£song
The Merck, as the CEO is known had flown in from America to host a 4pm London meeting after releasing the Hipgnosis interim results the day before. Four catalogue deals had also recently been announced adding to the event. The PLC generates income from song ownership and active portfolio song management from play and increasingly from streaming service platforms. Adding to the revenue outlook , music writer/owner share of the royalty revenues is increasing significantly over the next 4 years, due to be increased by 44% in stages increases. The fund currently owns 5 of the top 10 songs for the decade, according to Billboard.
At the interim (to 30/9) the PLC owned 27 catalogues which were bought on a blended 12.84x historic annual net income, with 4027 being top 10 songs and a fair value of £345m or 108.46p NAV per share. The income was £22m and a 2.5p dividend been paid from 3.55 eps. The total return since the 100p NAV/placing was 11.96%. Since the 1H period end, 15 catalogues have been acquired giving a total of 42, on a blend of 12.99x net annual income. The PLC now owns 11,225 songs, the total cost of the portfolio is £505m and a pipeline of future deals in excess of $1bn. The catalogue sellers may not be household names for investors but are to the music world. Dave A Stewart of the Eurythmics is one such artist, with him selling his rights to 1068 songs and him becoming a song advisor. The HIPGNOSIS PLC market cap is now £700m. 26% of the royalty revenue is from the top 10 songs. The NAV has risen from 103.27p to 108.46p since the period began. The presentation highlights the PLC is on the reserve list for the FTSE250.
There are three revenue sources for HIPGNOSIS, being mechanical, performances and from synchronisation. The later is being helped by the uptake of streaming from premium subscription offered by the likes of Spotify, whose subscriber numbers are up 31% to 113m, at 30/9/19 with big increases from SE Asia and India joiners. Apple Music is due a make a big update announcement on its music streaming service and ByteDance (US artists) is building a presence in Asia. Then there is ticktoc. Streaming revenue grew by 15% in 1H v 1H to £22.6m. The 5 Billboards ‘Top 10 songs of the decade’ are as…
