WASHINGTON/LOS ANGELES (BLOOMBERG) – Taylor Swift's feud with her record label reveals a little-known fact about the entertainment business: the outsized role private equity plays in funding its biggest stars.
Swift asked Carlyle Group in a tweet on Thursday to help her as she battles to secure ownership of albums she recorded with her previous label.
The Washington-based buyout firm helped finance celebrity manager Scooter Braun's acquisition of Big Machine Label Group LLC.
Carlyle found itself in the middle of the spat because, along with alternative asset managers including TPG and Blackstone Group, it has extended its reach into show business in recent years.
The industry, known for acquiring staid corporations, has been taking stakes in everything from record producers to major talent agencies.
There's a lot for buyout firms to do in music as the industry recovers from decades of decline.
The value of song libraries has jumped in recent years, buoyed by major labels making acquisitions and private investors buying in, and spending on music has increased thanks to subscription streaming services like Spotify Technology SA.
Blackstone owns Sesac Holding and The Harry Fox Agency, two groups that disburse royalties, while TPG was an investor in Spotify.
One of the biggest deals last year was Sony's purchase of EMI Music Publishing for US$2 billion. The seller was a consortium led by Abu Dhabi's Mubadala Investment. The deal allowed Sony to get its hands on a catalog of 2.1 million songs from Beyonce, Carole King and other artists.
And firms are interested in entertainment far beyond music.
TPG owns a large stake in Creative Artists Agency LLC, the talent agency and show business packaging firm whose clients include Will Smith and Jennifer Aniston, and has also invested in Vice Media and STX Entertainment, the studio behind "Hustlers."
Silver Lake owns part of Endeavor Group Holdings, the parent company of talent agency WME and operator of the Ultimate Fighting Championship.
Blackstone, the world's biggest alternative asset manager, bought into the TV network YES, as well as Merlin Entertainment, the owner of Legoland. The latter deals point to the firm's interest in the events business.
"We're also a big fan around live entertainment because even though many things are moving online, people still need physical activities, things they want to do," Blackstone President Jon Gray said on an earnings call last month. Endeavor called off a planned initial public offering in September.
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