The Money Behind the Deals: Eldridge Industries

Hello, hello! No long preamble this week. If you enjoy this newsletter you can always support it by recommending it to a friend or subscribing at $4/month or $40/year. Now, let’s learn about everyone’s favorite music financier: Eldridge Industries.

Money 4 Nothing, my personal favorite podcast about music and capitalism, interviewed Albert Glinsky, the author of ‘Switched On: Bob Moog and the Synthesizer Revolution’. Also, check out the show’s newsletter!

The 2008 financial crisis devastated the global economy and helped further hurt an already struggling music industry. Yet, many outside observers of the industry found this an excellent opportunity to jump into it. Andrew DeWaard, an assistant professor at the University of California, San Diego, through his research both into Hollywood and the record industry, observed how during the 00s, private equity accelerated investment into entertainment firms that produced painful corporate restructurings, consolidation, and layoffs. (Again, it’s worth mentioning Gabriel Meier’s essay ‘Sound Money’ pulls upon similar themes.)

The sharp decline in recorded music revenues, though as I’ve covered before less so publishing and live music, and rock bottom interest rates spurred new players to stake claim onto various parts of the entertainment industry through funding startups, reckless mergers, and unproven business proposals. Even when deal price tags fetch into the hundreds of millions, many of these companies are barely seen outside of the financial press which conceals their influence. This month, I’ll look at two companies exemplifying this trend, so let’s check out Eldridge Industries.

What is An Eldridge?

Todd Boehly, a former Guggenheim Partners president, faced a bit of a career reckoning. He worked at the firm for a number of years and helped purchase the Los Angeles Dodgers but according to Variety, his former employer wasn’t all that impressed with his media-heavy portfolio. This included Dick Clark Productions, Adweek, The Hollywood Reporter, and Billboard, but reportedly the only profitable work could be found in live production. The separation was reported to be “amicable” and Boehly didn’t struggle to raise capital once out on his own and founded Eldridge Industries in 2015. Now before getting into his music industry ventures, it’s good to see just how wide a range of clients and efforts he was down to back.

It’s well beyond the scope of this newsletter to explore all of the investments made by Boehly’s firm but some include real estate properties, insurance companies, Le Pain Quotidien (the French food chain?!), Chuck E. Cheese, Cloud9 (an esports team), random fintech startups, Digital Currency Group (which lost $1.1 billion in 2022); they also helped Cathie Wood maintain a controlling interest in ARK Invest?!! If certain venture capitalists enjoy parading around investment theses while embarking on media tours. Boehly’s company is unbound by such a desire for business decision coherence.

The scattershot nature of the deals may account for the last year of less-than-ideal headlines that have hit Boehly and Eldridge. Bloomberg ran the headline ‘Todd Boehly Steps Back at Chelsea After Worst Season in 29 Years’, as the new owner’s big spending and organizational upheaval appeared to immediately undermine the team’s efforts. There was also a similar sense of desperation in ongoing attempts to reboot the Golden Globes into a more relevant awards show during an era of increased skepticism about their value. (Eldridge must be breathing a little easier knowing the Hollywood strikes may be in their final days.) If the overall portfolio of Eldridge is such a hodgepodge of investments, then perhaps media, particularly music, might hold a stronger throughline. Especially since early reporting around Boehly’s departure from Guggenheim stressed his keen passion for media.

Let The Music Play

Eldridge’s early media assets: Adweek, Billboard, and The Hollywood Reporter represented fairly long-standing media trade publications; and Dick Clark Productions produces, I’ll be kind, second-tier entertainment shows. Not the Grammys, but the American/Billboard Music Awards; not American Idol, but So You Think You Can Dance. Again that these were underperforming assets within Guggenheim makes sense. Not only are these legacy media properties during a time when all of the media was struggling during a shift to digital, but these are companies that cover the specific industries being the most impacted. Thus it’s not hard to see how the solution proposed for these ailing brands was an easy corporate go-to: Consolidation.

In 2016, the Hollywood Reporter-Billboard Media Group bought Spin, Vibe, and Stereogum, which they said created “the world’s largest music brand by digital traffic, social reach and audience share.” Less than five years later, both Spin and Stereogum were sold off to Next Media Partners. The “strength” of all those brands coming together would be rebranded into MRC in mid-2020 and would grow to include all of the previously mentioned media properties, the studio behind House of Cards, and Nielsen Music (the media ratings people). So, Eldridge cobbled together what amounted to a cluster of inwardly facing media properties during a time when media as a whole continued to face an existential crisis in adapting to a changing market. It’s not hard to see how this might not lead to fruitful business outcomes.

In the fall of 2020, Penske Media Corporation formed a joint venture with MRC Media & Info, now placing the owner of Variety and numerous other magazines under the same roof as Billboard and The Hollywood Reporter. MRC, and by proxy Eldridge, would see further fracturing when a couple of executives took a couple of their own production companies, leaving Eldridge with “Dick Clark Productions and investments in hot indie studio A24, James Corden and Ben Winston’s Fulwell 73, Michael Sugar’s Sugar 23 and entertainment data and insights company Luminate”. The constant selling off and splitting of these assets makes it hard to deduce any strategy beyond hoping to repackage these assets to a future bidder unaware of the bill of goods being sold.

