Target Information

Concord is recognized as one of the largest independent music companies globally, operating multiple segments within the music industry. Its operations encompass a comprehensive recording music business where they sign emerging recording artists, alongside a substantial recording music catalog. Additionally, Concord engages in the music publishing sector, signing new songwriters and managing a significant music publishing catalog. Furthermore, the company leads in theatrical licensing, being one of the largest entities in this domain.

Beyond just managing talents and catalogs, Concord enhances the value of its music copyrights and royalties through a sophisticated operating platform. The firm has established a reputation for maximizing the benefits for their artists while maintaining a boutique feel, which positions them uniquely in a competitive landscape.

Industry Overview in the United States

The U.S. music industry has experienced a transformative shift over the past decade, driven by technological advancements and changing consumer behaviors. Streaming services have become the dominant mode of music consumption, drastically reshaping how artists and companies monetize music. As a result, the market has seen growth in revenues, with digital music sales eclipsing traditional formats such as physical sales and downloads.

This evolution has led to increased competition among music companies, with firms striving to diversify their offerings in order to capture and engage audiences effectively. Independent labels, such as Concord, have begun to leverage their unique connections and insights into niche markets, allowing them to carve out a significant market share alongside larger record labels.

The theatrical licensing segment has also witnessed considerable growth, propelled by the rising popularity of theatrical productions and musicals. This has positioned companies like Concord favorably, as they tap into lucrative licensing opportunities alongside their traditional music businesses.

As live performances continue to regain traction post-pandemic, the industry is expected to further evolve with hybrid strategies incorporating online and offline experiences. This adaptability will be crucial for companies aiming to stay competitive in the ever-changing music landscape.

Rationale Behind the Deal

The rationale behind Apollo's involvement in the $1.8 billion asset-backed securitization (ABS) for Concord in 2022 was to provide the company with an efficient solution for capitalizing on their extensive music catalog rights. By structuring this ABS, Concord could access scalable and flexible funding, essential for driving future acquisitions and enhancing their portfolio of music assets.

This strategic move enabled Concord to secure additional funding for growth, evidenced by their acquisition of Round Hill Music Royalty Fund shortly after, which added over 150,000 songs and 50 catalogs to their existing repertoire. The ABS structure proved instrumental in facilitating this timely transaction, highlighting its vital role in facilitating Concord's long-term growth strategy.

Information About the Investor

Apollo Global Management is renowned for its expertise in various sectors, including credit markets, private equity, and asset management. Their unique position allows them to leverage extensive industry knowledge to engage with companies like Concord effectively. Apollo's commitment to understanding the intricacies of the music business sets them apart as an ideal partner for navigating complex transactions within the industry.

In the realm of music finance, Apollo has made significant strides in structuring deals that cater specifically to the needs of music companies. By underwriting major transactions, such as the recent ABS for Concord, Apollo not only supports the growth of its partners but also enhances its portfolio by investing in a dynamic and evolving industry.

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From an investment standpoint, the collaboration between Apollo and Concord appears to be a sound decision, particularly within the current landscape of the music industry. The ABS structure adopted offers Concord a robust framework to scale and acquire additional music assets efficiently. This strategic financial maneuver not only supports immediate growth but positions Concord favorably for future opportunities as the market continues to evolve.

Furthermore, the successful acquisition of Round Hill Music showcases the effectiveness of the ABS as a financing tool, providing Concord with immediate access to a wealth of additional music content, including iconic tracks that can enhance their catalog tremendously.

However, potential investors should remain cognizant of the inherent risks within the music industry, such as fluctuations in consumer preferences and the impact of emerging technologies. It's crucial for Concord and their investors to maintain agility in their strategy to adapt to these changes and continue maximizing value in their operations.

Overall, the strategic partnership between Apollo and Concord presents a promising investment opportunity that leverages both parties' strengths. It signifies a progressive step towards capitalizing on music assets while ensuring sustainable growth in a rapidly transforming industry.

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