lag between earnings and distributions, which can
be up to 18 months.” He explains that all accruals
are expected to be received within a 12-month
period. “They are therefore accurate and subject
to a high degree of testing by Hipgnosis’ auditor,
PricewaterhouseCoopers, on a semiannual basis.”
The Shot Tower report was distributed only to
clients, but sources who have read it say it focuses on
yet another issue that bothers Hipgnosis’ rivals: how
the company calculates the average multiples it has
paid for catalogs. So far, Hipgnosis has reported the
NPS and the price it paid for just one deal — its ac-
quisition of the Kobalt Songs 1 catalog for $323 mil-
lion, which equates to a multiple of 18.3 times NPS.
Although publishers who bid against Hipgnosis
usually have a sense of what it pays for an acquisi-
tion, they say the company’s refusal to give more
information on the actual multiples it pays for assets
is another sign of the fund’s lack of transparency.
Readers of the Shot Tower report say it questioned
the way in which Hipgnosis uses right-to-income
to calculate its multiples. Right-to-income is royalty
revenue paid to the seller by licensees in the period
immediately preceding the buyer closing on the
deal. That revenue is turned over to the buyer at the
closing, which then pays songwriter royalties from
that revenue.
Hipgnosis’ latest financial report indicates it uses
right-to-income in calculating multiples but gives
no details as to how it figures into the calculations.
According to sources, the Shot Tower report says
that if right-to-income was included as revenue, it
would produce a higher multiple. Mercuriadis says
that Shot Tower’s conjecture was erroneous and it
is revisiting its analysis after Hipgnosis provided
additional information to the investment bank.
Some music publishing sources still suspect that
Hipgnosis is reporting lower-than-actual multiples.
When Hipgnosis takes part in an auction, rival
publishers say the catalogs tend to sell for close
to 20 times NPS, a significant increase from the
early 2010s, when multiples of 12 were typical. In
a December interview with The New York Times,
Mercuriadis said that 22 was the highest multiple he
has paid for a catalog.
Sources Billboard spoke with find it odd, then,
that Hipgnosis’ Jan. 21 prospectus states that it has
paid an average multiple of 15.63 times NPS for its
acquisitions. They say that number seems low, given
the steep rise in multiples overall for song catalogs
last year. They estimate, for example, that Mer-
curiadis paid a multiple of 30 times NPS — which
translates to upwards of $45 million — for the 50%
of the Neil Young catalog that Hipgnosis acquired.
Mercuriadis says such estimates are based
on incomplete information. He tells Billboard
that only 30% percent of Hipgnosis’ assets were
acquired in a bidding process — the other 70%
were private deals, which competitors have no
visibility into. “They didn’t want to have to tell
their shareholders, ‘Well, he’s able to make these
investments because he’s got a better relationship
with the songwriting community.’ ”
As for the actual prices he has paid, Mercuriadis
says he takes transparency seriously but also feels
the need to protect the financial privacy of the
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UNG:^ GUS^STEWART/REDFERNS/GETTYIMAGES.What’s In The Vault
By the end of 2020, Hipgnosis had acquired 129 song catalogs
containing over 60,000 tunes. Here are just a few of themJason
“Poo Bear”
BoydDATE ACQUIRED November 2018
SIZE 100% of publishing and writer’s share in
214 songs
HIGHLIGHTS Several Justin Bieber or Bieber-
affiliated hits, including “What Do You Mean?,”
“Company” and “Where Are Ü Now” from his 2015
Purpose album, as well as the English version of
Luis Fonsi and Daddy Yankee’s “Despacito”Chrissie
HyndeDATE ACQUIRED September 2020
SIZE 100% of publishing and writer’s share in
164 songs
HIGHLIGHTS Pretenders hits and fan favorites
“Brass in Pocket,” “Talk of the Town,” “2000
Miles,” “Message of Love,” “Back on the Chain
Gang” and “I’ll Stand by You”Ernest Dion
“No I.D.”
WilsonDATE ACQUIRED August 2020
SIZE 100% of publishing plus writer’s and
producer’s shares in 273 songs
HIGHLIGHTS “Run This Town” by JAY-Z featuring
Kanye West and Rihanna, “Holy Grail” by JAY-Z
featuring Justin Timberlake, West’s “Black Skin-
head” and Ed Sheeran’s “Kiss Me”Jimmy
IovineDATE ACQUIRED December 2020 (announced 2021)
SIZE Worldwide producing royalties for 259 songs
and film producer royalties for 8 Mile and Get Rich
or Die Tryin’
HIGHLIGHTS Royalties on some of rock’s most ven-
erated albums, including Tom Petty’s Damn the Tor-
pedoes (“Refugee”), Stevie Nicks’ Bella Donna (“Edge
of Seventeen”) and Dire Straits’ Making MoviesDebbie
Harry
and Chris
SteinDATE ACQUIRED August 2020
SIZE 100% of writer’s share and neighboring rights
in 197 songs
HIGHLIGHTS Pop classics from Blondie’s catalog,
including “Heart of Glass,” “Rapture,” “Call Me,”
“The Tide Is High,” “Dreaming,” “One Way or
Another” and “X-Offender”Neil
YoungDATE ACQUIRED December 2020
(announced 2021)
SIZE 50% of publishing and writer’s share in
1,180 songs
HIGHLIGHTS Six decades of hits and incisive
songwriting, including “Heart of Gold,” “Powder-
finger,” “Like a Hurricane,” “Rockin’ in the Free
World” and “My My, Hey Hey (Out of the Blue)”
—E.C.48 BILLBOARD • FEBRUARY 20, 2021