On Feb. 20, Universal Music Group announced that it has agreed to acquire a 26 percent stake in Chord Music Partners for $240 million. Chord Music Partners is responsible for managing the catalogs of renowned artists such as John Legend and The Weeknd.
This strategic move by the $53 billion company allows it to gain partial control over hit songs like “Blinding Lights” while also diversifying its investment portfolio.
According to Bloomberg, Chord is valued at around $1.85 billion, including its debt. Its billion-dollar valuation stems from its ownership of about 60,000 songs, including the catalogs of The Weeknd and John Legend.
In its first year, Chord invested $1.1 billion into KMR Music Royalties II, a catalog portfolio from Kobalt Capital Limited.
The transaction values Chord, established in 2021 by investment firms KKR and Dundee Partners, at $1.9 billion. KKR, previously the majority shareholder, is exiting the venture, with Dundee and its investor group set to own 74 percent as Universal enters the picture.
Under the agreement, Chord will oversee the acquisition of new catalogs. Additionally, Chord will assume the debt associated with these new deals, while Universal’s financial responsibility will be limited to its proportionate equity share.
So if Chord secures a $100 million deal for music from another artist with 50 percent leverage, Universal’s contribution would only be $12.5 million on average. This setup allows Universal to manage the songs while shouldering only a portion of the associated risk, providing the company with a strategic advantage in owning music assets.
The Weeknd owns his recording copyrights through The Weeknd XO Inc., also known as XO, a company he co-manages with his longtime friend and manager, Wassim “SAL” Slaiby.
Also in 2022, The Weeknd finalized a new long-term partnership with UMG, extending his nearly decade-long relationship with the company. This partnership, building upon the foundation established between the Toronto native, also known as Makkonen Tesfaye, and UMG’s Republic Records since 2012, will encompass recorded music, publishing, merchandise, and video.
Under that deal, Republic Records continued to serve as his label partner for upcoming recorded music releases, while Universal Music Publishing will handle all future work related to his songwriting catalog. However, the catalog aspect of the agreement will only come into effect once his existing commitment with Kobalt concludes, which has now happened.
