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A UK-based media group has secured $500mn in debt funding to invest in creating and buying music rights for films, TV, theatre productions and computer games in a sign of continued interest in the asset class among investors.
Cutting Edge Group (CEG), a music financier, publisher and record label based in London, has secured $500mn from a syndicate of four banks, led by US lender Fifth Third Bank and Northleaf Capital.
CEG will use the additional funds to buy and manage music rights, as well as finance new film and TV scores. The group is already in talks over more than $1bn of potential acquisitions, which could be further funded by bringing in third party investors.
CEG is a specialist in owning and managing music featured in film, TV, theatre productions and video games. Its existing portfolio of more than 2,000 titles includes the publishing rights to films such as Aquaman and distribution rights of The Jungle Book.
CEG, which was founded in 2006 by entrepreneur Philip Moross, also operates a business creating and managing portfolios of “wellness music” which aids sleep or focus. Majority owned by Moross the company also provides music for spas and hotels around the world.
Moross, who is working with artists like hip hop producer Timbaland producing wellness music, said the genre was popular on streaming platforms, with some tracks being streamed billions of times.
Music rights have become an increasingly popular investment on the back of rising revenues from streaming — which offers a growing income — with a number of specialist funds set up to own and manage the rights.
However, the sector has come under greater scrutiny in recent months given the mounting problems at Hipgnosis Songs Fund, a listed music rights investment company that has been forced to slash the value of its portfolio amid questions over governance and debt levels.
The company’s board is close to announcing the result of a strategic review, which is looking at a range of options for the future of the group including a wind down and sale of its assets.
New deals have continued to be struck by artists selling their music rights to investment groups, with US rock band Kiss most recently agreeing a $300mn deal that included its name, image and likenesses with Pophouse, the Swedish entertainment company founded by Abba’s Björn Ulvaeus.
CEG operates in a more niche area, with the bulk of its revenues coming from when a show or film for which it owns the music rights is broadcast. It also forward funds scores, giving composers the money to create their music.
Moross predicted that the revenues would continue to grow given the continued take-up of streaming services around the world.
The company also owns rights to music in games like Cyberpunk 2077, which are popular among fans on streaming platforms.
