Monday, April 15, 2024

Sour Note: Hipgnosis Songs Stock Price Drop Continues, Quarterly Dividend Cut as Board, Company, Face Shareholder Fate, Possible Asset Sell Off in 10 Days


TUESDAY AM: Hipgnosis Song Fund stock in the UK is at 66.70. On October 13th, it was at 74.00. On September 12, the price on the London Stock Exchange was as high as 94.00.

MONDAY: For the last few years we’ve had headline after headline about rock stars selling their song catalogs for millions. Bob Dylan, Bruce Springsteen, Sting, members of Fleetwood Mac have all been in the mix for figures from $300 million to $500 million. Even whippersnapper Justin Bieber cashed out.

Some of the catalogs were sold to solid music publishers like Universal, Sony, or Warners. But many were sold to a fund called Hipgnosis, run by Merck Mercuriadis, and bankrolled in part by Blackstone Group.

Hipgnosis Song Fund stock is dropping quickly. This was because the company announced they would not be paying dividends this quarter. What made the stock price drop? Hipgnosis announced today that “Citrin Cooperman, the Company‚Äôs Independent Portfolio Valuer, has materially reduced its expectations of industry-wide retroactive payments.” In layman’s terms, the thousands of songs now owned by Hipgnosis are not monetizing as promised.

Last month, Hipgnosis announced that they were proposing to sell off $465 million worth of the catalogs they bought — something no artist envisioned. They thought their publishing and/or masters were going just to Hipgnosis. If stockholders approve this at a meeting on October 26th, it could mean the end of the company and maybe the end of Mercuriadis. Maybe.

The “maybe” is because Hipgnosis is really two companies. One is the publicly traded entity, the other is a management company owned by Blackstone and run by Mercuriadis. Even if stockholders decide to sell off the assets, Blackstone could buy it and put Mercuriadis in charge. And what’s not discussed is that Mercuriadis himself has the right to find other investors and buy the catalogs.

Mercuriadis is a survivor, so no one should count him out. But this is a perilous moment. Hipgnosis’s artists include all stars like Manilow, Neil Young, Carole Bayer Sager, Journey, Lindsay Buckingham, Chrissie Hynde, Red Hot Chili Peppers, Dave Stewart and his Eurythmics songs. These people have all their money already, but now Hipgnosis has to make the money back.

Among the assets they’ve proposed selling, the biggest is probably Barry Manilow — who, ironically, is opening a Broadway show this Thursday. Manilow, for example, could wake up soon to find his part of songs like “Copacabana,” “Daybreak,” “Even Now,” “I Made it Through the Rain” sold off to new proprietors.

One Manilow song that’s safe: “I Write the Songs.” Manilow didn’t write it. Someone else owns it.

Stay tuned…

Roger Friedman
Roger Friedman
Roger Friedman began his Showbiz411 column in April 2009 after 10 years with Fox News, where he created the Fox411 column. His movie reviews are carried by Rotten Tomatoes, and he is a member of both the movie and TV branches of the Critics Choice Awards. His articles have appeared in dozens of publications over the years including New York Magazine, where he wrote the Intelligencer column in the mid 90s and covered the OJ Simpson trial, and Fox News (when it wasn't so crazy) where he covered Michael Jackson. He is also the writer and co-producer of "Only the Strong Survive," a selection of the Cannes, Sundance, and Telluride Film festivals, directed by DA Pennebaker and Chris Hegedus.

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