Jun 7, 2024 4 min read

Warner hires new acquisitions chief to gobble up distros

Warner Music has been looking for a man in finance - and has got one, in the shape of spectacularly haired Michael Ryan-Southern, who will lead corporate development - including, maybe, trying to buy a distributor that isn’t Believe

Warner hires new acquisitions chief to gobble up distros

Warner Music is now looking for another music distribution company to buy, having failed in its bid to acquire Believe earlier this year. So if you happen to have a music distribution company sitting in the back of your cupboard, now might be the time to dust it off. The major has even hired itself a dashing banker to engineer a deal. 

Sources who have spoken to Billboard say that DIY distributors CD Baby and Distrokid are on the official consideration list. Both Universal Music and Sony Music previously backed away from offering basic digital distribution to any grassroots artist that wants it, and Warner - despite having invested in building its own platform a few years back - never really promoted the service. 

Meanwhile, the majors have recently been pushing changes that demote and demonetise grassroots artists on the streaming platforms. And those artists make up a decent portion of the client base of distributors like CD Baby and Distrokid. 

The banker hired by Warner to lead a proactive acquisition strategy is Michael Ryan-Southern, most recently Global Head Of Music & Live Entertainment Investment Banking at Goldman Sachs. Ryan-Southern will join the major in August as EVP Corporate Development, reporting directly into boss man Robert Kyncl

“The market is filled with opportunities, in both recorded music and music publishing, and across different geographies”, says Kyncl. “We’re bullish on the long-term value of music, and having someone with Michael’s domain expertise and wide-ranging network run point on mergers and acquisitions will supercharge our efforts”.

Ryan-Southern - or ‘MRS’ as he’s referred to in the official statement, in weirdly informal finance bro-ese - is “excited by Robert and the team’s vision for the company”. Warner's “entrepreneurial spirit and tech-forward approach make it a tremendously welcoming environment for both artistic creativity and business innovation”, he adds. 

Since becoming Warner Music CEO at the start of 2023, Kyncl has often talked up the value, for artists, of working with a major player that can use its market power to pursue and secure the best deals and opportunities in an always evolving music market. 

Though Warner is, of course, considerably smaller than main rivals Universal and Sony in terms of market share, so an aggressive acquisition strategy makes sense. With Sony Music boss Rob Stringer talking up his company’s own M&A ambitions in a recent session with investors, a strong M&A strategy is not only sensible for Warner, but something that may be essential for it to keep pace and maintain its market share.

The most recent big bid as part of that strategy, to acquire French distribution and artist services company Believe, was bombastic if ambitious. Warner went up against Believe founder Denis Ladegaillerie and his private equity backers, who had already announced a plan to take the Paris stock exchange listed company back into private ownership. 

Given the control Ladegaillerie and his backers have over Believe, a hostile takeover by Warner would always have been tricky, and - as CMU noted at the time - a Believe acquisition would have wiped out the major’s cash reserves. Plus a combination of Warner and Believe may also have raised regulatory issues in France because of competition concerns. Concerns that indie label trade group UPFI raised when the bid was still on the table. 

Ryan-Southern’s remit in his new job is to “identify and acquire companies and catalogues that can enhance Warner Music's growth and earnings”. In a recent investor call, Kyncl confirmed that growing Warner’s distribution and artist services business - currently mainly ADA - remains part of the plan, despite the Believe bid failing. 

Though, does that mean buying distribution businesses that mainly work with indie labels or a DIY distributor that sells services to self-releasing artists? The Believe deal would have brought with it a leading DIY distributor in the shape of Tunecore. Both CD Baby, currently owned by Downtown, and Distrokid are also big players in the DIY distribution space. 

The majors have been involved in DIY distribution in the past. For a time, Universal Music operated a service called Spinnup, which was also meant to be a talent scouting platform for the major’s A&R teams. But that was shut down in 2022. 

In 2021, Sony Music acquired AWAL, which was slightly different, in that artists had to go through an application process, though at times it worked with large numbers of grassroots artists. AWAL does still have an application form any artist can fill out, but it seems to mainly now work with more established acts. 

Warner also plotted a move into DIY distribution, building its own platform called Level, which it quietly launched in 2018. It also had a talent scouting element to it. Level is still operational but has never been particularly promoted by its major label owner. 

Buying CD Baby or Distrokid - if their current owners would consider a sale - would give Warner an immediate sizeable share of the DIY distribution market. There would be logic to such a deal, in terms of overall market share, especially in developing markets, as well as access to data and new talent. Although is DIY distribution where Warner wants to be a dominant player? 

Although Universal has led the charge, all three majors have played their role in pressuring the streaming services to downgrade music uploaded by grassroots artists who are crucial to the success of companies like Distrokid. Meanwhile, as the majors put more pressure on the streaming services to do a better job of tackling streaming fraud, the services pass most of that pressure onto the DIY distributors. Which isn’t necessarily pressure Warner wants to deal with. 

That said, when it comes to higher level distributors - working with more established artists or indie labels - Warner would probably need to undertake a number of smaller standalone acquisitions to boost its market share. Which is more hassle. But surely once super-charged by Ryan-Southern’s “domain expertise and wide-ranging network”, that'll be no problem for the mini-major.

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