Warner Music and Bain set venture, seek Red Hot Chili Peppers songs

Malaysian Reserve

02-07-2025

WARNER Music Group Corp. announced a $300 million cost-savings drive, part of an effort to free up funds for growth initiatives, including a just-announced joint venture to acquire music catalogs.
The plan will result in an unspecified number of job cuts, according to a regulatory filing Tuesday. Almost two-thirds of the savings will be achieved through job cuts, with the rest coming from organizational changes and overhead savings, the company said. Warner Music employed about 5,800 people at the end of its latest fiscal year.
The company expects to realize the full benefit of the savings by the end of fiscal 2027.
'These decisions are not being made lightly,' Chief Executive Officer Robert Kyncl said in a note to employees. 'It will be difficult to say goodbye to talented people, and we're committed to acting with empathy and integrity.'
The filing coincided with the company's announcement Tuesday of a joint venture with the private equity firm Bain Capital to invest as much as $1.2 billion in iconic music catalogs.
The venture 'will provide artists and songwriters with opportunities to preserve and expand the reach of their catalogs, ensuring their legacies are well cared for,' the companies said in a statement on Tuesday. The two will acquire catalogs together, while Warner Music will manage marketing, distribution and administration.
As part of the partnership, Warner Music is in talks to acquire the catalog of the Red Hot Chili Peppers for more than $300 million, according to a person with knowledge of the matter. Hits by the rock group, which is already part of Warner Music, include songs such as Under the Bridge. There's no guarantee a deal will be reached, said the person, who asked not to be identified discussing private negotiations. The Financial Times reported on the talks earlier Tuesday.
Music has become an attractive asset in recent years as streaming broadened the industry's reach and emerging technologies introduced classic songs to new audiences. Investment firms including Blackstone Inc., Apollo Global Management Inc. and KKR & Co. have spent billions of dollars acquiring catalogs while major record labels are racing to control more intellectual property. Sony Group Corp. and Universal Music Group NV have also pursued a similar strategy of acquiring catalogs.
Warner Music, whose artists include Charli XCX, Fleetwood Mac and Bruno Mars, has acquired song catalogs in recent years such as those of David Bowie and the entire recordings catalog of producer David Guetta. Earlier this year, Warner bought a controlling stake in Tempo Music, which owns a catalog of song rights spanning recordings from Adele to Wiz Khalifa, in a deal valued at $450 million.
Warner Music is controlled by billionaire Len Blavatnik. –BLOOMBERG