Remember how we told you that that Ticketmaster-Front Line deal was a win for Warner Music Group? Well it seems that they won $5 million from Front Line’s $123 million purchase and another $18 million by selling part of Front Line to MSG this June.
Indeed, it seems the way to make money in music these days is to take stakes in artist management companies and venues, because all the labels are doing it. But how long before they flip these stakes for tidy profits?
NY Post: Since 2004, Warner and its private-equity backers, Thomas H. Lee Partners and Bain Capital, have been among the most aggressive investors in music-management firms, as WMG sought to diversify its sources of revenue.
T.H. Lee and Bain reportedly had a brief $10 million investment in The Firm, an artist-management company headed by Jeff Kwatinetz.
The Post doesn’t make it clear if they’re still invested in The Firm, but if they are, that might not be looking like such a hot property now, given that one its major partners and another high-profile manager just left and took their A-list clients with them.
WMG, meanwhile, had a stake in Front Line, the music business’ most powerful artist-representation shop, with clients like the Eagles and AC/DC…
A WMG spokesman said the company’s decision to sell its Front Line stake reflects not so much a shift away from the artist-management business but instead a focus on “investments where we can consolidate financial results and see a clear path to full ownership.”
Sources familiar with the matter said that WMG’s investment in Front Line did not meet those criteria, and given the economic environment and a motivated buyer in Ticketmaster, Warner opted for the cash…
Meanwhile, WMG continues to own or hold controlling stakes in several artist-management shops globally, as do other labels, including Universal Music Group, which inherited the management arm of the UK’s Sanctuary Group when it bought the company last year.
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