“I’ll never forget. My bankers who helped me, when we closed [the Spirit deal], said, ‘Singer, you’re a crazy motherfucker.’”
Spirit Music Group boss Jon Singer candidly recalls the moment his $350 million recapitalization and buyout of the independent publisher was confirmed.
The exec tells MBW that he was given 60 days to close the deal after he told the company’s former owners – a private equity firm – that he wanted to buy it.
After they agreed, Singer and business partner Ross Cameron pulled off one of the boldest management buyouts in recent music business history.
The banker, continues Singer, said: “‘First of all, you took [a risk] – because if it didn’t work, it would’ve provoked the sale. And [secondly], it’s never been done in 60 days.
“I said to him, ‘Listen. You have one time in your life to do something that you really care about and you believe in; you just go and you run on fumes’. That’s what we did.
“We signed contracts on December 21  and we closed a month later. We just had to get our financing in place, and boom. We opened up at the beginning of this year owning Spirit Music Group.”
Singer is now Chairman of Spirit Music Group and Managing Partner of Lyric Capitol Group, which fully owns the publisher. He joined Spirit in 2011 after 15 years in the recorded music business, initially with Island Records and most recently as CFO for the Decca Label Group (a division of Universal Music).
“I had around 15 years at Universal,” says Singer. “I was lucky enough that when I started my career in 1998, Chris Blackwell was still walking the halls of Island Records, so I got a little taste of working with the icon.”
“You have one time in your life to do something that you really care about and you believe in; you just go, and you run on fumes. That’s what we did.”
After Island Def Jam (which worked with the likes of Jay-Z and DMX and Ja Rule at the time), Singer went to work for Chris Blackwell’s Palm Pictures for a year, before being recruited back into the Universal system by classical label Decca.
While at Decca, Singer played a key role in diversifying the company from being the largest classical label in the world to an adult pop label, having success with the likes of Sting, Elton John, Alison Krauss/Robert Plant and Celtic Thunder.
“Because Decca was both classical and global, we had a dual report to Zach [Horowitz] and also to Lucian [Grainge], who was Head of International at the time.
“It was a great opportunity because Lucian came in and said, ‘Guys you need to transform, you can’t just be classical music.’ He gave us the ability to turn into an adult pop label, which we did successfully.”
After Decca, in September 2011, Singer joined Spirit as the company’s Worldwide CFO and was promoted to Worldwide Chief Operating Officer/Chief Financial Officer in 2016.
Spirit’s portfolio currently consists of around 75,000 songs, which include 200 No.1 Billboard hits and over 450 Top 10s. Its catalog includes music made by Chicago, Eminem, Sam Hunt, Jay Z, Madonna, Scotty McCreery, Tim McGraw, Elvis Presley, Ed Sheeran, Blake Shelton, Frank Sinatra, Taylor Swift, The Who and Whitney Houston.
Here, Singer tells MBW about his transition to the publishing world after 15 years in recorded music, the role he played in Spirit’s evolution beyond royalty collection and song promotion to working proactively with songwriters, and buying Spirit Music Group…
You spent many years working in recorded music for the likes of Island Def Jam and Decca Label Group. Tell us about how you moved over to publishing?
Friends of mine were in the publishing space and I saw what was going on over there. I just put a feeler out to one of my friends at one of the bigger independent publishers, and within two weeks I got a call from a private equity firm.
They were like, “Hey, we hear you’re interested in publishing. We’re a private equity firm, we own Spirit Music Group. And we’re looking for like a COO kind of person to come in.”
At that point, they had owned the company for two years. It was pretty flat, there wasn’t much growth. There weren’t many deals going on, and their thesis when they bought the company was to do a roll-up, sort of like what KKR did with BMG.
After six weeks of really getting to know the private equity firm and the management team at Spirit, I’ll never forget when the guy from the PE firm gave me the offer. I tried to convince him why I wasn’t the right person. And he said, “Listen, you’re a smart guy. You’ll figure out publishing. We’re going to teach you how to raise capital.” And that’s when I said, “Let’s go, I’m in.”
Tell us about the transition from working in recorded music to music publishing…
The first big transition was jumping from a major life to an independent life. My year at Palm Pictures really helped [with that, so] it wasn’t a complete shock.
“The majors are spoiled. You have the greatest offices, the greatest facilities, the greatest support systems, the greatest technology, and at an independent you’ve got to fend for yourself.”
The majors are spoiled. You have the greatest offices, the greatest facilities, the greatest support systems, the greatest technology, and at an independent you’ve got to fend for yourself.
It was first an adjustment to that, and that I easily overcame, because I actually enjoy that, just controlling your own destiny and building your support system that you need, which is what I did.
What were some of your early learnings or observations about the business when you made that move?
I remember sitting down with the private equity firm and they said to me after six months, “What are your thoughts, Jon?” And I said, “Well, it’s too early to give you any thoughts about the team itself, these are people and I’m still getting to know them. But the catalog is great, we’ve got to do more deals, and I need a financial analyst, a strong one.”