A couple of years earlier, during the song rights acquisition boom Eldridge wasn’t going to be left behind. The company purchased the pre-2020 catalog of The Killers with the band’s lead singer Brandon Flowers saying “Eldridge’s broad network across music, television and film will provide new opportunities for our music to be enjoyed by millions across the globe.” Again theory of Eldridge is one of IP ownership, and brand collaboration but without any clear sense of how all these moving parts should work together. That may be why it wasn’t shocking that Eldridge helped Sony make what is still the single largest publicly announced rights purchase ($550 million) for Bruce Springsteen’s recording and publishing catalog. Deep-pocketed and always ready to follow the latest trend, harder to find a better candidate for such a move. The company’s made no other publicly announced deals since so it’s a little curious what, if any, vision there is with these moves.

The other major music deal the companies made was a $1 billion dollar raise, which included Apple, A24, and Snoop Dogg, for Gamma, a new music company led by former Apple Music executive Larry Jackson. Again the thesis for gamma, like much Eldridge, appears to mostly be getting a lotta of big names together then vibe. This thesis was further put into action when it was announced that the supermodel and United Nations Commonwealth ambassador Naomi Campbell would be the company’s “Special Advisor, Africa & Middle East”. One can, and I did, read through all the press statements about gamma but it's hard to not see what amounts to a record label by another name without any of the backbone and support that define the handful of viable music labels in 2023. (Earlier this week gamma announced a deal with Rick Ross and the Maybach Music Group, an artist and label a decade post-peak relevancy.)

There’s almost nothing connecting all of these various investments and moves beyond a constant flipping, reorganization, and repositioning of a handful of media assets that hold diminishing returns. Yet, a step back does show Eldridge with a near monopoly on American entertainment trade press, a good number of award shows, and a few notable investments into production companies as well. Now I could extrapolate how helping Sony own all of Bruce Springsteen’s catalog could result in a great A24 film that will get all of the media attention, awards, and produce this virtuous cycle of media promotion. Yet, one would have to say, and hope, for the sheer amount of capital expended, there must be more exciting proposals down the pipeline.

Unheard Labor

The Writers Guild of America reached a tentative agreement with the Alliance of Motion Picture and Television Producers (AMPTP) to great applause from the union’s membership. Perhaps of note to readers here, there was specific language around artificial intelligence that says it cannot be used to replace work done by humans (i.e. by studios and producers) but isn’t off-limits for writers. Many congratulations to those who fought so hard this year. Workers at YouTube Music contractor went on a day-long strike as Google still refuses to bargain. To close, the United Auto Workers continue to escalate their “stand-up strike” against the Big 3 automakers with signs of progress but no immediate clear end in sight for the struggle.

Government Rythmes

SiriusXM, unsurprisingly, didn’t take too kindly to SoundExchange’s $150 million lawsuit calling it “misguided allegations”. We’ll see how the courts land over this. In other SiriusXM news, Liberty Media is interested in merging its share of the satellite radio company into a new publicly listed company, which SiriusXM shareholders are now considering.

A Note of Financialization

Primary Wave, one of the most established companies in the catalog acquisition space, picked up the publishing catalog of the country songwriters Eddie Rabbit and P.F. Sloan. The company continues to spend down the over billion dollars it raised last year from the asset manager Brookfield, so no wonder they keep pushing out press releases. Influence Media and Warner Music Nashville announced a partnership with Jesse Frasure, which includes purchasing her entire catalog. Again speaking of asset managers, only a year ago did Influence Media Partners raise $750 million with help from BlackRock Alternative Investors. Last week, the Australian band Jet sold some of their rights to BMG, in a deal far too particular for me to reprint here.

6 Links 2 Read

Deezer’s Artist-Centric Model Should be Universal with a Small ‘u’ - Music Ally / Let’s Reform Streaming Without a Two-Tier System - Billboard (Subscription)

Responses to the Deezer and UMG “artist-centric” streaming model feel oddly predictable. Big wigs across the industry are happy something is being done but split amongst their own personal interests in where the grips pick up. However, the recent news of Deezer agreeing to an “artist-centric” deal with Wagram, a french indie label, would say the new norm is already set.

5 observations on… Epic Games’ sale of Bandcamp to Songtradr - Music Business Worldwide

I thought Epic Games purchasing Bandcamp was a bummer, and this is doubly so. Even this article struggles to articulate any reason for Songtradr’s purchase beyond Bandcamp being a beloved asset by a small segment of music consumers. I’d even cite a report by Components about Bandcamp, which observed that the platform's audience is slowing in rich countries (US / UK) but growing in poorer ones. A sign to me that while Bandcamp certainly can sustain itself, it’s likely already peaked in popularity thanks to the pandemic and doesn’t need more investor, or new owner, pressure upon its shoulders.

More music streaming price rises – now! - Music Business Worldwide

Music streaming will be more expensive. Get excited!

The AI Chatbot Assistants Are Here. Do We Actually Want Them - New York Magazine

Just a wonderful piece that points out that both tech company products have gotten worse (anyone using Google lately) and that “chatbots” appear designed to make that worse not better. We’re all just circling the drain strapped with declining tech products with overbearing marketing. (Herrman also explored how tech companies mislead with analytics and metrics, which may be worth remembering while dealing with all this AI hype.)

What is the Future of Sampling? - DJ Magazine

Chal Raven connects contemporary sampling (goofy edits) and the prospects of artificial intelligence by asking what it means to be in a world where sampling is fully disconnected from a physical good. More than ready to read a book on this topic. (There’s already gotta be a good book on the “remix” out there…)

The UAW Strike May Be a Watershed for the US Labor Movement - Jacobin

This interview was conducted earlier in the strike but provides an excellent historical context of the UAW. I won’t strain to make a musical connection beyond this is clearly one of the most important American labor actions in this century.