Warner Music, the label behind Ed Sheeran, has bought First Night Records, home to the recordings of famed West End musicals such as Les Misérables and Mary Poppins.
Warner, which has grown its market share in part thanks to big hip hop acts such as Meek Mill and Cardi B, is betting that more family-friendly music will increase revenues. The deal is part of a strategy to target genres that Warner expected to adopt streaming in the coming years, said Kevin Gore, president of Warner’s Arts Music division.
First Night Records was founded in London in 1984 and found global success with the original London cast recording of Les Misérables. It has since formed a close partnership with Sir Cameron Mackintosh, the musicals producer, recording all of his hits produced in London, including those from Mary Poppins, Oliver! and Miss Saigon.
The value of the deal was not disclosed, though it was believed to be less than $100m.
Pop music is dominated by hip hop, which is heavily streamed on services such as Spotify, that have a relatively young user base. But Warner believes that as streaming becomes more mainstream, it should invest in “underserved” genres. The company started an arts division two years ago, which addresses a market that makes more than $550m in sales annually, according to people briefed on the plans.
“Older audiences always take longer to catch up with how people are consuming music,” said Mr Gore. “We identified early on that was going to happen with streaming. So when we saw what was happening with pop and hip hop, we knew that classical, jazz, Broadway music was going to experience an uplift a few years later.”
Warner’s Arts Music division operates a group of labels including Sesame Street Records, home to the music of the eponymous children’s television show, which it relaunched last year. The group last week started a new record label partnering with Build-a-Bear, the toymaker, and also focuses on classical music and film scores.
There is some evidence that Warner is on the right track. The two highest-selling albums last year were the soundtracks to movie musicals: The Greatest Showman and A Star is Born.
As part of the deal, First Night co-founder, John Craig, will help Warner to identify and record musical theatre productions in the UK. Sir Cameron said Mr Craig was “the only record producer to see the potential of the Les Misérables score when it first opened at the Barbican Theatre in London 34 years ago.”
“It is great news for both our industry and me personally that he has now sold his company to Warner Music,” he added.
Warner Music, like its peers Universal and Sony, has enjoyed a renaissance in the past few years as streaming has generated billions in sales. In the three months to March, Warner, owned by Len Blavatnik, the Russian-born billionaire, earned $67m in net income on $1.1bn in sales, as revenues jumped 13 per cent from a year ago.
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