Would You Buy Warner Now if you Could?

Between Warner and EMI on the selling block you’re about to see several billion more dollars injected into our supposedly diminishing industry.  An opportunity for anyone to make money with music in the next few months is upon us.


Moses Avalon

Do you know the best part of having integrity?  You don’t have to back-peddle when your hidden agenda is exposed.

While just about every tech-groupie blogger who predicted the demise of the major labels hides in an intellectual corner until they can find some other zeitgeist to glam onto, yours truly gets to kick back with a scotch in the “I told you so lounge.”  You know that place; it’s the one with all the smart people, who act on common sense and get richer by ignoring the guy preaching about the end of the world.  If you’re my reader (which if you’re reading this, you are) then you’re sitting in that lounge with me.  Pull up a chair, I’m gonna reward you with a tip to make some cash with your new-found confidence.

I often say, “half of being smart is knowing what you’re dumb at.” I didn’t write it, but whoever did was pretty smart.  I’ve used that philosophy in many ways to my advantage and investing is one of them.  I’m not on the short list of people who receive the memos with inside information about what stock is about to tank or split, but I know who those people are.  (So do you, if you read the news.) And we can follow what they do.  Do they make mistakes and is it wise to follow them—all the time?  I say, “yes” to both questions.  They do make mistakes, but it’s not very often and when they are right you stand to make a fortune.  That warrants the risk.

What does this have to do with music?

Simple.  Since the last quarter of 2010 over 50 companies have invested in the music business.  You won’t hear Techdirt or their elk report this, because the music biz haters refer to this new infusion as the “digital download bubble,” rather than the expanding and growing music space; implying that these investors are like Lemmings walking towards the cliff.  We’ll see.

So between Warner and EMI on the block you’re about to see several billion more dollars be injected into our supposedly diminishing industry.  Are all these investors foolish?  Do not one of them know how to read a blog?  Sure they do, but they know how to differentiate between angry musings of haters, from actual facts.

Case in point, an opportunity for anyone to make money with music in the next few months is upon us.  We are in a perfect storm of sorts. EMI, owner of the Beatles catalog, is about to fold.  Their assets will be parsed and sold to… whom?  We don’t yet know.  And in the other corner of our small universe we have Warner.  Brave Warner who after being kicked to the curb by their parent company, AOL, raised their own money (from more “dumb”  people) and rather than be chopped up (as the fate awaiting EMI) they said, nope, we’re too big to fail, we’ll be the world’s first Indie/major.

It worked for a while, until they realized that you can not pay your CEO, CFO, COO and President 200X what you’re paying your middle-management and maintain financial stability.  Eventually you squeeze too much juice from the lemon and the lemon dries up.

What do you do then? Refinance and start selling off shit you do not need.

Whoever ends up buying these EMI/Warner assets will know two things:

1) You do not need to pay a 50 year old with three kids in private school $3 million a year to run a damn record label. There is a 35 year old with no kids who will do it for $300K.

2) The catalogs, although a diminishing asset, are still worth three times what they are paying for it over the ten so years they plan to own it.


EMI is not public, so you can not get involved, but, at about $6 a share just about anyone can afford to buy a few shares of Warner stock.  Trends show that when a company is in the news– even if it’s bad news– the stock goes up.  Trends show that mergers tend to raise the price of stock. Add to all that the amazing value that is the Warner/EMI catalog and you get a serious perfect–storm-favorite in this horse race.

I’m getting in this race while it’s still cheap.  If you do too, I’ll see you at the finish line and we can go hang in the “I told you so” lounge, a fat cigar and laugh while we read Techdirt out loud.

Mo out.

15 responses to “Would You Buy Warner Now if you Could?”

  1. Moses Avalon says:

    Hi Moses,

    If I had the means, I’d buy Warner! Licensing and other new media applications is a gold mine. If the old dogs would get their head out of the proverbial antiquated sand, they’d realize that. — Brent Harvey

  2. Randy Coplin says:

    dear moses,
        i hope whoever buys EMI/warner will make it as you said, less top heavy. put more money into artist development. be in it with these artists for the long run. we’lll see better music.

  3. John Brodey says:

    Well, there is an opportunity but not in buying WB or EMI.  It can be considered new billions only if it is profit on top of the price the current owners paid.  But unless you have different info, they appear to be appropriately devalued.  If you paid $5 for something and sell it for $3, you don’t actually have an injection of new cash or a robust business.  Fair market value is what someone is willing to pay for something.

  4. Jef Jaisun says:

    “…at about $6 a share just about anyone can afford to buy a few shares of Warner stock.  Trends show that when a company is in the news– even if it’s bad news– the stock goes up.”

