Warner Music buys German merchandise retailer EMP for $180m
World’s third largest record company seals its largest takeover in five years
Warner Music has acquired EMP Merchandising, the German retailer that sells T-shirts featuring rock bands like Nirvana, in its largest takeover in five years.
Sycamore Partners, the private equity group that has bought struggling retailers like Staples, agreed to sell EMP for $180m, according to people close to the deal.
Warner, the third largest record company and home to artists including Ed Sheeran, has made a string of deals in the past year as music revenues soared and streaming services like Spotify have grown. The company has aimed to diversify its business beyond selling music, as merchandising and touring account for a bigger slice of artists’ income in the streaming era.
EMP, founded in 1986 as a mail order music store, sells merchandise from bands including Pink Floyd, Metallica and AC/DC.
As album sales shrink, artists have piled into merchandise as the primary physical purchase for music fans. Merchandise is “a big part of how music has visible and physical impact”, said Max Lousada, Warner’s chief executive for recorded music.
Previously a smaller part of a musician’s income, merchandise sales have surged in recent years, bringing in millions for the biggest stars. In its most recent tour, US rock band Panic! At the Disco made 30 per cent of its profits from merchandise, according to a Rolling Stone report, while Kanye West claims to have sold $780,000 of merchandise at a single New York concert.
Globally, music merchandise revenues grew 9.4 per cent to $3.1bn in 2016, according to the Licensing Industry Merchandisers’ Association.
Warner, owned by billionaire Len Blavatnik’s Access Industries, has been in dealmaking mode under Mr Lousada, who was promoted to the company’s top creative job last year after running the UK business.
A year ago Warner bought Dutch dance label Spinnin’ Records for more than $100m. Other deals have looked to broaden the label’s scope beyond recorded music. Warner last month bought Uproxx, the pop-culture website, and earlier this year acquired Sodatone, a machine learning start-up, in a bid to use data to find new artists.
Warner made $1.92bn in revenues in the first half of 2018, up 10 per cent from a year ago, amid an industry-wide recovery.