Sir Rod Stewart abandons talks to cash in on classic songs with public attack on bidder

Rod Stewart performs at the Platinum Jubilee - AP Photo/Alastair Grant, Pool
Rod Stewart performs at the Platinum Jubilee - AP Photo/Alastair Grant, Pool

Sir Rod Stewart has abandoned a deal to seal his 60-year career in music by selling his song catalogue after negotiations with a controversial industry mogul turned sour.

The 78-year-old singer has been in talks with Merck Mercuriadis’s investment firm Hipgnosis to join a long line of artists cashing in their musical legacy for a lump sum in recent years.

But after two years of discussions over the fate of rights to classic songs such as Maggie May and Da Ya Think I’m Sexy, Sir Rod has issued a public rebuke to Mr Mercuriadis, a veteran manager and divisive figure in the industry who casts himself as a friend to artists against the power of the major record labels.

Sir Rod said: “This catalogue represents my life’s work. And it became abundantly clear after much time and due diligence that this was not the right company to manage my song catalogue, career, or legacy.”

Industry insiders said talks had broken down as Sir Rod was unhappy with cuts to the price on offer following a downturn in the market.

Songs rights have emerged as a target for financial investors in recent years in a trend pioneered by Mr Mercuriadis and London-listed Hipgnosis, as rock-bottom interest rates prompted a hunt for better returns than available from more traditional assets such as bonds.

However soaring inflation and a scramble to raise interest rates to bring it under control has prompted questions over valuations.

Merck Mercuriadis - Eamonn M. McCormack/Getty Images)
Merck Mercuriadis - Eamonn M. McCormack/Getty Images)

The apparent failure of talks between Sir Rod and Hipgnosis is said to have been complicated by Mr Mercuriadis’s separate role in the singer’s management.

Sources close to Hipgnosis insisted talks were ongoing and a deal could still go ahead.

The former Faces frontman’s public criticism nevertheless comes as a blow to Hipgnosis, which has looked to capitalise on the surging value of song rights but is facing questions over its business model.

An industry source said: “Rod Stewart’s comments shed light on concerns that many of us in the music community have had for some time.

“An increasing number of artists are asking whether this is a business they can really trust with their legacy and investors are apprehensive too.”

Sir Rod is one of the most successful rock n roll artists of all time with more than 250m albums sold worldwide, including 10 No. 1 albums and 26 Top 10 singles in the UK.

The gravelly singer is also a model railway enthusiast, building a huge, intricate model of a US city over a period of 25 years.

He has said his concerts this year will be the last outings for his rock catalogue as he intends to focus on jazz in his old age.

A growing number of older artists have looked to cash out in recent years, driven by the boom in music rights thanks to the rise of streaming, as well as the collapse of live events during the pandemic.

Hipgnosis is one of the pioneers of the nascent sector, splashing out billions of pounds to build up a catalogue of more than 65,000 songs from artists including Justin Bieber, Britney Spears and Neil Young.

Other industry players have also got in on the act with escalating price tags. Sony bought Bruce Springsteen’s portfolio for an estimated $500m in 2021, while Universal is reportedly close to finalising a deal with Queen that would value the iconic rock band’s catalogue at more than $1bn.

Mr Mercuriadis, who has managed artists including Beyonce and Elton John, has touted his reputation as a friend to the stars, tapping Nile Rogers to serve on Hipgnosis’s advisory board.

The venture has proved lucrative for the music executive, who earns money through fees paid out to his family company, in addition to his salary and shareholding.

Merck Mercuriadis, a former music manager, has now taken his brazen dealmaking prowess to Los Angeles, splashing out $12 million on a newly revamped mansion
Merck Mercuriadis, a former music manager, has now taken his brazen dealmaking prowess to Los Angeles, splashing out $12 million on a newly revamped mansion

Last month, Mr Mercuriadis bought a $12m mansion in the Hollywood Hills boasting a cinema room, wine cellar and cocktail bar. He also owns a six-bedroom £3m home in Notting Hill and a property in Beverly Hills.

But Hipgnosis has come under scrutiny over the way it values its portfolio.

The Guernsey-headquartered company uses a third-party firm to rate its catalogue of songs through a so-called discount rate. However, this rate has remained stable for more than two years despite the recent surge in interest rates.

Hipgnosis has also built up a huge debt pile to fund its catalogue acquisitions. In November, it secured a new $700m revolving credit facility after maxing out its previous $600m debt package.

Meanwhile, Hipgnosis has seen its market value drop to below £1bn – less than half the £2.2bn valuation placed on its portfolio.

The steep discount means the fund, which counts the Church of England among its investors, risks an even greater discrepancy if it buys more song rights.

Instead, recent purchases have been made through Hipgnosis Songs Capital, an unlisted fund which was set up with $1bn of backing from private equity giant Blackstone in 2021.

Hipgnosis declined to comment.

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