Get ready to feel the music industry shake as Warner Bros. Discovery considers abandoning plans to offload its music library, including the soundtracks behind some of your favorite superhero movies. Just two months ago, rumors began to spread about the sale, but a recent report suggests the company may have to reconsider their options as the offers fall short of expectations.
According to the Financial Times, Warner Bros. Discovery was seeking a cool $1 billion+ for their music IP, but apparently, the company had hoped for even more, targeting a staggering $2 billion for the catalog. However, bids have only come in at approximately $1.2 billion to $1.3 billion, leaving the company to consider selling only a portion of the works or nixing the transaction altogether.
It’s not just Warner Bros. Discovery who’s facing obstacles in the music industry. In fact, insiders predict that song-rights valuations could be on the verge of a falloff due to asset devaluations, rising rates, and widespread economic woes. Despite this, several companies have announced plans to inject millions more into IP, leaving us to wonder if gargantuan purchase agreements could be the first to dry up.
BMG spent north of $400 million on catalogs across the 12-month stretch, while Kobalt has reportedly spent over $300 million on music IP as well as advances during its fiscal year. Even last month, Cutting Edge, AMR Songs, Larrosa, Shamrock, Mojo Music, and others unveiled song-rights investments and/or related funding.
It’s no secret that 2020, 2021, and 2022 delivered all manner of ultra-expensive catalog plays, but as the global economy cools, logic suggests that the red-hot space will follow suit. So, it’s crucial to keep an eye on the music industry, as we wait to see how these valuations will change over time. But for now, we’ll just have to wait and see what happens with Warner Bros. Discovery and their music library.