I also said, “If you’re looking for a return, you’ll get a good return by buying catalogs. [But if] you want that return you’ve got to take some risk. You have got to get into new music. You need to be more organic, and that means going out and finding writers and creating brand new copyrights.”
“The strategy was to have in-house A&R people; really align with amazing, creative A&R people that have track records and create partnerships.”
The private equity firm got worried about risk, so I had to explain to them why you could de-risk it. I explained to them on the record side, I’d be worried about it, it’s very risky, but on the publishing side you have many eggs in different baskets. The strategy was to have in-house A&R people; really align with amazing, creative A&R people that have track records and create partnerships.
That de-risks it a bit because you don’t have a fixed cost. It’s a bit variable: the up side is you don’t have that fixed [cost], the down side is when you have success you have to split your profits. I said, “But that’s going to be a good problem to have.” And they signed off.
Spirit acquired Pete Townshend’s catalog in 2012. Tell us about that deal and what it meant for Spirit?
It was total game changer for Spirit. It doubled the size of our business over night. And then from there, we raised a bunch of money. The private equity firm stood behind what they promised me and got me out there.
With some guidance from them, we raised a bunch of money and then we just really expanded the business. We didn’t have an office in Nashville, so we identified a company down there and bought it, with great executives, a great roster, and opened up Spirit Music Nashville.
“Rak and I got talking and Rak said, ‘Hey, my friends Mark Lewis and Martin Toher are looking to sell B-Unique. You should talk to them.'”
When I got to Spirit, we had an office in the UK and that was one of the things I identified and said, “Guys, this is bleeding. There’s nothing really going on here. There’s nothing coming out of it, but we have costs.”
And they were like, “Yeah, we have to change the personnel a bit.” And I said, “Let’s just shut it down. Because there’s nothing there, and then let’s build it back up.” That’s how bad it was.
I got to know Rak Sanghvi (Global President, Spirit Music Group, pictured) through Pete Townshend’s business manager. Rak and I got to talking and Rak said, “Hey, my friends Mark Lewis and Martin Toher are looking to sell B-Unique. You should talk to them.”
And sure enough, he introduced me, and they were about to close [a different] deal, I think. And I was able to show them why Spirit would be a great home for them. And it was great, because we bought B-Unique. We created a joint venture back to my A&R strategy, and from there we went on and signed a bunch of amazing talent.
Tell us about how you came to lead the recapitalization of Spirit?
I did all these deals, grew this business. I had equity in the business. All is going well and I’m here six, seven years in and I say to myself, “Well, this private equity firm bought this company in 2009. It’s now 2017/18; it’s a long hold for a private equity”.
So me and my business partner, Ross Cameron, we were just having a drink one night, just talking it through and we said, “You know what? We have to get in front of the sale, because they’re going to have to sell.” And by the way, I brought Ross in, in 2012 or so, when I said I needed a great financial analyst.
He was [originally] working for Spirit’s private equity firm. Genius; like, smart kid. He’s only in his early 30s now, but I brought him over and he became my super financial analyst.
“We decided we wanted to do a management buyout, so we got in front of a potential sale and spoke to a few investors.”
We’re sitting there, and he knows the private equity firm better than anybody because he worked there. And we said, “Why are we going to wait for them to one day tell us, ‘Hey guys, we’re going to sell the company.’ Why don’t we just try to do something, get in front of it?”
We decided we wanted to do a management buyout, so we got in front of a potential sale and spoke to a few investors. There was a lot of interest. They loved what we had done. They loved where the business was going.
And from my perspective, if the private equity firm at any moment had sold, what [was] going to happen? [The buyer would] buy it and Spirit would be absorbed, like SONGS was absorbed by Kobalt.
You never hear the word SONGS anymore, it’s Kobalt. Carlin is now referred to as Round Hill.
That’s not what we wanted, we built such an amazing company here and we wanted to continue to ride with them. But the rosters were not mature, and we also loved where the business was going. So, I was like, “Let’s be buyers”.
How did the private equity firm react to the idea?
I remember the day I went up to the private equity firm’s office and I sat with one of the senior guys up there. I said to him, “I’m here to buy the company.” He looked at me like I had 10 heads. He’s like, “What are you talking about Jon? You run the company; you’re doing great. Go back to your office and continue doing what you’re doing for us.” You know, keep your head down.
“I remember the day I went up to the private equity firm’s office and I sat with one of the senior guys up there. I said to him, “I’m here to buy the company.” He looked at me like I had 10 heads.”
And I said, “No, I want to buy the business, because you’re going to have to sell it soon.” He understood, and I said, “I’m going to get you good value. I have investors who are willing to pay good value; they see where the business is going.”
After a few conversations we agreed and they gave me 60 days to get a deal done. Because they’re like, we don’t want you getting distracted and hurting the business in any way, so you either get it done or don’t.
