Dan Runcie

Coachella’s dilemma is this: Big artists no longer need festivals. But festivals cost more money than ever to run. Higher prices. Fewer A+ level stars. Tougher product to sell.

@pickd4prez I gotta stay on brand 😂

@RuncieDan 😂 I read it in your podcast voice like "okay this is just like the intro set up"

Warner Music Group and Bain Capital made a big bet on The Red Hot Chili Peppers. They allocated roughly 25% of a $1.2B catalog fund to buy the band’s recorded music catalog. The goal of the fund is to invest in “iconic” catalogs. Is RHCP iconic? Here's what the numbers say:

@pickd4prez Yes haha of course

@RuncieDan Is RHCP iconic is rhetorical right?

This is where the “iconic catalog” label gets subjective. Some catalogs are iconic because they have once-in-a-generation cultural impact. Others are iconic because the streams are durable. For Warner/Bain, RHCP has a touch of both but they're especially strong on streaming.

I’d argue RHCP’s recorded music may be a stronger asset than publishing, which was sold for $150M in 2021. Sony Music now owns that. But publishing is more dependent on reputation, songwriting, and cultural impact. RHCP may rival Queen on recorded music, but less so on pub.

@MarkHolum Yea, $26M annual revenue is no joke. Legit numbers, especially on streaming. But agreed that the concentration is high.

@RuncieDan It's an interesting investment because the multiplier is quite low even though the catalog seems high quality. 25% is a high exposure.

Music assets are hotter than ever, but music stocks are cheaper than ever. The gap is huge. It continues to grow.

Managing estates for legendary artists is a tough business. Troy Carter shares his experience running Prince’s estate for 5 years.

"Blue dot fever" is a catchy term but it exaggerates the reality. A handful of cancelled tours says more about the demand and expectations for those specific artists. It says less about the overall industry.

“If you start putting these things in a f****** Ford Escort commercial, they become less and less valuable.” Troy Carter on the rise of music catalog sales.

@MarkHolum I do think the gap between the true asset value and the current market cap is much bigger than WMG debt total. But any buyer would likely pay a premium over the current market cap. That price would need to be much greater still for it to all make sense.

@RuncieDan The problem is that if I'm PE... I'm looking at a company that has tons of undervalued assets on its balance sheet (its music catalog), that I could sell off to pay for an aquisition, leaving a debt loaded husk for equity. I'm not sure that's a good thing.

The newly-merged BMG-Concord (private): • $2.2B annual rev • $730M profit • $15B valuation Warner Music Group (public): • $6.7B annual rev • $1.4B profit • $15B market cap Another example of how private investors love music but public markets discounts music companies.

@VinceValholla I would need to double check, but that number wouldn't surprise me

@RuncieDan You’re right. BMG-Concord has a market share of 2%, correct?

@MarkHolum Agreed. Len Blavatnik could also take it private himself.

@RuncieDan I mean… wmg sure as hell looks like a good PE target.

@LJGGMG Last week! Still needs regulatory approval though

@RuncieDan Wai t when did BMG & Concord merge