Concord Music’s rumored acquisition of Stem Disintermedia is fetching a bigger price tag than previously thought, according to DMN sources.
For those who love that music industry deal flow, here’s ‘another one’: according to well-placed sources to DMN, Concord Music is plunking down more than $100 million for indie music distributor and artist financier Stem Disintermedia. That is more than double earlier whisper numbers — and apparently this is a ‘done deal’ with final details being tied up.
In terms of bringing this home, big props are being given to Stem’s ultra-shrewd co-founder and CEO, Milana Lewis. Lewis didn’t respond to a request for comment on the latest whisper number, and a Concord representative was also mum. Incidentally, DMN has also learned that this deal derby featured multiple interested parties — including Sony Music Entertainment — though it appears that bidding battles were relatively tame.
Earlier, various trade rags offered differing takes on what’s happening. Among the reported details are a sale price of $50 million—or definitely not—with a full-blown sale being transacted (or maybe it’s just an ownership stake). On the last point, DMN sources have explained that this is a finalized transaction, though nothing official has been released, so stay tuned.
But, is $100 million really that great?
Some well-heeled dealmakers, including The Raine Group and the venerable Fred Davis, are pulling the strings on this one. But doing the math, this may be less of an epic dunk than it appears: According to data from DMN Pro’s authoritative Music Industry Funding Tracker, Stem has pulled in roughly $42.5 million in funding since its founding in 2015, with an additional $250 million credit facility secured last year to power an artist-financing expansion, including artist advances.
That suggests a modest investor return for all parties involved despite the 9-figure sticker. Will anyone score lifetime ‘F-U money‘ once this deal is closed? Aside from the company principles and even angels, the list of investors is lengthy and includes Evolution Media, Aspect Ventures WndrCo, Upfront Ventures, Block, Slow Ventures, QED Investors, among others.
Perhaps this is a good time to get out in a frothier moment for indie distributors?
On that last point, some static has emerged over Stem’s financing terms, with rising interest rates and tighter lending standards impacting artist deals.
Indeed, this has apparently become a growing issue at Stem, given that sought-after artists can shop around for better deals and advances, pushing up the price of scoring high-performing talent relationships. Beyond that, the broader bonanza era of low-interest rates couldn’t be more over, putting enormous pressure on leveraged plays.
(Incidentally, those plunging into the funding deals in DMN Pro should not confuse Stem with the NFT-focused ‘Stems,’ which secured a $4 million round in late 2022.)
Back to the matter at hand, broader questions are now percolating on whether Warner Music Group was merely kicking the tires on Stem — or if they were even seriously at the table. Just recently, WMG chief Robert Kyncl pooh-poohed the notion of acquiring independent distributors, preferring to build rather than buy. It all sounds logical, though that takeaway seems to contradict rumors that WMG was seriously bidding.
Just days later, WMG also acquired RSDL.io via its independent distro arm, ADA, suggesting that Kyncl might be playing a Steve Jobs-like game of ‘reality distortion’ to calm rival bids.
Separately, it looks like business as usual at Stem despite the hastening acquisition. Earlier this week, Stem Director of Artist & Label Strategy Kylie Everitt picked apart some indie distribution details at Musexpo at the Castaway in Burbank, part of a broader industry panel moderated by Digital Music News that also included execs from Gyrostream, Audeze, Strm Music, Hook, and Chartmetric.
More as this develops.
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