In another major move into the indie sector, Sony Music Entertainment has agreed to purchase the remaining equity stake in the Orchard from Dimensional Associates, giving the major full ownership of the company.
According to a Sony Corp. filing with the U.S. Securities and Exchange Commission on its financial results for the fiscal third quarter ended Dec. 31, Sony has agreed to pay about $200 million for the remaining shares in the company.
According to the filing, the Orchard is currently owned by Orchard Assets Holdings, believed to be a joint venture between Dimensional Associates and Sony. Sony bought what has been consistently described as a majority stake in the Orchard in March 2012. While the exact percentages of Sony’s stake have never been publicly disclosed, sources say Sony owed 51% of the company and Dimensional the remaining 49%.
The Orchard was founded by songwriter, record producer, and artist manager Richard Gottehrer and digital music executive Scott Cohen back in 1997. The independent music and video distribution, marketing, and sales organization is now recognized as one of the biggest of its kind. Billboard estimates that the Orchard has annual revenues of $200 million.
The new deal requires regulatory approvals and is expected to close after March 31, 2015, according to the filing. In addition to the Orchard, Sony Music Entertainment also owns RED, widely considered to be one of the best and biggest indie U.S. distros.
For the fiscal quarter ended Dec. 31, 2014, Sony’s music operation — which spans Sony Music Entertainment, Sony Music Japan and Sony/ATV Music Publishing — reported sales of 163.6 billion yen, or ($1.36 billion according to the OANDA currency converter).
The figure represents a 13.1% increase over sales reported during the corresponding period a prior year, of 144.7 billion yen, or $1.21 billion. During the period, the music operations improved profitability to 25.4 billion yen ($211.8 million), a 17% increase from 21.7 billion yen, or $180.9 million. Sony attributed its music divisions’ improved profitability to sales growth the favorable impact of foreign exchange rates. [Billboard]
