Famed music entrepreneur Charles Koppelman is trying to get back into the business in a big way – teaming up with Goldman Sachs Group’s private-equity arm to bid on Warner/Chappell Music, The Post has learned.
Koppelman, the former chairman of EMI Records Group, North America, made a fortune in 1989 by selling his SBK Entertainment music publishing business to EMI for a hefty $337 million.
Now he’s trying for an encore performance.
Koppelman and his well- heeled partner, Goldman Sachs, have approached AOL Time Warner about a potential leveraged buyout of Warner/Chappell, the music-publishing arm of the Warner Music Group, according to sources familiar with the situation.
Koppelman, who would put up some of his own money alongside Goldman for the venture, would be in charge of leading a turnaround of the division, sources said.
The unit, which collects royalties for the sale, publication or performance of more than a million songs, could fetch $1 billion to $1.5 billion.
AOL’s talks with Koppelman and Goldman are taking place as the debt-laden media giant explores a plan to sell its music operations in pieces, rather than as a whole.
As The Post first reported, AOL is canvassing possible buyers for the music division’s three main businesses – the recorded-music operations, the music-publishing arm, and the DVD and CD manufacturing unit – as it searches for a way to ease its heavy debt load and avoid a downgrade in its credit rating.
AOL Chief Executive Dick Parsons said he hopes to raise $2 billion to $4 billion from asset sales to reduce the company’s $29 billion debt.
AOL is understood to be focused on selling the manufacturing arm, which could fetch as much as $1 billion, and it has not decided whether to sell the other units. But people close to the company’s thinking say that once the manufacturing unit is sold, Warner/Chappell will be next to go.
Meanwhile, Koppelman and Goldman aren’t the only suitors circling Warner/Chappell. Such major music companies as Sony Music and recording industry maven David Geffen have shown interest in the unit. Private-equity firms are also kicking the tires.
Koppelman could not be reached for comment, and a spokesperson for Goldman Sachs didn’t return calls by press time.
Koppelman – who has been in the record business for over three decades – has had success turning music into money. He founded his very first venture – a music publisher – with $10,000 of borrowed funds, then sold it three years later for $3 million.
But his real record-breaking deal took form in 1986, when he and his SBK Entertainment World Inc. partners, Martin Bandier and Stephen Swid, bought the 250,000-strong copy rights of the CBS Songs catalog at a fire sale price of merely $125 million.
SBK sold its music publishing interests three years later to EMI for a then-record $337 million price.
Koppelman was ousted from EMI in May 1997 following a corporate shake up, but he didn’t leave empty handed. Koppelman walked away from EMI with a cool $50 million severance package.
Goldman has been seeking investments in the media, entertainment and publishing arenas as it looks to put to work some of the $5.25 billion in capital it raised almost three years ago for its private equity fund, GS Capital Partners 2000.
Goldman’s move underscores a belief there are significant investment opportunities in the beaten-up music sector, which has been struggling with fierce competition, music piracy and plunging profits.
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Whole new act
Charles Koppelman, who influenced the careers of Frank Sinatra, Barbra Streisand and the Lovin’ Spoonful, is making a run at Warner/Chappell Music with Goldman Sachs.
His career highlights:
1970 – Heads Columbia Records’ music publishing business.
1975 – Forms the Entertainment Co. with builder Sam Lefrak.
1986 – Buys music-publishing unit of CBS Records for $125 million and renames it SBK Entertainment World.
1989 – Sells SBK to EMI for $337 million and takes reins of its music publishing business.
1993-97 – Heads EMI North America before being ousted – and given $50 million payout.
1998 – Partners with Prudential Securities to form CAK Universal Credit, which dreams up Bowie bonds, based on Bowie’s future royalties.
2000 – Tries to buy Ford Models as chairman of Magnum Sports & Entertainment.
2001 – Becomes chairman of shoe retailer Steve Madden while it’s embroiled in fraud case.