In February, Billboard broke the news that Primary Wave was nearing a historic deal to acquire Kobalt, arguably the world’s largest independent frontline publisher. Together, it was estimated that the newly combined company would be worth a staggering $7 billion in assets.
By July, the deal finally closed. But given that no one from the two companies had yet spoken to the press, major questions remained about how this new arrangement would operate in practice. All that was disclosed at the time was that Kobalt would operate independently of Primary Wave, one of the largest owners of iconic music catalogs in the industry, with a roster spanning from Whitney Houston to Stevie Nicks to Bob Marley to Prince.
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But would Primary Wave move all of its catalogs to Kobalt? Did the deal include assets from Kobalt’s $700m catalog fund with Morgan Stanley? And how do Kobalt’s other verticals fit into the picture? The independent publisher is also home to AMRA, a global digital rights collection service that aims to speed up royalty collection and cut out middlemen outside of the U.S., and Kosign, its digital-first publishing service for middle-class songwriters who are not ready to sign a traditional deal.
News of the acquisition also came at a time of seismic change in the music industry. Universal Music Group’s Virgin division was finalizing its acquisition of Downtown Music Holdings and BMG was moving toward its purchase of Concord, reshaping the state of independent music in a matter of months.
To explain Primary Wave and Kobalt’s new deal for the first time and why all of this consolidation is happening now, Primary Wave founder/CEO Larry Mestel and Kobalt CEO Laurent Hubert joined Billboard’s music business podcast, On the Record.
To watch this episode of Billboard On the Record, check out the YouTube video below or click here for more viewing and listening options. An edited and condensed excerpt of the conversation can also be found below.
When did you guys start discussing this deal?
Hubert: I think the beginning of the conversation was some time in the summer of 2025. I think the first conversation was not a direct conversation with me but with another party at a particular dinner.
Mestel: I remember that dinner, and Primary Wave has historically been administration-agnostic. We’re into the value creation business, not the administration business. So we’ve always used Kobalt or Universal or some other administrators instead of creating our own internal administration platform.
The dinner Laurent was speaking about was a dinner that I believe Goldman Sachs had organized. I remember at that dinner, Jenny Kim, who is head of music now at Goldman, came up to me and said, “Have you considered Kobalt as an acquisition and as a partner?” And I said, “Well, we’re administration-agnostic, but I’ve known Laurent forever. Culturally, I think we’re very similar companies.” She said, “Well, you’re going to consider it because I’m bringing you the deal.” And so I said, “Great, let’s consider it.”
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At the end of the day, it made a lot of sense for us because you could never have on your team too many great managers, and Laurent’s team are fantastic managers. We saw some jewels inside of Kobalt, not just the administration platform, which is really fantastic, but divisions like AMRA and Kosign, too.
Why not do administration in-house at Primary Wave?
Mestel: For us, the focus has always been on marketing, on branding, on creating content, doing Broadway, doing movies, doing immersive experiences, creating cosmetic lines, you know, gaming, etc. So there’s a real core competency to that, and it’s very hard for other companies that are competitors to recreate what we recreate. To build an administration platform takes a significant amount of capital and takes a significant amount of effort. And we always viewed it as a commodity, where there were a lot of industry players that did administration, but not many — in fact, I can’t even name any — that does really great marketing and value creation. So we’ve always stayed away from the administration side of the business because we could always rent it at relatively insignificant cost.
You’ve said before that Kobalt is going to stand on its own, but you guys have complementary strengths. Where are the two companies going to work together?
Hubert: I have to credit Larry for the vision for the business because initially, when we first talked, I understood the interest, but I did not fully understand the vision. And then I think Larry explained that very clearly, saying, “Hey, we understand Kobalt. We understand what it means in the market and that it’s a destination today.” He says also he built a destination — which I think is very unique — and we create value differently. You know, for Primary Wave, it’s really about how do you create engagement on the properties that they acquired, and for us, it’s how do we unlock greater value from a collection perspective.
From that perspective, we saw a direct opportunity, and some of it will be that we will cross some functionality that we have, and we’ll compound those benefits without talking about merger or integration. That was also interesting for us from a management perspective because we felt we didn’t have to go through an education process about Kobalt. We don’t have to be disrupted day one. We could keep going and do what we do the best we can do.
