Sony Music Entertainment is going shopping! After gaining full-blown ownership over The Orchard and Sony/ATV Music Publishing, the Tokyo-based label is ready to drop some serious cash on Believe.
With streaming exploding, what’s a major music label to do with all its cash? Thankfully for Sony Music Entertainment, there’s Believe Digital, which is rumored to be carrying a price tag of more than $400 million.
Last year, Sony Corp.’s music unit reported operating profits of $677 million (or roughly 76 billion yen) on sales of $5.8 billion (approximately 650 billion yen) for the year ended March 31st. Now, it’s time to reinvest some of that capital and make a play at the top dog, Universal Music Group.
According to a just-released report in Asian business daily Nikkei, Sony Music is moving to close on the indie-focused distributor. Specifically, Nikkei is pointing to a price tag of between 40 billion yen to 50 billion yen (or $355 million to $444 million).
Big bucks! But Believe itself has been on a spending spree, with investors fueling the buyout binge. That includes Spotify investor Technology Crossover Ventures (TCV), which put nearly $60 million into Believe back in 2015.
Believe then swallowed US-based TuneCore back in April of 2015, as first reported by Digital Music News. It also grabbed French indie distributor and label Naive for a cool $10 million (roughly $12 million). Which means investors are properly fattening this goose for a serious, multi-hundreds of millions-type acquisition.
See how this game works?
Believe itself is also a fabulous French company, alongside other Parisian indies like Jamendo. The company reportedly has annual sales of about $250 million. At some point, ‘Believe Digital’ dropped the ‘Digital’ and simplified the moniker.
And what about The Orchard? Actually, it looks like Sony had to do some serious valuation rewrites on its Orchard acquisition last fiscal year. During the previous fiscal year, Sony’s Orchard unit gained an accounting boost of $151 million (or roughly 18 billion yen); a shift that softened the current-year income boost. But that’s just complicated bean-counting.
Back to Believe, nothing has been formally announced. Though this sort of well-timed leak usually prefaces a real-deal announcement.
The $400 million+ price would cover an acquisition of a majority share in Believe. But a deal for the whole Believe enchilada may also be happening, given Sony’s newfound penchant for ‘wholly owned subsidiaries’.