Yesterday was not a good day for Hipgnosis Songs Fund. The company told investors that its independent portfolio valuer estimates that it will now receive significantly less money in payouts from the ‘CRB III’ settlement in the US. That’s the rate-setting agreement covering streaming royalties for songwriters between 2018 and 2022.
Hipgnosis now expects to get $9.9m in royalties instead of the previously-anticipated $21.7m. As a result of this news, Hipgnosis said it was withdrawing its proposed interim dividend for shareholders.
Amid all this, the company’s share price – already much lower than investors and Hipgnosis management alike would prefer – dropped by 10%.
The timing is particularly unfortunate for Hipgnosis, too, because a pair of crucial shareholder votes are happening later this month. They will be voting on whether the company should continue in its current form, and also on whether to approve its proposed $440m sale of song catalogues to a sister fund, Hipgnosis Songs Capital.
Some of Hipgnosis’s shareholders were already uneasy about the deal, so yesterday’s news risks fanning the flames of any rebellion against the plans.
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