#TheWeeklyRoundUp - 28.10.23

Hipgnosis vote shock: 83.2% of shareholders vote against continuation (Complete Music Update)

The result of today's Hipgnosis Songs Fund continuation vote has been announced - with a significant majority of shareholders voting against continuation and also voting to eject the company's chair Andrew Sutch.

The publicly listed Songs Fund has been under increased investor scrutiny in recent months as today's routine vote on whether to continue operating approached. Some shareholders have been very critical of the Fund's board and others have criticised Hipgnosis Song Management, the separate entity that advises the Fund and manages its catalogues.

A key concern has been the flagging share price. The board proposed addressing that by selling a stack of rights to the separate Blackstone-backed Hipgnosis Songs Capital and then using the profits of that sale to buy back shares and service the Fund's credit facility, in order to boost its share price. But then some investors weren't happy with the proposed Hipgnosis-to-Hipgnosis deal either.

Some other measures were then instigated to allay investor concerns. Two directors on the board announced that they would stand down, including Chair Andrew Sutch, who said he would leave the role as soon as a replacement was found and definitely before next year's Annual General Meeting.

Then last week a strategic review was announced. Though some more vocal shareholders continued to criticise the board and their advisors. And then yesterday it was announced two directors would actually stand down alongside Sutch, Andrew Wilkinson and Paul Burger.

83.2% of shareholders voted against the continuation of the Fund this morning and 71.5% voted against Sutch's reappointment, despite his commitment to ultimately stand down. As a result the planned vote on whether to approve the Hipgnosis-to-Hipgonsis deal did not happen.

The vote against continuation doesn't necessarily mean the Fund will be wound up, but it does force a "reset", with a new Chair to be appointed who will lead the already announced strategic review.

Commenting on all the latest developments, Merck Mercuriadis - founder of the Hipgnosis empire - said: "Today’s Hipgnosis Songs Fund AGM marks an opportunity to reset and focus on the future".

“Our conversations with shareholders have revealed a consensus that they are enthusiastic about the quality of the company’s iconic portfolio of songs", he goes on. "However, it is also clear that they are asking for change and we respect that feedback. Hipgnosis Song Management’s new management team and I have already started taking the relevant necessary action to meet the expectations of shareholders".

“Our commitment to the company’s shareholders remains absolute and we look forward to working with a new Chair and reconstituted board during this period to ensure that the Hipgnosis Songs Fund delivers for its shareholders. During this process, shareholders can be certain that Hipgnosis Song Management will continue to manage the songs with the greatest duty of care as always".

“Finally", he concluded, "I would like to thank Andrew Sutch, Andrew Wilkinson and Paul Burger for their important contributions to the company over the last almost six years".

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CISAC: Africa sees growth in music royalty collections but still behind globally (Music In Africa)

The International Confederation of Societies of Authors and Composers (CISAC) has released its Global Collections Report for 2022, which shows that global royalty collections for creators reached an all-time zenith of €12.1bn ($12.8bn), growing by a record 26.7% in what CISAC is calling “a full recovery from the pandemic.”

According to the report, all global regions and repertoires saw growth in 2022, with music collections, the largest segment, increasing a record 28% to €10.8bn – 21.4% up on 2019. CISAC also monitors collections in the audiovisual, visual arts, literature and drama repertoires.

Despite recording 10.4% growth, Africa’s global music contribution remains the lowest, with the region collecting €73m, or a 0.7% global share. This is a 0.1% decline compared to 2021 music collections on the continent.

Latin America registered the highest music growth at 64.9% and posted €550m or 5.1% of the global share, while Europe led the way with €5.54bn (+28.3%), followed by Canada/US (€2.95bn/+29.9%). Europe and Canada/US have a global collection share of 51.1% and 27.3% respectively.

In terms of countries’ music collection ranking, South Africa is in 30th position having collected €40m, or a 0.4% global share. No other African country appears in the top 50. Nigeria, arguably Africa’s biggest music industry, does not have a listed collective management organisation (CMO) under CISAC’s list of members. South Africa’s data are based on royalty collections by the Southern African Music Rights Organisation (SAMRO), the Composers, Authors and Publishers Association (CAPASSO) and the Dramatic, Artistic and Literary Rights Organisation (DALRO).

Overall, Africa creators’ collections grew by 10.1% in all repertoires, recovering from a pre-pandemic level of €76m as TV and radio remained the largest segment with 43.8% of the total. This was helped by increased income in South Africa from radio advertising revenues and commercial TV.

In 2021, all collections in Africa grew by 17.1% to reach €75m of which €69.7m was from music. Broadcast royalty income grew 11.5% to €33m, two-thirds of which came from South Africa. Zimbabwe registered an eight-fold increase, adding almost €2.5m to the total, while broadcast revenue in Cameroon grew four-fold due to back payments by users.

Live events and use of music by businesses makes up 22.6% of African collections, and grew by more than one-quarter in 2022. The largest contributors to this increase were Angola where revenues jumped five-fold as collections restarted, and Ivory Coast where a 23.2% increase in the live and background sector drove national growth of 2.7%.

Despite this annual growth, the regional total for live and background remains -4.3% below pre-pandemic levels. In South Africa, income grew by 5.5% in 2022 but remained nearly one-fifth down on 2019 with many businesses struggling to recover post-lockdown. While background music collections grew, local society SAMRO reported cinema and live event revenues falling by -94% and -67%, respectively, during the year.

South Africa, Ivory Coast and Morocco are the top three countries leading collections, posting €40m (6.6%), €7m (2.7%) and €6m (-8%), respectively. Visual arts in South Africa registered an impressive 786.1% growth. Compared to other countries, South Africa is the only African country appearing in the top 50 earners in all repertoires at No 31.