The team behind Hipgnosis Songs Fund has joined forces with a British media executive to emulate the lucrative music rights market by moving into film and television, with a venture they claim could eventually be worth more than £1 billion.
Easttree Media, which is backed by BlackRock, has so far raised $300 million to invest in the participation rights of actors, writers and other rights holders, with an ambition of building up a library diversified by genre and vintage that is capable of creating a steady, long-term income stream for investors.
The investment company has attracted interest from some of North America’s largest pension funds, which have directly allocated capital via BlackRock. About $100 million has been deployed since June in deals averaging between $20 million and $30 million.
The company, which was launched at the end of last year, was born after Chris Helm, the former finance chief at Hipgnosis, struck up a conversation with Marc Allen, a British TV and film executive, in the immigration queue at LAX Airport.
“The outcome of that conversation was, could we do in film and TV what has been done in music?” Allen, who has worked in the film and TV industry in Britain and Los Angeles for the past 20 years, said.
Markku Lonnqvist, previously chief investment officer at Hipgnosis Songs Management, the investment adviser to the formerly London-listed fund, also came on board. Easttree has also hired Alison Cornwell, a former Disney executive, as its finance chief.
Buying up song rights has become an increasingly mainstream asset class, using royalties, such as from radio, streaming and performances, to generate income for investors. It has attracted billions in capital from some of America’s largest private equity firms, after Hipgnosis — founded by the music executive Merck Mercuriadis — blazed an early, if tumultuous, trail, by buying up the rights to songs from Neil Young, the Red Hot Chili Peppers and Shakira.
Merck Mercuriadis’s Hipgnosis started off by buying rights to songs by the likes of the Red Hot Chili Peppers, below
MIKE TRAN/BILLBOARD/GETTY IMAGES
Easttree is attempting to establish film and TV income rights as an asset class that can break through in the same way.
The team behind Easttree think that it could be as big as Hipgnosis, the FTSE 250 fund that was sold in 2024 for $1.6 billion to Blackstone, the private equity firm. “That’s probably easily where we’re going to be in three or four years’ time,” Lonnqvist said.
Easttree has said that it courted only the largest institutional investors for backing, including KKR and Oaktree Capital Management, the American investment firms. “We strongly felt that there is a real need for this product and a real scale,” Lonnqvist said.
The novelty of film and TV rights was said to have helped to secure early interest from major institutional investors when it began pitching for investment in 2023, as the market for buying up music catalogues became more crowded. Helm said: “In music, at the time when we saw BlackRock, it was relatively saturated, and this was just a unique proposition.”
The founding team sees a path to eventually floating the venture on the public market. “Yeah, of course. I think everything is possible,” Lonnqvist said, although he said it would not be floated as an investment trust.
Unlike the institutions rushing to purchase catalogues of music, Easttree does not acquire copyright or attempt to “sweat” the rights it acquires by, for example, licensing content to major streamers or other platforms, describing itself as “completely passive”. Instead it is buying the share of profits that actors, writers or producers earn when their work continues to be shown and resold. The average age of the interests acquired so far is about 15 years, in line with its preference for “evergreen” content that has a proven record.
Two standout deals have been completed so far, and those in Easttree’s portfolio have won 22 Primetime Emmy Awards and two Golden Globes, though the company insists that discretion — particularly in the early days — is key.
Nate Bargatze hosts last year’s Emmys
CHRISTOPHER POLK/VARIETY/GETTY IMAGES
At the heart of the business is the “black box” the team has developed to value film and television shows and how the income generated might perform over time.
Getting the information to feed in has been no easy task, reliant on accumulating the income statements from a multitude of production studios. “It’s not transactional like [music] streams and downloads,” Helm said, pointing towards the huge level of income now generated by licensing content to streamers and traditional television channels.
Having roots outside Hollywood is both a help and a hindrance, according to the founders. Allen said: “It helps because we are a different voice, we are coming in fresh. It hinders because it’s a busy town and you never have a bad meeting in Hollywood. And once you’ve left the meeting, that person’s got ten more.”
• How FTSE 100 fund manager M&G engineered a smash-hit song
For now the market is scarcely populated. Shamrock, the former Disney family office, and Domain Capital, an investment manager based in Georgia, in the US, are two firms that also invest in TV and film residuals, as well as a range of other assets. Easttree is the only pure-play operator.
A surfeit of capital, which could risk pushing valuations higher, is not a concern right now, the founders say. “The reality is that the payments that go out to talent, to producers, to distributors, to studios, is several billions of dollars every year,” Allen said.