separate from one another, have all said the royalties they get are far less than the big US libraries they write for. And the upfront money they get is very low as well. Even when I meet with music supervisor and production company clients and AN comes up... the attitude towards AN isn't great, what I've heard several different people say is the good thing about AN is that they have a lot of off the wall esoteric styles that nobody else has. So if you are looking for something that is hard to find, AN will probably have it. But quality is a problem. They have some great albums, surrounded by lots of filler albums where the writing and production quality aren't great. So the complaint is usually consistency.

I hope EOne brings some positive changes to the company. Only time will tell.
Old 22nd April 2019
  #26
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Quote:
Originally Posted by Etch-A-Sketch View Post
I was trying to find where I read that and can't. It was in an article talking about how much money is in music publishing. I remember the big headline was that Universal was making $7bil a year ($19mil per day) total and it briefly in passing mentioned that the Unippm division made somewhere between $60~$100mil worldwide for Universal...
Universal Music Group announced on Monday another blockbuster quarterly earnings, raking in €1.502 billion ($1.7 billion at current exchange rate) through the end of March -- a nearly 19 percent jump at constant currency compared to the same period last year.

Universal Music Quarterly Earnings Total $1.7 Billion as Streaming Jumps 28 Percent | Billboard

Where does that $1.7 billion come from? Album sales, licensing, streaming, and what else? Publishing, no doubt, but that would have to be a small percentage, based on PRO figs.
Old 22nd April 2019
  #27
Quote:
Originally Posted by Jeff Hayat View Post
Universal Music Group announced on Monday another blockbuster quarterly earnings, raking in €1.502 billion ($1.7 billion at current exchange rate) through the end of March -- a nearly 19 percent jump at constant currency compared to the same period last year.

Universal Music Quarterly Earnings Total $1.7 Billion as Streaming Jumps 28 Percent | Billboard

Where does that $1.7 billion come from? Album sales, licensing, streaming, and what else? Publishing, no doubt, but that would have to be a small percentage, based on PRO figs.
A large portion of the “licensing” is music publishing licensing. Licensing masters and underlying publishing rights.
Old 22nd April 2019
  #28
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Quote:
Originally Posted by Etch-A-Sketch View Post
I was trying to find where I read that and can't. It was in an article talking about how much money is in music publishing. I remember the big headline was that Universal was making $7bil a year ($19mil per day) total and it briefly in passing mentioned that the Unippm division made somewhere between $60~$100mil worldwide for Universal...
I've never analyzed Vivendi/Universal's financial reports, but $60-100M in worldwide revenue for Unippm is surprising -- that's only about 1.4% of their total revenues. Is Uni's production music division really that small?
Old 22nd April 2019
  #29
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Quote:
Originally Posted by Etch-A-Sketch View Post
Not for me. The stories of woe about AN I hear comes from composers I work with who were hired and worked with AN... and even after AN blatantly screwed one of them over, AN came back and asked him to work for them again! LOL
But I still don’t understand how a composer can be screwed over! ANW works on a 50/50 royalty split same as any other library. Difference is that all recording and production costs are paid by ANW and NOT recouped from the composer. As for MCPS we all know that ANW bypasses the MCPS model so that’s not a cause for concern either.

Fun fact: ANW composers do get paid MCPS as some music placements generate Mechanicals.

Anyway, the only reason a composer would not do well with ANW is if their music wasn’t up to the mark. I’m not sure who your musician friends are but I suspect that both you and they may have an axe to grind. Probably best to get your facts right first though and not grind your axe against The Rock Of Hearsay.

Fun fact: The Rock Of Hearsay would make a good album title.

Last edited by Marineville; 22nd April 2019 at 04:54 PM..
Old 22nd April 2019
  #30
Gear Maniac
 

'I Can Hear That Axe Grinding'...

Library music contract

...could be track one on the album. LOL

There's alot of heresay in some of the threads here: 'I heard'...'I talked to'...

Hearsay is a very convenient method of supporting a position with no evidence whatsoever. Anyone can say anything with hearsay really can't they. There's a very good reason Judge Judy doesn't allow it into her courtroom!
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