Primary Wave is in the advanced stages of putting together a deal to acquire Kobalt Music Group, the gigantic independent music publishing administration company, which would create a powerhouse independent music company with over $7 billion in assets, Billboard estimates.
Primary Wave’s portfolio, which includes stakes in the catalogs of Prince, Whitney Houston, Bob Marley and recently Britney Spears, is worth nearly $6 billion. Kobalt, the world’s largest independent music publisher, was acquired in 2022 by a group of investors led by Francisco Partners in a deal that valued the company at around $750 million valuation. Since then, Kobalt under CEO Laurent Hubert has grown significantly, improved profitability and launched a joint venture with Morgan Stanley’s Tactical Value group with $700 million to invest in music copyrights.
Soucres say those efforts have resulted in Kobalt generating roughly $100 million in earnings before interest, taxes, depreciation, and amortization (EBITDA), and that the company could fetch a sale price north of $1.5 billion, especially if the assets purchased with Morgan Stanley are included in the deal. Goldman Sachs, which advised Kobalt in its sale to Francisco Partners, is said to be representing the company again.
All of the companies declined to comment or did not respond to requests for comment.
Francisco Partners has a controlling 90% interest in the company, with Dundee Partners, Matt Pincus and Kobalt founder and chairman Willard Ahdritz also owning stakes in the company. Pincus sold his company SONGS and its valuable music publishing catalog to Kobalt back in 2017, which the company subsequently turned around and sold to Dundee Partners in 2021.
Before that sale, Kobalt sold another portfolio of music publishing assets to Hipgnosis Songs Fund in 2020. But under the Francisco Partners-led ownership, Kobalt once again began acquiring music assets with Morgan Stanley, including certain rights related to the catalogs of *NSYNC and AJR, as well as catalogs from songwriters who have written for various artists.
In its second incarnation after selling some of its assets to BMG in 2013, Primary Wave has emerged as a powerhouse buyer of music assets and owns the music rights to such artists Stevie Nicks, James Brown, Notorious B.I.G., Olivia Newton-John, Boyz II Men, Jackson Browne, John Mellencamp, Luther Vandross, Burt Bacharach, Alice Cooper and the Cars.
But it’s been dependent on other publishing administration platforms for its collections. Many of its music publishing acquisitions have been tied up in publishing administration deals. For assets where deals has been ending, if the songwriters agree, Primary Wave has been assigning them to be handled by the Universal Music Publishing Group, sources say.
If the deal to acquire Kobalt goes through, Primary Wave would not only have its own publishing administration platform, it would also own Kobalt’s AMRA, the global music collection organization that collects mechanical and performance royalties directly from digital services providers. This would thus cut out the fees paid to local collection societies and sub-publishers, improving profitability for Primary Wave’s music publishing assets.
Another possible benefit to Primary Wave is that it would acquire a stake in the music catalogs Kobalt has acquired since 2022. Kobalt said in 2023 it formed a partnership with Morgan Stanley Tactical Value to invest more than $700 million in music rights, with Kirkland & Ellis acting as advisor to Kobalt.
While Kobalt has been quiet about the acquisitions it made through that partnership, sources say it has been actively buying primarily publishing catalogs as well as some rights to master recordings. Sources suggest that its acquisition portfolio includes rights related to the catalogs of *NSYNC — which has accumulated in the U.S. nearly 32 million album consumption units in its career — and AJR, whose catalog so far has garnered nearly 5.4 million album consumption units.
Whatever rights Kobalt has acquired, these assets don’t appear to be covered by the consolidated financial results that Kobalt has filed to the U.K.’s Companies House. Sources say the joint venture acquisitions are highly leveraged. In the past, Kobalt has used an off balance-sheet approach to the music catalogs it has owned and may be doing so again.
Finally, Kobalt has created KOSIGN, which provides publishing administration services to independent artists and songwriters who often don’t have a way to collect publishing royalties on the plays their recorded masters receive. This is a growing area that could fuel further revenue growth for Kobalt as companies like Songtrust and Word Collections are competing in this growing D-I-Y sector.
Kobalt’s financials for the fiscal year ending June 30, 2025, are due to be filed at the U.K. Company House site by March 31, 2026. In the meantime, a look at its financials from the prior year ending June 30, 2024 shows that Kobalt lost $30.24 million on revenue of $794.4 million, versus the prior year when it had $13.1 million in profit on revenue of $522 million.
The main reason why the company went unprofitable in 2024 is that it’s administrative expenses almost doubled to $119 million from the prior year’s spending of $64.4 million, while its finance costs increased to $48 million from the prior year’s $27.2 million. However, sources say that Kobalt’s operating profit, when examined under U.S. accounting principles, is very strong, and that the company has become much more profitable in the last few years.