So, first I had to pinch myself like, “Wow, I have the ability to buy Spirit right now”. That was the first step. And then, Ross and myself ran around, we found a bunch of money. The nice thing is we’re buying a company that we know, so from that perspective, the diligence wasn’t too rough, but we still had to raise the money [and] get structures in place, but we did it.
Tell us about some of first steps that you took once you owned Spirit?
We built the team up, that’s the most important thing, and now here we are. We didn’t get absorbed by a big guy. And we just expanded on it.
I was the CFO of the company and I needed a strong [replacement]; I needed somebody who just hits the ground running and works hard and is smart and knows this business.
So, I’m the luckiest guy in the business because not only do I end up owning Spirit Music Group, but the guy who hired me to Island Records in 1998, Joe Borrino – who’s one of my closest friends and also an amazing person – came on at the beginning of the year as the new COO and CFO of Spirit Music Group.
“I’m the luckiest guy in the business, because not only do I end up owning Spirit Music Group, but the guy who hired me to Island Records in 1998, Joe Borrino, came on at the beginning of the year as the new COO and CFO of Spirit Music Group.”
He was the CFO at Island Def Jam, and Jay-Z recruited him to Roc Nation to help him start up Roc Nation. So, he was the CFO for Roc Nation, and then he went for a little bit to [Avex International].
That didn’t work out and the timing was right because that was winding down, and I told him, “Should we connect the dots?” And Joe said, “I’m in.” It was like the instant I said to him there’s this opportunity, he said, “I don’t even care, I know you’ll take care of me, just bring me on”.
We still have Frank Rogers, who is CEO down in Nashville and is creating this true creative powerhouse signing David Garcia and Zach Crowell. Frank just brought in Derek Wells. He’s Senior Director A&R/Production down in Nashville and an unbelievable person – he’s a studio musician and one of the greatest guitar players in the world.
Tell us about some of the first deals you did under the new Spirit?
The first deal we did once we started this new chapter was a JV with multi-platinum songwriter and producer Gregg Wattenberg. We acquired the global rights to Wattenberg’s complete songwriting catalog, signed him to a co-publishing agreement for all future works and partnered with him to form a joint venture which will allow him to leverage Spirit’s resources to find, sign and develop songwriting talent.
Then we bought an amazing catalog down in Colombia, called Prodemus. It’s one of the most well-known Latin catalogs. We started a Latin division a few years ago and we aligned with a company called Sunflower [run by] Jamar [Chess] and Juan Carlos [Barguil].
They’re out there managing the catalog and they’re signing some talent, but we want to expand. Latin music is growing significantly, the outlook is significant growth, and we thoroughly believe in growing a best-in-class division.
Prodemus was our first real entrée into that. That catalog’s been around a long time, and the amazing thing about that catalog that we saw when we were doing the diligence on it, was that it wasn’t really handled properly. The registrations weren’t good, the syncing wasn’t really there.
With the strength of our admin systems we probably found $300,000 or $400,000 of money they never even knew existed that they were entitled to. So, it’s one of those catalogs, that our infrastructure here – our machine – kicks in and we’re collecting away. It’s going to be a great deal for myself and my investors.
The next big [deal] that excites me is Ingrid Michaelson. We bought that catalog a few months ago.
I had the opportunity to talk to her and her manager, Lynn Grossman, who I had become very good friends with through this process. We probably spent an hour and a half or so on the phone with myself, and Ingrid, and Lynn and I wanted to understand why Ingrid was selling.
I just wanted to get to the root of everything. I don’t want to get too much into it, because it’s very private to Ingrid, but we really connected and her lawyer called me afterwards, and he said, “Singer, I don’t know what you did, but Ingrid really wants to sell her catalog to you.”
What was really attractive about this deal, is that it’s both masters and her [publishing] of her catalog. There are some amazing songs in that catalog, and we’re really excited to get going on that. The nice thing about that deal also, since I connected with Lynn and Ingrid, is that we still remain in contact.
What next for Spirit? How would you like to see the company develop over the next five years?
Continuing to build our infrastructure, our systems, make them stronger, and really just focus on our talent and our songs.
Some of these bigger guys brag about having millions of copyrights, okay. I don’t care how great your systems are, if you have that many, I wouldn’t be able to sleep at night knowing I have to look after that many copyrights. Because it’s hard, and you can’t even have enough people to handle that.
“Some of these bigger guys brag about having millions of copyrights, okay. I don’t care how great your systems are, if you have that many, I wouldn’t be able to sleep at night.”
That was one thing with Ingrid Michaelson that we talked about. When she was talking to a bigger player to go to, she was very focused on her songs being well taken care of. And I said to her, “Listen, we don’t have millions of song, so we’re going to look after your songs very closely and we’re going to know where they’re being used. So you have nothing to worry about there.”
Right now we have about 75,000 songs and I always say my next goal is to have 250,000 songs and be worth $1 billion. It’s extremely feasible.Music Business Worldwide
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