Bowie the Musical

Hmm, thought I, hmm:

David Bowie says yes to futuristic musical based on his hits

Bowie\’s space-age fantasies will be used for the first time in showcase London performance next year

So, in a business sense, like Mamma Mia or We Will Rock You. Get those old songs up on a West End stage, take the royalties and run.

Although it\’s not quite that. He\’s granted permission for a one off charity gig….which might, if it\’s all lovely, then turn into a longer running production.

The hmmm bit comes from the Bowie Bonds.

Back in 1997, Bowie securitised the future revenues (royalties etc) on his classic songs into a bond issue which was then bought by Prudential. The bonds had a slightly rocky valuation life….the fall in recorded music sales meant they lost rating and value, then the rise of iTunes etc seems to have revived them.

My immediate reaction was that he\’s licencing the songs to see whether greater income can be generated from them in order to pay off (or maybe refinance etc) those bonds.

But the bonds were supposed to mature in 2009. So maybe not: anyone know what is the actual status of those Bowie bonds?

It could be mildly interesting this: the first musical to be driven by having to repay a bond issue.

Just to give a guide, a seriously successful musical, one that had two or three casts around the world, could indeed make serious inroads into at least the financing costs, if not the capital, of a $55 million bond issue.

4 comments on “Bowie the Musical

  1. Does this story make sense?
    Bowie issues bonds. i.e he exchanges the royalty stream for one-off capital. (?)
    The bond owner (Prudential) then owned the rights and could market the songs any way they thought fit.
    (If Bowie kept content control then he’s a lot more cunning than Prudential.)
    However, maybe the bonds matured in 2009 and were cancelled. So royalties revert to Bowie.
    And a charidee musical (high-risk, capital intensive) might be a good way of revaluing the royalty stream so that Bowie can reissue Bowie bonds?
    Maybe file this under “too boring to research” but I’m looking forward to the obituary: “Bowie proves you can take it with you.”

    Tim adds: I’ve been looking into this a bit more as it intrigued me. Prudential got the revenue stream but not publishing control over the royalties. Bowie didn’t get capital, he got a loan which had to be repaid (and as far as I know, was).

    Royalties are now back with Bowie, yes, I think so. And yes, this would be a good way of testing the water and then perhaps issuing another Bowie bond.

    The importance of this is this: royalties continue 70 years after songwriters’ death. This is a way of moving that royalty income forward in time, so that he can spend it now.

  2. Interesting question, I’ve had a look round. The prospectus was never published, but it seems that “average life” – based I suppose on royalty projections – was 10 years, and maturity 15 years. From which I guess that the bondholders were to receive all the royalties from the specified songs until the sums received amounted to 7.9% interest plus principal.

    Various sites claim that “When the bonds matured in 2007, the royalty rights reverted back to David Bowie.” But the same sites specify a 10-year maturity, which is not quite right, so they may not be trustworthy.

    The dollar numbers reported for the deal don’t add up. Reportedly $55m was raised by the issue, which was backed by annual royalty cashflow from the songs of “more than $1m per year”. It would take $4.345m a year to pay the 7.9% interest, and $14.836m a year to pay the principal plus interest over ten years.

  3. blokeinfrance asks whether this story makes sense. Well, no, it doesn’t, for the simple reason that, according to David Bowie’s spokesman:

    “Neither the David Bowie Organisation, nor its co-publishers EMI Music and Chrysalis, has issued a license for this performance at the O2. There are no negotiations pending for a long running musical featuring the music of Mr. Bowie”.

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