Larry, you mentioned that there were some jewels within Kobalt that you were super interested in. You mentioned AMRA, and it’s interesting because I’ve heard similar phrasing back when Francisco Partners purchased Kobalt in 2022. They called AMRA an “unpolished gem.” So I’m curious why you think it’s a gem as well?
Mestel: Those that aren’t using AMRA are going local. How long does it take for you to collect your money? Eight months, 12 months, 15 months. AMRA is going direct, and it’s very hard to recreate AMRA because of the history of AMRA and the licenses that they’ve put in place. So, it’s touching your money sooner, and there are less people with their hands in your pocket. It’s really that simple. I think the more people discover AMRA, the more people are going to want to use AMRA. We have $7.5 billion worth of assets now within Primary Wave. We’re going to be putting as much of our repertoire through AMRA as we possibly can.
Larry, do you plan to switch all the Primary Wave catalogs over to do publishing admin through Kobalt now as well?
Mestel: It’s a great question. No.
Why?
Mestel: We have some great partners around the world, and I’ll name two: Kobalt and Universal. We give Universal quite a bit of our administration worldwide. They are an excellent administration organization. We have a great relationship with Jody [Gerson, CEO of UMPG] and Mark [Cimino, COO of UMPG] and David [Kokakis, chief counsel of UMPG] and the team there. Kobalt will be getting much more of Primary Wave repertoire than it has gotten in the past, but we won’t be taking anything away that we’ve given Universal, and we’ll continue to give Universal more work in the future because they’ve done a great job.
I guess you also can’t just stop in the middle of an administration agreement with another company, like UMPG, just because you bought Kobalt this year.
Mestel: We have very short-term deals, but we’re not going to do that. The reason is that when you do short-term deals, you keep partners engaged. If you put up a long-term deal, maybe there’s less incentive. So I like to do month-to-month, quarter-to-quarter, year-to-year. I don’t like much more than year-to-year.
We are very well capitalized, and the fact that we’re very well-capitalized means we don’t need advances because when you take advances, that means you lower your margin. I’d rather have a much higher margin, no advance.
Luminate CEO Rob Jonas recently came on this podcast and revealed that now 150,000 songs are being uploaded to streaming services every day. With the sheer volume of music now, how has that changed your approach?
Mestel: I think that’s much more relevant for Laurent than it is for me because we are in the icon and legend business. We’re buying only the greatest of the great.
Hubert: Frankly, in the past 10-15 years, the way we manage publishing has totally transformed. We went from an ownership to a consumption model. Obviously, we went from a few hundred income sources to literally thousands of income sources.
We also have seen fragmentation of copyright. It’s not uncommon to see five, seven writers on a song, and you have fragmentation of consumption. So if you look at those factors, it has compounded volume in [many] ways, and the challenge with volume is you need to manage that with great velocity because we have to account every quarter. [Just] because you have more to manage [doesn’t mean] that you can delay your accounting period, obviously. Plus, you also have [more] challenges with accuracy. Our job as we build the infrastructure — it’s a continuous exercise — is, how do we manage this?
I’ve often had a conversation with my CTO: How do we manage [Amazon Web Services] cost? All of it is in the cloud. You have volume growing at 30%-40% a year, and you have your cost of AWS growing at 10%-12% a year, and we have to manage the business. You have to find ways to, again, optimally manage that ecosystem without affecting velocity. It’s frankly a job of every day. It really is. It’s a natural tension in the business.
So, are publishers spending more than ever to try to collect all these royalties all over the world?
Hubert: We are. The challenge is that the value of that micro license or micro transaction is so small that you have to do it cost-effectively; otherwise you’d be losing money [to collect it]. Technology is obviously a major aspect of what we do. AI is, of course, but it’s not only AI — it’s about building infrastructure that can handle the volume. It’s a challenge. This is a topic that we talk about almost every day.
Kobalt announced a $700 million fund in 2023 to buy music catalogs. Is that part of this deal, or do you retain that at Kobalt?
Hubert: We retain [it], and that’s a conversation that I had [with Larry] because we have a different IP strategy and we deploy on different type of copyrights. For us, the idea here was to provide an additional service to our clients, and we provided all the services under a lending situation. But if people needed a capital event, we wanted to be able to say yes, we can do that for you as well. We created a fund in ’11 and a second fund in ’16. We created that fund in 2023, and we’ve been deploying the capital, obviously, not only on clients that we have because we know them and they come to us, but we’re also buying third-party copyrights.
