. And on the recorded-master side, Downtown Music Publishing bought Strictly Confidential’s 10,000-song catalog., Managing Partner at Shot Tower Capital, pointed to a friendly regulatory environment created by the Music Modernization Act and favorable rulings in ASCAP and BMI rate courts.
Publishing catalogs are valued according to the net amount of revenue received by the rights owner -- the net publisher's share, or NPS. Investors like publishing because a catalog has somewhat predictable cash flows based on the quality of the music and prior year royalties. In addition to reliability, publishing assets are popular for the industry’s global growth and potential.
Historically, a common multiple was around 10 to 12 times NPS. Today, multiples reached from 16 times NPS to “nosebleed sections,” quipped, the former CEO of both Sony/ATV Publishing and EMI Music Publishing. Dunn believes 20 times NPS can be reasonable for some catalogs. “There’s high growth, low interest rates and a lot of people are looking to deploy capital,” he said.
Putting a value on a publishing catalog is part art and part science. Data analysis is key: investors have experts pore over royalty information and assess where a song sits in its lifecycle. But human intuition also plays a part. “The first thing I ever did when evaluating a catalog is to get a tape of the songs and I would listen to them and think about the prospects -- the things that weren’t part of NPS,” said Bandier.
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