From Universal’s acquisition in the UAE to BMG’s $447m in H1… it’s MBW’s Weekly Round-up – Music Business Worldwide

Welcome to Music Business Worldwide’s weekly round-up – where we make sure you caught the five biggest stories to hit our headlines over the past seven days. MBW’s round-up is supported by Centtrip, which helps over 500 of the world’s best-selling artists maximise their income and reduce their touring costs.

Patrick Boulos, Universal Music Group‘s CEO in the MENA Region, noted this week that the Middle East and North Africa “is one of the fastest growing music markets in the world, representing untapped potential and opportunity”.

The exec’s comments arrived alongside the news on Wednesday (August 30) that Universal has acquired a prominent UAE-based music company called Chabaka Music, which specializes in digital distribution, marketing, publishing, and artist services across the Middle East and North Africa.

This week, MBW asked why Universal has swooped for Chabaka now – and how ferocious can we expect the music biz’s commercial activity in the MENA region to become in the months and years ahead of us?

Also this week, Bloomberg reported that François-Henri Pinault, a French billionaire whose family is behind the Kering group, is nearing a $7 billion deal to buy a majority stake in Los Angeles-based talent agency Creative Artists Agency (CAA).

Bloomberg also reported that Singapore government investment arm Temasek Holdings is looking to boost its own stake in CAA by buying out the shares held by China’s CMC Capital. Temasek secured a minority stake in CAA in September 2017 and has also previously invested in SoundCloud.

Meanwhile, BMG parent, Bertelsmann, reported that the Berlin-headquartered music company generated EUR €414 million (USD $447m) in the six months to end of June this year.

Plus,  gamma expanded in Africa and the Middle East with the addition of two senior executive appointments, while ASCAP took aim at rival BMI‘s newly-for-profit status, in addition to its sale talks with private equity…

Here’s what happened this week…

1) UNIVERSAL MUSIC JUST SWOOPED FOR A PROMINENT COMPANY IN UAE. THE RACE IS ON FOR THE MAJORS TO BUILD MARKET POWER IN MENA.

The sound of opportunity for the record business across the Middle East and North Africa (MENA) is getting louder.

The latest evidence: Universal Music Group’s announcement on Wednesday (August 30) that it’s acquired Chabaka Music, a company based in the United Arab Emirates and founded in 2013 by brothers Ala’a and Tarek Makki.

Chabaka specializes in digital distribution, marketing, publishing, and artist services across the MENA region. It will now become part of UMG’s Virgin Music Group.

The deal marks UMG’s latest strategic positioning in the MENA recorded music market, following its launch in 2021 of Universal Arabic Music (UAM) in tandem with Republic Records and music biz entrepreneur, Wassim ‘SAL’ Slaiby.

The commercial potential of MENA for music rightsholders is plain to see.

According to stats published by IFPI, the Middle East and North Africa was the world’s fastest-growing market in 2021, and its third-fastest-growing in 2022.

Last year, MENA’s recorded music market grew 23.8% YoY, and represented the highest share for streaming of any region globally, at 95.5%…

2) BMG REVENUES UP 11.5% YOY IN H1 2023, HITTING $447M, AS OPERATING EBITDA GROWS 22.6%

BMG saw its global revenues grow by double digits – 11.5% – year-on-year in the first half of 2023.

According to a new interim report from BMG parent, Bertelsmann, the Berlin-headquartered music company generated EUR €414 million (USD $447m) in the six months to end of June this year, up on the EUR €371 million it generated in the equivalent prior-year period.

BMG’s profit also grew significantly. In H1 2023, BMG’s operating EBITDA hit €90 million ($97m), up 22.6% YoY…

3) BILLIONAIRE FRANÇOIS-HENRI PINAULT NEARS $7BN DEAL FOR CAA (REPORT)

François-Henri Pinault, a French billionaire whose family is behind the Kering group, is nearing a $7 billion deal to buy a majority stake in Los Angeles-based Creative Artists Agency (CAA).

That’s according to a Bloomberg report from Wednesday (August 30), which, citing people familiar with the matter, says that Pinault is looking to buy the majority stake in the talent agency held by private equity firm TPG Capital.

The news outlet first reported on the talks for a deal in July. But sources at the time said that talks for a majority stake in TPG-backed CAA ‘could still end without an agreement’.

TPG acquired a 35% stake in CAA in 2010 and subsequently increased its holding to 53% in 2014…

4) ASCAP STICKS THE BOOT INTO BMI OVER FOR-PROFIT SWITCH AND SALE TALKS: ‘WE PAY SONGWRITERS, NOT SHAREHOLDERS.’

One senior publishing executive texted MBW over the weekend simply calling it “genius”. A leading talent manager, meanwhile, told us he thought it “tacky and childish”, and “a cheap look”.

Whichever camp you fit in, you can’t deny that ASCAP’s new social media campaign – aiming its guns at historical rival BMI – is getting the music industry talking.

MBW broke the news last Wednesday (August 23) that NYC-based private equity firm New Mountain Capital (NMC) was in advanced talks to acquire BMI.

Some industry sources suggest that New Mountain and BMI have agreed a transaction in principle for approximately USD $1.7 billion. Other sources suggest, however, that it’s not yet a done deal.

News of BMI’s talks with NMC news arrived 10 months after BMI revealed that it was scrapping its long-held, not-for-profit business model (under which it had operated since being founded in 1939) and changing to a for-profit model.

Over the weekend (August 26 and 27) and the two days prior, ASCAP posted numerous messages on Instagram and Twitter (X) that clearly took aim at BMI’s newly-for-profit status, in addition to its sale talks with private equity…

5) GAMMA EXPANDS IN AFRICA AND THE MIDDLE EAST WITH ADDITION OF TWO SENIOR EXECUTIVE APPOINTMENTS

Gamma, the billion-dollar-backed company launched by Larry Jackson in March, says that it has expanded “its commitment to Africa and the Middle East” with the addition of two senior music industry executives.

The appointments include legendary Nigerian songwriter and recording artist Larry Gaaga joining as Vice President/General Manager of Africa, and respected Arab artist and DJ, Dany Neville taking the role of Vice President, A&R, Middle East.

Gaaga will be based in Lagos and Neville in Dubai…

MBW’s Weekly Round-Up is supported by Centtrip, which helps over 500 of the world’s best-selling artists maximise their income and reduce their touring costs.

 Music Business Worldwide