Why 300 Entertainment is Exploring a Potential Sale

Last week, Bloomberg reported that 300 Entertainment is exploring a sale for $400 million, according to sources. This is a great opportunity to dive into the label, its initial vision, and its value to potential buyers.‍

A mindset ahead of its strategy. In 2012, 300 Entertainment was launched as the "modern content company." The independent record label was started by three seasoned execs—Lyor Cohen, Kevin Liles, and Todd Moscowitz. It was funded by Google Ventures and had partnered with Twitter for data insights. By 2014, it had Young Thug, Migos, and Fetty Wap on its roster. 300 looked ready to run the 2010s, the same way that Cohen and Liles had Def Jam on top back in the day.

But despite its momentum, the record label's strategy had lagged behind.

300 wanted its artists to sign 360 deals, which led to inevitable tension between labels and artists. This was an era where SoundCloud rappers pushed artist independence, yet 300 wanted even more ownership. Both Rich the Kid and Migos had expressed frustration with past deals.

‍Lasting success. By 2016, both Cohen and Moscowitz had left the label, and Kevin Liles took over as CEO. Liles has been recognized by the industry for his accomplishments. He's one of the few Black execs leading a label at this level. In 2016, the same year Cohen and Moscowitz left, the label grew 72%. 300 has moved away from 360s and has continued to attract top talent, like Young Thug's protege Gunna, and Megan Thee Stallion. It has also expanded into other genres of music. 300 has signed over 100 artists to date.

The label has succeeded, but others like EMPIRE and Quality Control are more comparable to the "modern content company." EMPIRE was an early advocate for artist flexibility with its short-term deal structure, while QC has done both multimedia content and startup investing. And for tech partnerships, UnitedMasters—which was just valued at $550 million— has led the way in recent years.

‍Will 300 get $400 million? 300's potential sale will capture the hot market for music assets. Early investors like Google Ventures will likely cash out big time on their initial investments.

But 300 is more unique from most recent music asset sales. To date, most sales have been from legacy artists with older music that still gets a lot of radio play. Meanwhile, 300 is a relatively new label with newer artists who rely primarily on streaming revenue. 300's biggest hit is Fetty Wap's "Trap Queen." It also has Fetty Wap's other summer 2015 anthems like "679," "My Way," and "Again."

Acquiring 300 is also a bet on the trajectory of its biggest stars—Thug, Meg, and Gunna— who each have their bull and bear cases.

Thug is talented, influential, and proven, but his recent Punk album sold under 100K units in its first week (and numbers matter if you're buying a record label). Meg can get any high-profile partnership or media profile she wants. But when her debut album Good News barely sold over 100K, it was a reminder that Meg's recorded music revenue might be the least valuable part of "Meg The Stallion, Inc." And while Gunna can flow with the best of them (and inspire a billionaire to dress like him for Halloween), but he has yet to take the mainstream leap like his fellow Thug protege, Lil' Baby.

The $400 million asking price is steep. But if 300 gets close to that number, that will be a strong signal for other hip-hop record labels and investors that want to cash in on this moment.