Merck Mercuriadis will step down as chief executive officer of catalog investment advisor Hipgnosis Song Management, the company announced on Friday (Feb. 2). The executive, who spent years managing the careers of artists like Elton John, Beyoncé and Guns N’ Roses before launching Hipgnosis, will transition to a newly created chairman role and will continue to “lead engagement” with industry stakeholders on behalf of the business, it said.
Taking on the CEO role will be Ben Katovsky, HSM’s president and chief operating officer since joining the company in October 2022. He boasts almost two decades of experience in the music industry, most recently in a seven-year tenure as chief operating officer at BMG.
“One of our most important goals has been to bring an institutional rigor to Hipgnosis Song Management,” Mercuriadis said. “Over the last 16 months, Ben has done an amazing job building the team and HSM’s capabilities to deliver the best possible service to our clients and I’m certain this appointment makes us stronger.”
Added Katovsky, “I am proud to be asked to lead HSM through its next chapter, building on all Merck has achieved. In my time in the music industry I haven’t come across anyone who can match his rapport and relationships with songwriters and artists.”
Hipgnosis Song Management is the investment advisor for Hipgnosis Songs Fund, the publicly-listed royalty fund with a catalog that includes stakes in songs by Neil Young, Justin Bieber, Journey, Lindsey Buckingham, Blondie, Justin Timberlake and many other artists and writers. HSF capped a turbulent 2023 by lowering the value of its catalog following what new board chair Robert Naylor described to investors as a strained relationship with the Mercuriadis-led HSM over the catalog’s value.
A third Hipgnosis, Hipgnosis Songs Capital, is a joint venture between HSF and investment giant Blackstone. It is wrapped in a proposal to acquire 29 catalogs for $440 million to help the public fund reduce its debt and improve its share price.
In January, the public fund’s board of directors leveled several complaints against its namesake advisor, calling into question its ability to field competitive bids for its trove of assets. A main sticking point is the investment advisor’s call option — a right to purchase the company’s catalogs if its contract is terminated with less than 12 months’ notice, among other scenarios — which the board contends harms the fund’s ability to receive competitive bids.
The fund’s board wants to make the bidding process more attractive and on Jan. 18 announced a proposal to pay bidders a 20-million-pound ($25.4 million) fee to cover due diligence and acquisition costs when they pursue a purchase of HSFs assets. Shareholders will vote Feb. 7 on that proposal.
HSM said in its announcement that it has sought approval from the fund for the management transition.
In further comment, Katovsky praised HSM’s two clients — HSF and HSC — for their “vision, ambition and on-going commitment to grow music as an asset class through HSM,” and said he hoped to collaborate well with the fund’s board going forward.
“I particularly hope we will be able to work constructively with the Board of Hipgnosis Songs Fund Ltd, as I believe that HSM is best able to deliver value for their shareholders whether they decide the Company has a future as a long-term operation or wish to pursue the sale of assets following their strategic review,” he said.
Added Mercuriadis, “Having invested almost $3 billion on behalf of our clients in extraordinarily successful songs we are at an important juncture in our development where the services we provide to our clients are of paramount importance. Our commitment remains stronger than ever. We look forward to continuing our work with songwriters and the creative community to create the greatest possible opportunities from the iconic and culturally important Songs which we manage on behalf of HSM’s clients.”
