Concord Music Acquisition Boosts Star Power For New Haven Firm

by Categorized: Consumer, Media, Wall Street Date:

For Brett D. Hellerman, CEO of Wood Creek Capital Management LLC in New Haven, buying one of the most prominent independent record companies is a coup for several reasons, not least a partnership with one of Hollywood’s revered legends.

Wood Creek’s purchase of Concord Music Group, based in Beverly Hills, a deal announced this week and expected to close soon, bolsters the $1 billion-plus investment firm’s niche in music and intellectual property. Concord’s recording roster is shimmering, with Sir Paul McCartney, Alison Kraus, James Taylor, Kenny G and many others; and its copyright and record catalog includes Tony Bennett, Ray Charles, John Coltrane, Ella Fitzgerald, Frank Sinatra and Creedence Clearwater Revival.

Paul McCartney at 2012 London Olympics opening ceremony. Reuters.

Paul McCartney at 2012 London Olympics opening ceremony. Reuters.

Huge names all, and the deal positions the investors in Wood Creek — a separately run affiliate of MassMutual — to profit from distribution channels that are helping to save a battered recording industry: Sirius, Spotify, Rhapsody, Pandora and, of course iTunes, which doubled its sales last year through global outreach.

And the deal, with a nondisclosed price reported by Variety and others to be more than $120 million, comes with Norman Lear, the 90-year-old TV and movie producer who changed American culture with “All in the Family” and other shows in the ’70s.  Lear, a former owner of Concord, has until now been co-chairman of the business, and will remain closely involved with the company.

Lear comes into the office nearly every day, an employee there told me.  Does that mean Hellerman is now Norman Lear’s boss?

Norman Lear, in 2009 Los Angeles Times photo

Norman Lear, in 2009 Los Angeles Times photo

“I’m not his boss, believe me. He’s a titanic figure in entertainment,” Hellerman said in a phone interview Thursday. “He’s agreed to remain on as chairman emeritus, it’s great for us, it provides continuity…I never thought that I would be in business with Norman Lear, and I’m very happy about it.”

Concord was founded in Concord, Cal. in 1973 by auto dealer and jazz enthusiast Carl Jefferson, who built the business for two decades.  In 1999, Lear and a partner bought Concord from a firm that had owned it for a few years.  They later moved it to Beverly Hills and bought Fantasy Inc., which included several record labels. They also devised a partnership with Starbucks that proved groundbreaking.

Concord merged ownership in 2008 with Village Roadshow Pictures Group, the independent film company, forming Village Roadshow Entertainment Group — the entity that sold Concord to Wood Creek, an asset management firm.

Hellerman is bullish on the industry that’s making a transition from the sale of physical records to a streaming- and cloud-based licensing model.

“If you own the copyrtight you don’t really care how it gets listened to,” Hellerman said. “You get paid….That’s why it’s called a penny busiuness, you’ve got to go pick up your pennies.”

The fast-moving developments with online and digital channels “are really showing what the future of the distribution is going to look like,” said Hellerman, a longtime manager and executive in alternative investments.

The record business grew sales last year for the first time in a decade, he said. “It’s been a near-death experience for a lot of record companies…At the same time, more people around the world are listening to more music for more hours than ever before.”

The music business, in short, is solving a vexing problem — how to generate revenues — that the news business is still struggling with, though the music industry it still has serious concerns about piracy.  Forward-thinking investment firms such as Wood Creek have probably helped, by making innovative arrangements for distribution.

Wood Creek is not new to the music business; it owns The Bicycle Music Co., with a catalog featuring Michael Jackson, Marvin Hamlisch, Alanis Morissette, Cyndi Lauper and many others, along with other entertainment assets.

“We’ve kind of pioneered institutional investments in intellectual property assets,” Hellerman said. “In a knowledge economy, intellectual property is infrastructure.”

Maybe so, but most railroads, factories and even consumer brands don’t have Hollywood star power.

In addition to being chairman emeritus, Lear is expected to acquire an interest in Concord.  The existing management of Concord, including CEO Glen Barros, will stay on, along with two entertainment executives that Wood Creek is sending, who have been affiliated with the New Haven firm.

“We’re very hands-on investors, we’re actively involved in the strategy of our businesses,” Hellerman said. “We’re not going to figure out which records Concord should be releasing but we’re involved in an appropriate manner given our ownership of the company.”

Lear’s comment, released by Concord, shows his effusive belief in the power of creativity.

“It has long been my contention that, when the world finds a solution to its global concerns, the door will have been kicked open by the arts, with music leading the way.  I congratulate Brett Hellerman and his team for joining Concord and its management in that understanding.”

We can imagine many productive, heated debates ensuing and probably a further consolidation of the music business.

Wood Creek was formed in 2005 with the partnership of MassMutual’s giant Babson Capital Management LLC and Norfolk Management Group LLC, headed by Hellerman.

Norfolk was named for its hometown in Connecticut, where Hellerman, speaking of railroads and infrastructure, owns the old train station.

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