Concord in Advanced Talks to Acquire Stem

Concord is an advanced talks to acquire music distributor Stem, according to multiple sources close to the talks.

Los Angeles-based Stem is a 10-year-old digital distributor that gives independent artists ownership of their works and retains a distribution fee. Nashville-based Concord has vast music publishing and recorded music catalogs that include the compositions of Rodgers & Hammerstein, classical music publishing company Boosey & Hawkes, and the catalog of Round Hill Music, which it purchased in 2023 for $469 million.

Financial terms are unknown, but a report at Music Business Worldwide claims the deal could reach $50 million. The Hollywood Reporter cites sources as saying that figure “is wildly inaccurate” and that negotiations could result in a partial sale.

Stem would help Concord in its ambition to develop its frontline business. While Concord’s annual revenue is split roughly 50-50 between its publishing and recorded music divisions, it has notched more publishing hits, such as Miley Cyrus’ “Flowers,” which Concord owns a piece of through Tyler Johnson’s co-writing credit. In September, Concord merged its Concord Records and Fantasy Records into a single label, naming Margi Cheske and Mark Williams as co-presidents.

Concord’s frontline record label business includes Rounder Records, Concord Jazz, Fearless Records, Concord Theatrical Recordings and the Kidz Bop franchise. Concord also has joint ventures in Loma Vista Recordings with Tom Whalley; Easy Eye Sound with Dan Auerbach; and PULSE Records with PULSE Music Group. Launched in 2023, PULSE Records saw major success with Tommy Richman’s 2024 hit “Million Dollar Baby.” Billboard estimates the song generated $4.99 million from on-demand audio streams and digital song sales, based on Luminate data.

Stem, which raised $40 million in three fundraising rounds from 2017 to 2022, has been looking for a strategic investor since at least last year to give it access to more funding for artist advances after losing a series of stars to major labels. Competition for artists seeking distribution deals had picked up enough that Stem “lost numerous deals historically as it wasn’t able to be competitive with advances,” according to a Stem pitch deck Billboard obtained in 2024.

In 2023, Stem secured a $250 million credit facility from Victory Park Capital to expand its advance check product, which has funded projects by Brent Faiyaz and Justine Skye. That line of credit was “restrictive,” a source with knowledge of the company tells Billboard, because it was doled out on a deal-by-deal basis, requiring each artist’s project to recoup its own advance. Lewis says a better option is to borrow against the whole company’s balance sheet so that if one artist’s project flops, the loan can be repaid by a successful one.

“Music is a hit-driven business, and you need to have capital that understands that and is willing to allow you to take the risk across multiple projects, knowing that the overall portfolio will perform,” this person says.

It was for that reason that Stem was looking for equity investors rather than debt. Outside investors, many from the venture capital world, already own a majority of Stem’s equity. Stem’s decision to provide artists with advances came at a time when interest rates were lower than they are today, and one industry source speculates that rising interest rates were a pressing matter for Stem. Concord would likely be able to provide Stem with a lower cost of capital, this source tells Billboard. Concord has raised more than $3 billion from three asset-backed securities led by Apollo Global Management.

Warner Music Group (WMG) has also been in the market for a distribution company, having passed on an opportunity to acquire TuneCore owner Believe in 2024. But speaking at a Morgan Stanley conference on Monday (March 11), WMG CEO Robert Kyncl suggested the company could build rather than buy a distributor at the going rates. “I’ve looked at all distribution companies over the last 18 months … and what I can tell you is that we’re not willing to grow this at all costs,” Kyncl said.