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Follow up on the masters of Taylor Swift's old albums:After Ithaca acquired Big Machine in 2019, Ithaca resold Taylor's old recordings to yet another PE firm (Shamrock), supposedly for a "big payday".
This story doesn't add up to me. Here's why: https://variety.com/2020/music/news/scooter-braun-sells-taylor-swift-big-machine-masters-1234832080/
Swift has publicly indicated that under the terms of Ithaca's sale of the old recording masters, "Scooter [...] would continue to receive many years of future financial reward from my music masters".
If Ithaca sold the masters outright, how does Scooter continue to benefit?
![Swift has publicly indicated that under the terms of Ithaca's sale of the old recording masters, "Scooter [...] would continue to receive many years of future financial reward from my music masters".If Ithaca sold the masters outright, how does Scooter continue to benefit?](https://pbs.twimg.com/media/EyoDK1jWUAkdFdQ.jpg "Swift has publicly indicated that under the terms of Ithaca's sale of the old recording masters, \"Scooter [...] would continue to receive many years of future financial reward from my music masters\".If Ithaca sold the masters outright, how does Scooter continue to benefit?")
If Ithaca sold the masters outright, how does Scooter continue to benefit?
My guess is that after purchasing Big Machine, Scooter realized Swift was going to greatly damage the financial value of the masters -- but unfortunately for him, every potential buyer of the masters figured this out at the exact same time. So he couldn't sell them for much $.
My guess is that he sold them for relatively little $ up front, but he worked out some sort of arrangement by which Ithaca and Shamrock would share in the rewards if, by this transaction, they managed to persuade Swift to stop going scorched-earth on the old masters.
Viewed from this angle, the supposed "sale" looks more like a ceremonial PR move. Almost as if Ithaca and Shamrock put on a public show to try to distract Taylor from her plans.
So far, she appears unmoved. I don't think it's working out the way they'd hoped.
So far, she appears unmoved. I don't think it's working out the way they'd hoped.
Bringing this back around to private equity due dilligence:
If Shamrock did even a sliver of dd on this purchase, they would know they'd get much more cooperation from Swift if Scooter was 100% out of the picture.
If Shamrock did even a sliver of dd on this purchase, they would know they'd get much more cooperation from Swift if Scooter was 100% out of the picture.
The fact that Scooter is still in the picture suggests something is wrong. To me, it suggests that the asset is distressed b/c shamrock clearly wasn't willing to pay full price up front even though this would have increased the value of the masters to Shamrock.
as a norm, this makes sense
is this particular deal a triumph of norm over common sense? It sure seems like the PV of the masters is higher without a Scooter earnout attached https://twitter.com/A_Bonavia/status/1380927140598779906?s=19
is this particular deal a triumph of norm over common sense? It sure seems like the PV of the masters is higher without a Scooter earnout attached https://twitter.com/A_Bonavia/status/1380927140598779906?s=19
