I just read that Sony bought the rights to Pink Floyd’s catalog for something like $400 million. They also bought Bruce Springsteen’s catalog for around $500 million. That’s close to $1 billion for just two artists. There’s a whole bunch of other artists who are also getting bought out which brings the grand total to billions of dollars.
How are these companies getting the money to pay these crazy sums?
What is their plan to make that money back? Commercials and film placement?
Seems like you’d have to wait a veeeery long time to recoup these investments.
In: Economics
Sony is a massively large company with a $120 billion market cap (the total value of all of its shares). Large companies can often sit on a lot of cash, which comes from revenue of its operations, and which it hasn’t decided how to spend or use. Sony sits on about $16 billion cash these days. Even if they are not sitting on a large amount of cash, large companies can borrow money from banks when they need a large amount for a deal.
Other companies buying music assets are basically like private equity funds. Their money comes from a bunch of different investors who pool their money together to have the company invest in things they are interested in. Those investors are all types, and often right under your nose. For example, Concord Group’s largest investor is the Michigan Retirement System, which is basically all the money being held and managed for pensions of state employees of Michigan (public school teachers, state troopers, judges, etc.).
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