US music rights organisation SESAC is about to change ownership, but not management.
Rizvi Traverse Management, the owners of the third largest rights organisation in the US, have entered into an agreement with private equity funds affiliated with Blackstone to acquire SESAC. The transaction, the details of which were not disclosed, is expected to close by the end of the first quarter of 2017.
Blackstone views the acquisition as a long term investment and has sheltered it as part of its core private equity strategy, which is specifically designed to hold private equity investments for much longer periods of time than traditional private equity funds. SESAC Chairman and CEO John Josephson said in a statement that Blackstone will help the current management "to execute our company’s growth strategy in our primary performance rights business, as well as mechanical rights, administrative services, multi-rights and multi-territory licensing".
He added: "Blackstone is acquiring our company with the specific intent of backing the existing management team, and shares our long-term vision for the company with a history of adding value to their portfolio companies as a supportive strategic partner and capital provider. We anticipate a seamless transition in ownership with no disruption to our business activities as a result of this transaction. Going forward, we believe our long-term partnership with Blackstone will position SESAC well for enhanced growth and continued delivery of best in class service to our affiliates, licensees and commercial partners.”
SESAC was initially founded in 1930, but its development really started in 1993, when investors led by Stephen Swid, the former business partner of Marty Bandier and Charles Koppelman, bought the society and started to aggressively grow its business. In 2012, investment bank Allen & Co. and hedge fund Och-Ziff were shopping the company and eventually sold it to its current owners, Rizvi Traverse, for a transaction estimated at $500 million.
As a privately-owned rights society, SESAC is not bound by the consent decrees that rule the two main performance rights society in the US, ASCAP and BMI. With the recent acquisition from the National Music
Publishers' Association of HFA, which licenses mechanical rights, SESAC became the only US-based music rights organisation to administers public performance, mechanical, synchronisation and other rights all within one roof. SESAC represents the rights to 30,000 members, including Bob Dylan, Neil Diamond, RUSH, Charli XCX (PRS), Zac Brown, Mumford & Sons (PRS), Lady Antebellum, Mariah Carey, Axl Rose, Shirley Caesar, and Robin Thicke.
Robert Reid, senior managing director at Blackstone, said: “We are thrilled to be backing John, Kelli Turner and the entire SESAC team and investing in the most progressive music rights organisation for songwriters and artists. Music is fundamental to our society and is consumed both actively and passively by users worldwide, across increasingly diverse methods of distribution. We expect music listenership to continue to grow over the long-term and are excited to invest in SESAC, one of the key facilitators of the music market and related copyright management infrastructure.”
David Kestnbaum, managing director at Blackstone added, “We view SESAC as an attractive fit for our core private equity investment platform and are pleased to partner with the company’s experienced, highly capable management team to help support their growth strategy over the long term to continue to serve their key affiliate and licensee constituents.”