Mestel: We turn down many more deals than we do, and so Laurent’s team is participating in our deal meetings. When there’s a deal that we’re reviewing that isn’t right for Primary Wave, we’re turning it over to Kobalt [now].
Larry, I think one of the most interesting things Primary Wave has done from a marketing perspective is the Whitney Houston slot machines in Las Vegas. How are those going? Are they a success?
Mestel: It has been a giant success for us. We started this in 2024, and we budgeted 200 machines a year. Now, we’ve done over 500 a year. We just renewed the deal with [slot machine manufacturer] IGT. We are having great success, but how do you measure success? Well, you can measure success on shipping machines and shipping more than your budget, but the real measure is that we’re making more money for the estate of Whitney Houston, which we own 50% of, [on slot machines] than the entire estate was generating six and a half years ago when we bought into the estate on that one deal.
Larry, you often talk about how you guys partner with the estates when you do these deals, but I know estates can be really sensitive about certain brand partnerships. Like, anything that involves sex, alcohol or even gambling. What was that conversation like with the Houston estate to decide that this was right for her legacy?
Mestel: It was easy. Whitney loved to play slot machines. It was very organic. We will not do a brand deal, a marketing deal, any type of brand alliance, movie, anything unless the artist estate 100% signs off and says yes.
Willard Ahdritz, founder of Kobalt, is stepping away from his role as chairman as part of this deal. Who is now filling that role?
Hubert: Larry.
Mestel: The reality is there’s only one person that matters, which is the CEO, which is Laurent. We were clear with each other day one that the reason why Primary Wave was doing this, a big chunk of the reason, was the management team in Laurent and Kobalt. It is an entrepreneurial company. Laurent runs it with very little interference at all from Primary Wave. We talk a couple times a week, so we’re very active on what we’re doing together. Kobalt is and will remain a separate entrepreneurially-run company.
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Both Primary Wave and Kobalt have active funds to buy more catalogs. Kobalt’s is a $700 million fund, announced in 2023 with Morgan Stanley, and Primary Wave’s is a $2.2 billion fund with Brookfield, announced in the spring. How much of these funds have you both deployed so far?
Mestel: We are way ahead of schedule. We’ve deployed almost 60% of our most current fund, which we only closed back in April of this year. There have been some very, very large-scale deals, and our pipeline is pretty significant. So we anticipate being probably 75% invested at the end of the year and fully invested the first quarter of next year. We have many pools of capital. We have a permanent evergreen fund with Brookfield. Brookfield put $2 billion on [the] primary balance sheet four and a half years ago, whenever that was, 2022, and we have a lot of surprises.
Hubert: We’ve deployed about half a billion dollars of the $700 million, and we intend to spend the [remainder] of that $200 million going forward. So there will be a new fund [soon] … [Primary Wave and Kobalt] don’t go after the same targets at all. We typically buy more recent vintages. We buy copyrights where we have high incentives of digital royalties because we want to take advantage of the AMRA capabilities.
2026 has been a year full of major music business acquisitions. UMG’s Virgin Music Group acquired Downtown, BMG bought Concord and Primary Wave acquired Kobalt. On a macro scale, why do you think these acquisitions and this consolidation is happening now?
Mestel: I think you can see a lot more. I think as interest rates go up, I think you will see a lot of our competitors that are financially driven looking to sell. Primary Wave, by the way, has no debt, so we’re generating significant returns without that because of the alpha we’re creating as we market. A lot of our competitors are highly leveraged, so they’re taking very safe assets that generate cash flow every single day that would normally go back out into acquisition, or go back out in the form of dividends to investors. These companies are paying interest to banks, and as interest rates go up and they have to refinance their significant debt, they’re going to have a hard time. I don’t name competitors, but you’re going to see a lot of people that are going to be selling, I think, over the course of the next two and three years. So you’ll see a lot more consolidation, and that’s great for companies like Kobalt and Primary Wave, especially ones that are very well capitalized and have almost no debt.
But is it better for artists and songwriters?
Mestel: Well, it’s better if you’re with a company that has an infrastructure to create content for them and to actually market [their music]. Is it any good when an artist is acquired by a private equity firm? Probably not, because the first thing on their mind isn’t legacy protection, and it’s not turning a hit song that was a hit 30 years ago into a hit song again. It’s, how are they going to extract as much cash out of the asset as they possibly can, and then likely flip it? So yeah, I think it’s very good if the artist is being acquired by a company that has the ability to do something.
