Sean Parker: Picking Up The Pieces

posted in: Features • Music News

Warner Music Group put themselves up for sale in January, with consulting help from Goldman Sachs, but does anyone want to spend over $2.5 billion to buy Warner? Sean Parker does, or at least Sean Parker along with several other investors. The notorious Napster co-founder and Facebook investor certainly has a lot of money (roughly $1.6 billion), but his intentions with Warner are unclear so far. Some other notable members of the investor group include supermarket billionaire Ron Burkle and Doug Teitelbaum of Bay Harbour Management.

Parker’s history with Warner is a tumultuous one. Warner was one of the record companies that clashed with Napster years ago, resulting in various lawsuits that forced Napster into bankruptcy. It seems unlikely that he would get involved with buying out Warner out of spite, so what is the real reason? The most obvious answer has to do with his stake in Spotify: he is both an investor and an advisor to the music streaming service. Warner has been opposed to Spotify and reluctant to work out a deal with them. Spotify is popular in Europe, but labels like Warner have managed to keep it out of the states for the time being. More specifically, Warner chief Edgar Bronfman is against all free streaming services and claims they are “not net positive.” So buying out Warner would greatly help to facilitate a deal between the opposing companies, but that still doesn’t seem like a legitimate reason. The purchase would probably be the most expensive way to help Spotify license Warner’s library.

Peter Kafka of MediaMemo speculates that there is a simpler explanation. His theory is that Parker thinks Warner’s catalog is undervalued, “in part because of the digital revolution [Parker] helped usher in. Crippling an industry isn’t cool. Crippling an industry then scooping up its underpriced remains is cool.” Time will reveal Parker’s true motivation, but the buyout is far from a done deal. This latest group is just one of five bidders expected to make a offer to Warner in the next few weeks.