Reservoir Media Management is a new type of music publisher, launched in 2021 through the financial vehicle of a Special Purpose Acquisition Company (SPAC) on the NASDAQ. Reservoir has grown by acquiring legendary recording and music publishing catalogues such as Chrysalis Records, Shapiro Bernstein and Tommy Boy Records. The following blog post tells the story of how Reservoir became one of the largest music rights companies in the US, with a lot of acquisition capital at stake for further expansion.
Music as an Investment – part 6: Reservoir Media Management
In 2021, Reservoir Media Management was listed on the NASDAQ technology exchange in New York with the help of a SPAC. A SPAC, which stands for Special Purpose Acquisition Company, is a publicly traded company whose purpose is to raise capital for investments on the stock market. They are also known as “blank check companies” because they are listed for the sole purpose of using the investor capital raised to acquire or merge with another public or private company. Most SPACs are formed and floated within two years. If no suitable takeover candidate is found during this period, they are dissolved and the company’s assets are returned to the investors. The risk for investors is that they do not know in advance which company their money will be invested in – hence the blank cheque companies – and, of course, as a listed company, the SPAC is subject to the usual stock market fluctuations.[1]
In the case of Reservoir, it was Roth CH Acquisition II Co. that facilitated the 2021 IPO. At the time, Reservoir’s enterprise value was estimated at US $788 million,[2] which is mainly due to the aggressive rights acquisitions of the New York-based music publisher founded in 2007. Reservoir was established by Golnar Khosrowshahi, a trained pianist and former director of Silkroad, the non-profit organisation founded by star cellist Yo-Yo Ma.[3] Reservoir was originally part of the portfolio of Vancouver -based Persis Holdings, founded in 1981 by Golnar Khosrowshahi’s father, Hassan, after he fled revolutionary Iran. In the 1980s, Hassan Khosrowshahi founded Future Shop, Canada’s largest computer retailer, which was acquired by US electronics retailer Best Buy in 2001 for C $508 million.[4] The proceeds of the sale were used to establish the Persis family holding company, which has interests in property, pharmaceuticals and cosmetics, and food wholesaling.[5] Persis Holdings also provided the seed capital for Reservoir Media in 2007, which has since been managed by Golnar Khosrowshahi.
Reservoir initially operated as a traditional music publisher, growing rapidly through a number of publishing acquisitions. Highlights include the purchase of Chrysalis Records’ parent company Blue Raincoat Music in 2019, which suddenly added around 20,000 master rights to its catalogue,[6] and the acquisition of music publisher Shapiro Bernstein in May 2020, which saw 16,000 copyrights change hands, including songs by Michael Jackson, the Beatles, Frank Sinatra, Ella Fitzgerald, Bob Dylan and Elton John.[7] Finally, in June 2021, Tommy Boy Records, a major force in hip-hop and rap in the 1980s and 1990s, was purchased by Reservoir for US $100 million.[8]
At the time of the 2021 IPO, Reservoir is no longer a traditional music publisher, but a music rights exploitation company that has now invested billions of dollars in the acquisition of music catalogues to generate returns to satisfy investors. It is also worth noting that Reservoir Media Management is not backed by a large investment company that has provided the financial resources to build a valuable music catalogue. Instead, the Reservoir founder was able to rely on the support of her father’s Persis Holding in order to go public via a SPAC.
Other blog posts on “Music as an Investment”
Part 6: Reservoir Media Management
Part 7: Private Equity in the Music Rights Market
Part 8: An Explanation
Endnotes
[1] Investopedia, “What Is a Blank Check Company? How They Work, Risks, and Example”, September 29, 2021, accessed: 2024-01-17.
[2] Music Business Worldwide, “Reservoir to list on the NASDAQ via SPAC merger with $788m valuation”, April 14, 2021, accessed: 2024-01-17.
[3] Music Business Research Worldwide, “Golnar Khosrowshahi”, n.d., accessed: 2024-01-17.
[4] Wikipedia “Hassan Khosrowshahi”, n.d., accessed: 2024-01-17.
[5] Siehe https://persisholdings.com/investments/, Zugriff am 21.07.2023.
[6] Variety, “Reservoir Strikes Deal for Chrysalis Records, Blue Raincoat Music”, 29. August 2019, Zugriff am 21.07.2023.
[7] Music Business Research, “Reservoir acquires 16,000 copyrights by bringing Shapiro Bernstein into its portfolio”, 15. Mai 2020, Zugriff am 21.07.2023.
[8] Variety, “Reservoir Acquires Iconic Tommy Boy Music, Groundbreaking Hip-Hop Label, for $100 Million“, 4. Juni 2021, Zugriff am 21.07.2023.
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