The largest licensing company on Broadway could be up for sale
Broadway’s largest licensing house could soon be on the block.
Recent reports suggest that the company could be sold if Concord executives fail to convince the majority owner, Michigan State Retirement System’s pension fund, to give them more money. The company has tried to allocate more funds to fuel its continued growth and previous negotiations have not been successful.
After the pension fund offered less money than Concord wanted last summer, Concord decided to turn to debt financing and raised $ 600 million. Almost half of the money was used to pay off existing debt, leaving the company with approximately $ 380 million to cover operating costs and fund future acquisitions.
Concord, which began as a jazz record label in 1973, has grown into a giant in the small theater licensing industry over the past five years through a series of strategic deals. “They came out of nowhere and started buying them all up,” commented Charles Grippo, a consumer electronics lawyer.
After Concord signed a licensing agreement for Broadway composer Andrew Lloyd Webber’s musicals in 2016, Concord spent $ 500 million in 2017 to acquire Imagem Music Group, a Dutch music publisher that owns the rights to Richard Rodgers and Oscar Hammerstein’s shows II controlled. In 2018, the company continued its buying frenzy, buying publishers Tams-Whitmark Music Library and Samuel French.
Samuel French was family owned for 188 years before Concord devoured it. “Not that there was any serious writing on the wall, but when Concord knocked on our door, we had started thinking about the future of Samuel French as opposed to the benefits of being part of something bigger,” “recalls Abbie Van Nostrand, director of corporate communications. “The prospect of the industry required that we be supported by an institution with more resources,” said then President Nate Collins.
“Concord managed to get into this relatively small world at just the right time,” said Ted Chapin, who previously oversaw the licensing of the Rodgers and Hammerstein plants.
As the new giant on the block, Concord now licenses over 10,000 musicals and plays to schools, summer camps and regional theaters. With an extensive catalog of musicals such as A chorus line and Hadestown besides games like fences and Slave game, the company brings in approximately $ 100 million each year from theater licenses and an additional $ 400 million from its other music businesses. Experts estimate the entire company could now be worth between $ 4 billion and $ 5 billion.
“Concord is such a huge company already, it’s hard to predict what might happen when it goes to an even bigger company,” said Elizabeth Wollman, music professor at Baruch College.
If the giant company goes up for sale, it is possible that one of the big music labels like Universal Music Group or Sony Music Group is trying to siphon it off to gain market share. The deals may not get regulatory approval, however, and industry insiders suspect private equity funds like Kohlberg Kravis Roberts or Blackstone could take a move to buy.
“On the one hand, I think that [a private equity fund buying Concord] could be good to some extent because the private equity fund could pump more money into it, ”said Grippo. “I would not be surprised if Concord wants to have more money, among other things, so that they can buy other license companies for cinemas,” said the lawyer.
With more money, Grippo said, “Concord could make broader offers to Broadway shows to get the rights to those shows,” outbidding its main competitors Music Theater International, Theatrical Rights Worldwide and Broadway Licensing. Concord could also use the additional money to build up the music publishing, casting and content production departments or to expand its international presence.
“The desire to expand the ways in which live theater can be more effectively mass broadcasted so that the whole world can see and access it is a current concern,” noted Professor Wollman.
“On the other hand, private equity funds like to pull their money out immediately,” said Grippo. In order to achieve double or triple digit returns as quickly as possible, the funds often make significant changes to either increase income or decrease expenses.
“My concern is that they could drive up the royalties,” said the attorney. “The royalties on the Rodgers and Hammerstein shows are already pretty high,” he said, and since Concord “has the exclusive rights to the shows, it’s not that you can go to another licensing agency and get a better rate” , he said.
Concord executives and Michigan State Retirement Systems declined to discuss the situation.