The 10 Biggest Music Business Deals of 2023

The battle between Kakao and HYBE for a controlling stake in HYBE has all the ingredients for a thrilling Netflix series: a contentious split with a founder, a lawsuit, fevered attempts to woo investors and an arrest for stock price manipulation. Days after Kakao took a 9.05% stake in SM Entertainment, HYBE acquired a 14.8% stake from SM Entertainment’s exiled founder, Lee Soo-man, who successfully prevented SM Entertainment from issuing new shares — and diluting his ownership interest — to sell to Kakao. HYBE sought a larger stake but couldn’t match Kakao Corp and Kakao Entertainment tender offer that brought their stake to 40% and their total investment to approximately $1 billion. The story took a turn in November after Kakao’s chief investment officer was arrested for allegedly manipulating SM Entertainment’s stock price to prevent HYBE from building a larger stake in the company.

Concord raised $500 million through an asset-backed security with Apollo Global Management. That money would ultimately be used for its acquisition of Round Hill Music Royalty Fund. Asset-backed securities are financial investments that are collateralized with underling assets. In recent years, music has been an increasingly common asset class used to raise money through ABS sales. Concord had the biggest music business deal of 2022 with a $1.8-billion ABS and Chord Music Partners, a venture of KKR Credit Advisors and Dundee Partners, raised $732 million through an ABS.

Music royalty-backed, publicly traded investment funds have had a rough couple of years. When interest rates were low, the enduring popularity of song catalogs looked like a good way for investors to get a decent return. Now that a 10-year Treasury note offers a risk-free return of greater than 4%, those steady returns aren’t so attractive. That helps explain why music funds have been trading at a steep discount to their catalog’s asset values. Although streaming growth was helping the catalogs produce steady royalties, the lagging share prices had become a constraint to further growing the portfolios. One solution: sell assets. The $2.1-billion Hipgnosis Songs Fund tried a partial catalog sale to reduce debt and bolster its share price — but it was rejected by shareholders. Round Hill Music Royalty Fund was small enough to be swept up in a single transaction. Concord’s $469 million acquisition of Round Hill Music Royalty Fund’s assets — including songs by Alice in Chains, Bruno Mars and Louis Armstrong — was a win-win scenario: Concord picked up a swath of catalogs for a good price and Round Hill’s shareholders were paid a 67% premium over the prior day’s closing price.

HYBE set off a battle for control over SM Entertainment when it purchased a 14.8% stake in the K-pop competitor from its founder, Lee Soo-man, for $334 million. SM Entertainment ended a production contract with Lee in 2022 and sought to overhaul its corporate governance and build a next-generation music company with help from Korean internet and tech giant Kakao. Lee responded by turning to HYBE, which purchased a majority of his shares and won a court injunction that prevented SM Entertainment from issuing new shares to sell to Kakao. HYBE backed off, however, after Kakao Corp and Kakao Entertainment offered shareholders a steep premium and amassed a 40% stake in the company. HYBE sold some of its shares to Kakao and retains an 8.8% stake.

HYBE’s initial push into the U.S. came with its $1.05 billion acquisition of Ithaca Holdings, which included Scooter Braun’s SB Projects and the Nashville-based Big Machine Label Group. Even though K-pop was gaining in popularity in the world’s largest music market, HYBE wasn’t content to merely export its brand of pop music to other markets. So, Braun, who became CEO of HYBE America in January, expanded his purview with HYBE’s $300 million acquisition of Atlanta-based hip-hop company Quality Control in February. The $300 million deal added such artists as Migos and Lil Baby, and the company’s young founders, Pierre “P” Thomas and Kevin “Coach K” Lee, to the HYBE roster.

Litmus Music, a music rights company founded in 2022 with backing by private equity giant Carlyle Group LLC, made a splash in September when it paid $225 million for Katy Perry’s master rights royalties and publishing income from her five albums for Capitol Records — One of the Boys, Teenage Dream, PRISM, Witness and Smile — and a stable of modern pop classics such as “Firework,” “E.T.” and “Teenage Dream.” Not only was the deal the largest artist catalog transaction of 2023, but it also ranked among deals for Paul Simon’s and David Bowie’s works as one of the top artist catalog deals ever.

In February 2022, Dr. Dre brought a hip-hop review to the Super Bowl halftime show that proved the lasting popularity of his work as both an artist and a producer. In January 2023, those songs turned into the most valuable hip-hop catalog deal ever for a single artist. Universal Music Group and Shamrock Capital paid about $200 million for various passive income streams from Dr. Dre’s illustrious catalog — including producer royalties, his share of N.W.A artist royalties and the writer’s share of the song catalog where he doesn’t own the publishing. The deal also included Dre’s share of an Aftermath/Interscope joint venture with the Top Dawg label for Kendrick Lamar releases through that deal.

In a year when Hipgnosis Songs Fund, the publicly traded royalty trust, was frequently in the headlines, the award for the biggest transaction by a Hipgnosis company went to Hipgnosis Songs Capital for its $200 million deal for the Justin Bieber catalog. Hipgnosis Songs Capital is a joint venture of the Merck Mercuriadis-led Hipgnosis Song Mangement — the public fund’s investment advisor — and investment giant Blackstone. With Hipgnosis Songs Fund sitting on the deal-making sidelines, Hipgnosis Songs Capital picked up 100% of Bieber’s publishing, as well as artist royalties from his master recordings and neighboring rights. The deal covered 290 titles covering Bieber’s career through the end of 2021.

According to reports in August, HYBE paid 150 billion won ($114 million) for the remaining 51.5% stake in Belift Lab that was owned by the joint venture’s partner, CJ ENM. The agency was created in 2018 to develop a boy band spawned from “I-Land,” an audition show aired on CJ ENM’s television network Mnet. The result was Enhypen, one of HYBE’s most successful acts not named BTS. Enhpyen’s latest album, Orange Blood, debuted at No. 4 on the Billboard 200 album chart on Dec. 2 and reportedly sold nearly 1.9 million units in South Korea in its first week of release.

Elliot Grainge’s 10k Projects record label spent seven years working in partnership with Universal Music Group, releasing projects by Ice Spice, Tekashi 6ix9ine, Trippie Redd, iann dior and Internet Money. It was a sensible home given that his father, Lucian Grainge, has been UMG’s chairman and CEO since 2011. But 10k Projects left for Warner Music Group in August in a deal described as a joint venture when it was announced in September. Warner Music Group’s annual report, released on Nov. 21, however, revealed that WMG acquired a 51% stake in 10k Projects for $102 million.