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The Who sell out

by Matt Miller | Published January 25, 2012 at 9:07 AM

Spirit Music Group, a private equity-owned independent music publisher, is acquiring the music catalog of legendary rocker Peter Townshend for an undisclosed amount.

Townshend, the guitarist and principal songwriter of The Who, is selling his interest in the copyright to approximately 350 tunes, including such rock anthems "Baba O'Riley," "Pinball Wizard" and "Won't Get Fooled Again."

As part of the deal, Townshend signed a multiyear consultancy agreement to work with Spirit on better leveraging the assets.

Pegasus Capital Advisors LP of New York and Cos Cob, Conn., bought Spirit Music in April 2009, also for an undisclosed amount. (Spirit management headed by president and CEO Mark Fried kept a small interest in the company.)

According to Pegasus partner Drew Tarlow, the Townshend catalog marks the biggest acquisition to date, although it has made two other important purchases: an interest in some of the songs by the group Chicago and the 300-plus song catalog of Marilyn and Alan Bergman, best known for many Barbra Streisand hits.

While the music business as a whole remains unsettled, publishing provides a bit of stability since the rights and the payments are well-defined and fairly steady. That's meant a fair amount of deal activity over the past few years.

"Music publishing isn't a very exciting business, but from a financial point of view, it's very interesting," said Tarlow.

Spirit Music, based in New York, owned the publishing copyright to roughly 15,000 titles before the Townshend deal, which puts the group in the middle ranks of independent publishers, but way behind the majors -- Universal Music Group, EMI Group plc, Warner/Chappell Music Inc. and Sony/ATV Music Publishing -- and leading independent publishers Imagem Music and BMG Rights Management.

Last September, BMG Rights Management, which is owned in part by Kohlberg Kravis Roberts & Co. LP, bought the large independent publisher Bug Music Inc. for what analysts believe was close to $300 million.

Tarlow said that Pegasus acquired Spirit Music with the idea that it would become a platform for "adding high quality assets."

"This is one in a series of transactions," added David Cunningham, another partner at Pegasus. "There will be a lot more to come."

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The Who sell out

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