Take a look behind the financials of Hipgnosis’ reported $100 million acquisition of Justin Timberlake's publishing catalog.
estimates, with his share of the writing earning about $3.3 million in net publisher’s share . Based on that, the reported $100 million price tag would mean the deal landed a 30.6 multiple NPS — which is considered a very expensive multiple.
In fact, while song music publishing catalogs filled with iconic songs have been known to go for close to a 30 times multiple — that so far seems to have happened only in rate rare instances. Contemporary songwriters, like Timberlake, have tended to trade at lower valuations than catalogs filled with songs that have stood the test of time, such as Bob Dylan, Paul Simon and Bruce Springsteen. That’s because investors feel uncertainty around which songs will prevail with iconic status, and which will be remembered as foregone once-upon-a-time hits.chart toppers, with songs like “SexyBack” and “Can’t Stop The Feeling!” that are likely to gain that iconic status down through the years, even these are hard to give proper valuations. That’s because some of his biggest songs generating the most revenue are still current or semi-current, which means that their streaming totals have yet to decay to a streaming rate and income level that becomes predictable going forward. That’s a problem for institutional investors, who like investments in predictable income streams. So, if Hipgnosis paid that much, it’s gambling on the level at which some of the catalog’s biggest earners will eventually level off. They’re not going in blind, though. The songs’ performance over the past few years along gives some idea of what’s to come. Sources say annual revenue for Timberlake’s catalog has already fallen from the $5 million-level it earned annually from around 2016 to 2018, when “Can’t Stop The Feeling!” — which he co-wrote for theestimates his catalog has averaged $3.3 million in NPS annually . When the Timberlake catalog was first shopped to the market, sources say his camp was hoping for a $100 million payday, or at the very least a 28 times NPS multiple. At $3.3 million, a 28 times multiple would deliver a $92 million payday. But some potential bidders felt that multiple was too high, considering the uncertainty about the decay rate for the catalog’s current biggest songs; and due to the building nervousness about how rising interest rates could impact valuations. Instead, sources say a bid in the $70 million to $75 million range would be more reasonable. There are other elements that likely impacted the deal, too. The acquired songs will remain with Universal Music Publishing Group until Timberlake’s contract expires with the publisher in 2025, and then move over to Hipgnosis Songs Management. And sources familiar with the situation say Timberlake is choosing to remain with UMPG on a going forward basis, rather than moving over to Hipgnosis for future songs.last October, sources say the investment firm brings a higher degree of financial discipline to the Hipgnosis Songs Management acquisition appetite. Instead of a $100 million payday, despite reports, the sources say it’s more likely the Timberlake catalog went for about $85 million — at most. Representatives for Blackstone, Universal and the Timberlake camp either declined to comment or didn’t respond to a request for comment. Other than confirming that Timberlake would remained signed to UMPG on a going forward basis, Hipgnsosis Songs Management CEOdeclined to disclose any details of the transaction, except to say, “We are under [non-disclosure agreement] and have not given anyone including
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