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SESAC, the Nashville based performance rights organization, is for sale. Investment bank Allen & Co. and hedge fund Och-Ziff have hired Goldman Sachs to attempt to sell the organization for $500 million.
SESAC collects public performance royalties for numerous songwriters and music publishers. Its roster includes artists such as Bob Dylan, Mumford and Sons, and Lady Antebellum. SESAC exists as a for-profit organization, setting itself apart from larger nonprofit competitors BMI and ASCAP. The organization earns about $50 million per year before taxes, interest, depreciation, and amortization.
Recently, Warner Music has expressed an interest in the firm, creating a serious issue. If sold to a major music company, SESAC will lose its independence, allowing for record labels to possibly take in greater revenues at the expense of the organization’s songwriters. Lisbeth Barron, managing director at investment bank Berenson & Co., explains, “it is more challenging to sell to a large recorded music company because of the concern of losing the ‘Switzerland’ status.”