The Red Hot Chili Peppers are looking to sell their recorded masters catalog, with the iconic rock band seeking about $350 million for their collection of hit recordings.
The potential sale was reported by Billboard late Wednesday (February 19), citing sources. The catalog includes popular tracks such as Under The Bridge, Californication, Dani California and Give It Away.
The catalog reportedly generates an estimated $26 million in annual revenue, primarily from recordings released through Warner Music Group. The sale is said to include the band’s 13 studio albums and additional releases issued by WMG in the US.
While the status of the band’s first four EMI-released studio albums remains unclear, sources told Billboard that these rights may also be included in the offering, contributing about $1 million to annual revenue.
The report comes four years after the band was reported to have sold their music publishing rights to Hipgnosis Songs Fund for about $140 million to $150 million.
If the band achieves their asking price for the masters, their combined music asset sales would reach roughly $500 million, Billboard noted. Attorney Eric Greenspan from the law firm Myman Greenspan Fox Rosenberg Mobster Younger & Light, who handled the publishing deal in 2021, is reportedly managing the recorded music catalog sale.
Sources told Billboard that the final deal might land between $325 million and $340 million. Based on Billboard’s estimates, the catalog’s net label share (NLS) or gross profit is approximately $20 million annually, after deducting production, distribution, and other expenses. However, some non-strategic suitors report hearing figures closer to $15 million in NLS.
At the projected sale price, the deal would represent potentially 17 times NLS at $20 million annual profit, or 22-23 times at $15 million, according to the report. This valuation structure suggests the deal may be more attractive to major music companies rather than private equity firms.
While some sources told Billboard that WMG may be the leading buyer with a deal potentially already in place, other sources said negotiations are still ongoing.
The Red Hot Chili Peppers recently performed at the Kia Forum at the FireAid benefit show on January 30 for wildfire relief efforts in Los Angeles. The FireAid benefit concerts drew 50 million viewers, and with donations still pouring in, the campaign’s leaders say they expect to raise more than $100 million.
Music Business Worldwide