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Universal Music has struck a joint venture with one of Hollywood’s top agents, as the world’s largest record label seeks new ways to monetise its stars’ intellectual property.
UMG’s agreement with Patrick Whitesell, co-founder of talent agency WME, will have financial backing from private equity group Silver Lake.
“This is us coming together with Patrick’s experience and his networks and we’re going to bolt them together and we’re going to try and create something,” Sir Lucian Grainge, Universal Music chief executive, said in an interview.
Grainge cited “Abba Voyage” — the popular virtual concert residency — and the Mamma Mia musical as the types of ambitious projects he wants to replicate with this joint venture.
Many in UMG’s vast stable of artists — which includes Taylor Swift, Lady Gaga, Kendrick Lamar and Billie Eilish — have already struck deals to help sell perfume, clothing and beauty products. Other tie-ups include documentaries and museum installations.
But Whitesell and Grainge believe they can find more commercial opportunities, in part by exploiting UMG’s global reach, which spans 75 countries.
Silver Lake, which had been an investor in WME, gave Whitesell $250mn in March to invest in media companies. Whitesell will work with Egon Durban, Silver Lake’s chief executive. “Capital is not our issue,” Whitesell said. “We want to build sustainable business lines that don’t exist now.”
Grainge noted that UMG was an early investor in Beats by Dr Dre, the headphone company later acquired by Apple. He also cited the Gin & Juice drinks line launched by Dr Dre and Snoop Dogg. This new venture will help more artists to develop businesses, he said.
Grainge and Whitesell first discussed a partnership last year at the Milken Institute conference in Beverly Hills as Whitesell was contemplating his future beyond the WME talent agency he built with Ari Emanuel, which helped mould modern Hollywood.
“We started talking about the music business . . . What I had seen was, we would have artists who wanted to do a beauty brand or their version of Abba Voyage and they would have to go back to UMG because they had their [music] rights, or because they needed capital,” Whitesell said.
“Literally over months, we sat and got together and chatted about the capabilities and IP and properties they own, the artists they represent and we talked about well, if we could go into these three, four, five different areas, would that be impactful?”
The joint venture will hunt for opportunities for UMG’s music stars across “film, television, fashion, consumer products, branded experiences, and other emerging growth areas”, the companies said.
Whitesell and Emanuel founded WME in 1995 and built the company into a sprawling entertainment giant with clients like Martin Scorsese. But they stepped away in March, with Whitesell launching a new investment vehicle called WTSL.
Whitesell continues to work with a roster of A-list stars, including Hugh Jackman, Matt Damon and Michael B Jordan. In March, Whitesell invested $80mn in television producer Omaha Productions.
As the economics of the entertainment industry have shifted, talent agencies like WME, CAA and UTA have been working to help their clients find new ways to earn — including by launching tequila brands or lifestyle companies.
Whitesell said the new venture with UMG will not compete with other agencies in talent representation, but instead offer consulting services, capital and marketing to help develop new businesses for UMG artists and their IP. “The idea is not to be competitive with [the agencies] but to find solutions for [artists] that don’t exist,” he said.
Whitesell and UMG declined to say how much they were investing in the joint venture. “[Silver Lake] wants me, and in this case this joint venture, to bring as many opportunities as they can. The bigger cheques they can write, the better,” said Whitesell. “There is no budget . . . hopefully we’re going to apply a lot of capital.”
UMG shares have gained 14 per cent this year. The company last year made €1.2bn in net income from €11.8bn in revenue.
