Vancouver's Nettwerk Music Group nets $300M and management buyout

Nettwerk group nets $300M

Photo: Contributed

Terry McBride co-founded Nettwerk Music Group 40 years ago and is the company's CEO

The management team behind a Vancouver music company known for working with artists such as Sarah McLachlan, the Barenaked Ladies and Coldplay is buying out of much of the company, supported by a $300 million investment from Create Music Group.

Create Music is expected to provide additional financing to Nettwerk Music Group in future years, when needed to grow the company.

Nettwerk CEO Terry McBride told BIV that his management team is set to own about 80 per cent of the company once the transaction closes later this month. Existing shareholders will own the remainder, with Create Music not getting an equity stake. He said he would not detail what Create Music gets for its investment but called the transaction a "classic distribution deal."

"This transaction is transformational," said Ryan Beedie, whose Beedie Capital has been Nettwerk's largest shareholder.

"The deal significantly increases management’s ownership, provides substantial growth capital for further investment, and brings a fantastic new partner in Create."

He said in a LinkedIn post that Beedie Capital would remain a "significant shareholder."

"For the past 20 years we’ve had a front-row seat as the company evolved into one of the most important independent labels in North America," he said.

Vistara Growth is another Nettwerk shareholder that is selling shares in the transaction.

Terry McBride and Mark Jowett co-founded Nettwerk more than 40 years ago, and McBride was a BIV Forty Under 40 recipient in 1990. 

He established the principles for Nettwerk, and led the company through the decades, shepherding growth and enabling the company to be what it calls an "artist-first record label and publisher."

Nettwerk's work with Coldplay saw it in 2000 make available the band's Parachutes album in Canada and the United States. Nettwerk now works with artists such as Paris Paloma, Passenger, Leisure, SYML, Mon Rovîa among others.

"An artist like SYML, who you might not know, has streamed billions of streams, is multi-platinum in the U.S., is diamond in France, and platinum throughout all of Europe, yet anyone over the age of 40, probably doesn't know them," McBride said.

"These are all artists basically streaming hundreds of millions of streams a year, and are filling up Orpheum-type venues."

Nettwerk said that its partnership with Create Music gives it access to "infrastructure" as well as global distribution networks and label services.

Its leadership team is set to continue managing day-to-day operations, signings and artist development efforts, with support from Create’s platform, the company said.

"The partners have highly complementary strengths," Nettwerk said in a press release. "The partnership is built on shared values and collaborative spirit that will empower both Nettwerk and Create to expand their global presence while maintaining their core missions."

McBride said he was excited about the transaction.

“Partnering with Create allows us to continue to build on our foundation, grow our capabilities, and provide even more value to the artists we represent—while staying true to our roots as an artist-focused, independent Canadian label," he said.

Create Music's CEO and co-founder Jonathan Strauss praised McBride and his team for building "one of the most enduring and influential independent music companies in the modern era.”

Beedie said on LinkedIn that he first met McBride when the two were in a Young Presidents' Organization forum group about 25 years ago. His first investment in Nettwerk then came in 2006, two years after he was named a BIV Forty Under 40 winner.

McBride told BIV in 2011 that he was pulling back from his activities in the company to focus on other passions. 

He remained as CEO of Nettwerk and is the only CEO in its history. 

McBride said in 2011, however, that he would still listen to demonstration tapes and go to concerts to seek out emerging talent, but he had stopped managing artists—a role that used to take up about 90 per cent of his time.

“I’m tired of dealing with other people’s dramas,” McBride said at that time. “A copyright doesn’t phone you at 2 a.m. to tell you about some drama. A copyright makes you money while you’re actually sleeping.”

Wednesday morning he clarified that he stepped back from artist management and "focused on building a catalogue of intellectual property, of building artists' careers but not as an artist manager."

The transaction is expected to close this month.