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Harmony Music’s rumored acquisition of Stem Disintermedia is fetching an even bigger price ticket than beforehand thought, based on DMN sources.
For many who love that music business deal movement, right here’s ‘one other one’: based on well-placed sources to DMN, Harmony Music is plunking down greater than $100 million for indie music distributor and artist financier Stem Disintermedia. That’s greater than double earlier whisper numbers — and apparently this can be a ‘achieved deal’ with last particulars being tied up.
When it comes to bringing this house, large props are being given to Stem’s ultra-shrewd co-founder and CEO, Milana Lewis. Lewis didn’t reply to a request for touch upon the newest whisper quantity, and a Harmony consultant was additionally mum. By the way, DMN has additionally realized that this deal derby featured a number of events — together with Sony Music Leisure — although it seems that bidding battles have been comparatively tame.
Earlier, varied commerce rags provided differing takes on what’s occurring. Among the many reported particulars are a sale value of $50 million—or positively not—with a full-blown sale being transacted (or possibly it’s simply an possession stake). On the final level, DMN sources have defined that this can be a finalized transaction, although nothing official has been launched, so keep tuned.
However, is $100 million actually that nice?
Some well-heeled dealmakers, together with The Raine Group and the venerable Fred Davis, are pulling the strings on this one. However doing the maths, this can be much less of an epic dunk than it seems: In line with knowledge from DMN Professional’s authoritative Music Business Funding Tracker, Stem has pulled in roughly $42.5 million in funding since its founding in 2015, with an extra $250 million credit score facility secured final yr to energy an artist-financing growth, together with artist advances.
That means a modest investor return for all events concerned regardless of the 9-figure sticker. Will anybody rating lifetime ‘F-U cash‘ as soon as this deal is closed? Except for the corporate principals and even angels, the listing of traders is prolonged and contains Evolution Media, Side Ventures, WndrCo, Upfront Ventures, Block, Gradual Ventures, and QED Traders, amongst others.
That raises the query: maybe this can be a good time to get out in a frothier second for indie distributors?
On that final level, some static has emerged over Stem’s financing phrases, with rising rates of interest and tighter lending requirements impacting artist offers.
Certainly, this has apparently develop into a rising problem at Stem, on condition that sought-after artists can store round for higher offers and advances, pushing up the worth of scoring high-performing expertise relationships. Past that, the broader bonanza period of low-interest charges couldn’t be extra over, placing huge stress on leveraged performs.
(By the way, these plunging into the funding offers in DMN Professional mustn’t confuse Stem with the NFT-focused ‘Stems,’ which secured a $4 million spherical in late 2022.)
Again to the matter at hand, broader questions are actually percolating on whether or not Warner Music Group was merely kicking the tires on Stem — or in the event that they have been even critically on the desk.
Only in the near past, WMG chief Robert Kyncl pooh-poohed the notion of buying impartial distributors, preferring to construct reasonably than purchase. All of it sounds logical, although that takeaway appears to contradict rumors that WMG was critically bidding.
Simply days later, WMG additionally acquired RSDL.io through its impartial distro arm, ADA, suggesting that Kyncl is likely to be enjoying a Steve Jobs-like recreation of ‘actuality distortion’ to calm rival bids.
Individually, it appears to be like like enterprise as standard at Stem regardless of the hastening acquisition.
Earlier this week, Stem Director of Artist & Label Technique Kylie Everitt picked aside some indie distribution particulars at Musexpo on the Castaway in Burbank, a part of a broader business panel moderated by Digital Music Information that additionally included execs from Gyrostream, Audeze, Strm Music, Hook, and Chartmetric.
Extra as this develops.