    Uh, yeah. That’s what I thought, too, when I bought WAMU at $3.98. Who knew the “merger” was going to be the FED closing it down and handing it off to Chase for nothing?

    Like Lightnin’ Hopkins used to say, “Ain’t no harm in gamblin’, long as you don’t lose.” And you can take dat to da bank.

    Jef Jaisun

  5. Peter Headley says:

    Hi,always great to be participate in your offerings,having access to your timely advice has help me to keep my music clients working consistenly for the past 4 years,thanks and i am getting in to the Emi/Warner bed.

  6. Dalton Priddy says:

    Maybe they should consider having the creative content holders both present and future own it as an employee owned entity. Just a thought to consider.

  7. 50 + says:

    Hey Moses,

    Just like to say that there are a few of us 50+ year olds who have a passion for the music biz and qualitifcations who would do it for 300K… kids are off and on their own now… Just sayin…:-)

  8. Moses Avalon says:

    If you reprint in the comments please remove my name and email…

    You say:
    “1) You do not need to pay a 50 year old with three kids in private school $3 million a year to run a damn record label. There is a 35 year old with no kids who will do it for $300K.”

    Come on Moses!!! I anxiously await your emailings as I find you to be very bright and to have great insights into this industry.

    Why oh why would one of the front runners for Warners be Len Blavatnik? The only reason he is in the running is because he and Edgar are completely enamored with each other. Edgar sold Len his town house for 11x what Edgar paid. Why would anyone pay that much (making it the 2nd highest price paid for a residence in NYC HISTORY!!!!!) Except to maybe bolster a friends finances.

    The old reason Russian Len is in the bidding process is to attempt to take ownership and keep things EXACTLY AS THEY ARE meaning Lyor on (at 3.5 million a year w a 3 million bonus that he reaps every year despite LOSING MORE AND MORE $$$ each year) and to keep JR enjoying his 1 Million + 3 Million bonus.

    Even if things don’t go down this way I predict Edgar and Len (upon losing WMG) will take their profits, round up more of Lenny’s Billionaire Russian friends and buy EMI and promptly move the entire WMG Exec staff over to EMI on exactly the same salary + bonus plans they are currently on (or maybe even better than they are currently on).

    The whole thing is absolutely disgusting and the definition of scumbaggery!!!

  9. Jeff says:

    Hey Mo,

    I’m a 51 year old lifelong music lover and businessman, with 2 of my 3 kids on their own, who would gladly run a label for $300K. I’d even settle for a fraction of the bonus mentioned elsewhere.

    Where do I send my resume? (Fat chance, right?)


  10. Kevin says:

    Two questions:
    1) Can you the details as to how you are determining the value of the catelogs? You said they are worth 3times more. Also, with everyone stealing music, I’d think the income stream is going to be less and less. Of course if someone invents a solid way to stop the steeling or a new model,then it could be worth more.
    2) The comment about a 35 yr. old CEO would take less money. So, why hasn’t that happened? It would be an easy way to cut costs. With all the laid off music execs., there has to be someone that would take $300K or something a lot less than a million/year or more. Thanks!

    • Moses Avalon says:

      @Kevin. Well, as to #1: I don’t see myself publishing that kind of analysis, which is somewhat anecdotal anyway, on my blog.
      The answer to 2) is… nepotism.

  11. tom says:

    Where can we purchase stock for wb

  12. Ted Myers says:

    Yo Mo,
    Ted here. Been unemployed from Concord for the last 8 months or so. How come you keep referring to the music industry as “supposedly diminishing?”  Can there be any doubt that – at least on the record label side – it has diminished by, like, 50% in the last few years? C’mon!  I’m living proof.

    • Moses says:

      @Ted. Yes, I’ve head this before: the music business MUST be shrinking b/c I’m out of work. I’s true: labels have re-tooled their staff to comply with the digital age. That means getting rid of the positions that are obsolete (or are staffed with veterans who cost too much) and hiring people with a skill-set that confronts the new challenges.

      For every A&R person making six figures who was fired the labels are also hiring a few new social media people for under 70K a year.

      It’s a shame that people who want to make the “shrinking business” argument do not take the time to do an actual survey or read imperial data on it’s size. Pollster provides much of this information in their annual report for about ($50)

      Also, as you correctly state, the record biz is only one facet of the music industry. A facet that is redefining itself. For example, what if Apple started their own label? Then, suddenly everyone who worked in the record division would now be adding to the stats, thus increasing the “size of the music business.”

      This dynamic is happening everywhere, as companies start “labels” and expand the biz.

      But… If you want to think in old terms and define the music biz as essentially three larg distributors, then yes, I gues you have a point, the business is “shrinking.”

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