Hipgnosis founder Merck Mercuriadis is moving from CEO to the role of Chair at the Hipgnosis Song Management company. The change in role comes amid, and may well have been motivated by, the very public war of words between HSM and the Hipgnosis Songs Fund - or SONG - the London Stock Exchange listed entity, also founded by Mercuriadis, which owns numerous music rights and is advised by HSM.
According to an official statement, as HSM Chair, Mercuriadis will "continue to lead engagement with songwriters, artists and the music industry, generate opportunities to increase consumption and enhance the value of HSM’s client’s portfolios, lead acquisitions and advocate on behalf of songwriters, artists and HSM".
That is a pretty big to-do list and, we are told, Mercuriadis will continue to devote the majority of his time to the company. As he becomes Chair, he will be replaced as CEO by Ben Katovsky, who joined HSM from BMG in 2022 and is currently COO.
Katovsky will "assume responsibility for executive management of the business, implementing HSM’s strategy to build on the company’s position as the premiere platform for acquiring and managing song assets. He will ensure HSM delivers a high quality, value adding service to HSM’s clients and their shareholders".
The building tensions between HSM and SONG over the last year have been very public. Investors in SONG initially became vocal around concerns about the fund’s share price. As part of a plan to boost the share price, HSM proposed selling a number of SONG's catalogues to Hipgnosis Song Capital, a separate entity also advised by HSM, which is majority owned by funds managed and/or advised by private equity giant Blackstone.
That proposed deal proved controversial with SONG's investors, in part because HSM is also majority owned by Blackstone. Investors ultimately rejected the plan. The SONG board was then replaced and a strategic review of its operations, including its relationship with HSM, was announced.
The new board of SONG has since publicly criticised HSM a number of times, including over its role in the proposed sale of catalogues to HSC and in advising SONG on the value of its assets. There is also a dispute over a “call option” in the deal between SONG and HSM, which means that - if SONG terminates its contract with HSM - then that company has the right to acquire the portfolio of music rights owned by the fund.
It remains to be seen what the board of SONG makes of the change in roles for Mercuriadis and Katovsky. The official statement of the rejig also notes that, "as a matter of prudence, we have requested the board of Hipgnosis Songs Fund Ltd to approve the planned transition of Merck’s role".