Arena Holdings Bought Gallo Outright in March 2020. The JSE Filing Prices the Music Business at R65 Million, Not the R75 Million Widely Reported.

On 6 March 2020, a company registered in England and Wales told the Johannesburg market that it had sold Africa’s oldest record label. The buyer was Arena Holdings Proprietary Limited. What changed hands was not a catalogue but the entire issued share capital of two companies, Gallo Music Investments Proprietary Limited and Indigenous Film Distribution Proprietary Limited, plus every loan and other claim owed by those companies to their seller. Total consideration: R75,000,000, allocated R65,000,000 to the music business and R10,000,000 to the film business. The deal carried no outstanding conditions precedent, and closing was anticipated four days later.

That allocation matters, because the widely circulated figure for Gallo is R75 million. The filing says otherwise, and the filing is the document that binds.

What was sold was a company, not a catalogue

The seller was Blackstar Holdings Group Proprietary Limited, described in the announcement as a wholly owned indirect subsidiary of Tiso Blackstar Group SE. It signed a written sale of shares and claims agreement with Arena Holdings as purchaser, with Gallo Music Investments and Indigenous Film Distribution named as parties to the same agreement.

A sale of shares and claims is not an assignment of copyright. No master recording was transferred. No publishing agreement was novated. No songwriter contract was reassigned. The companies that held those rights before the sale still held them after it. What changed was who owned the companies, and who was owed the intercompany debt inside them. For anyone signed to Gallo at the time, the counterparty had not moved. Only the shareholder above it had.

What the filing says Gallo actually is

The announcement describes the business in language worth quoting exactly. Gallo Music Investments is “a full service music publishing and record company, whose business involves the acquisition and/or exploitation of all rights of ownership, including copyrights, in music compositions (both the musical works and lyrics), as well as representing artists, recording, manufacturing, distributing digitally and physically and selling pre-recorded music and video in South Africa and internationally under the names of ‘Gallo Record Company’ and ‘Gallo Music Publishers’.”

Read that carefully. The ownership language attaches to music compositions, the works and the lyrics, which is the publishing side. The recorded music side is described in terms of activity, recording, manufacturing, distributing, selling, not in terms of ownership. An exchange announcement is a summary, not a schedule of assets, so this proves nothing on its own, but it is a distinction the drafters chose. Gallo’s own corporate site says the company “manages the largest catalogue of African master recordings in the world”. Manages is not owns.

Note also that Gallo Record Company and Gallo Music Publishers appear in the filing as trading names of Gallo Music Investments, not as the selling entities.

The clause about unpaid royalties

Clause 4.1 sets out how the price was struck. The consideration was “calculated on the basis that, on the Closing Date, the Companies will not be indebted in respect of any debt that has been outstanding for more than 12 months (excluding the sale claims and any unpaid royalty amounts)”.

The parenthesis is the finding. The buyer required the companies to arrive substantially clean of aged debt, then carved unpaid royalties out of that requirement. Royalty arrears older than twelve months were allowed to remain inside the companies and travel with them to the new owner. The filing does not quantify them, or say who was owed. That is a normal enough commercial construction. It is also, in a South African music context with a long history of contested historical royalties, a line a lawyer for an affected artist would want to read.

Nine months earlier, the same company said it was keeping Gallo

On 27 June 2019, Tiso Blackstar announced the disposal of its South African media, broadcast and content businesses to Lebashe Investment Group Proprietary Limited for R800,000,000, with African operations in Ghana, Nigeria and Kenya plus South African radio going for a further R250,000,000. Total: R1,050,000,000.

That announcement expressly excluded Gallo, and said of the remaining group: “It will retain the Gallo Music Group business and develop it further as the music industry continues to evolve.” Eight months later Gallo was sold. The March 2020 announcement explains the reversal by reference to the 2019 Integrated Annual Report, saying the Gallo businesses “were considered to be part of the media structure and the Tiso Blackstar Board elected to dispose of this investment separately”.

The two were also classified differently under the JSE Listings Requirements. The 2019 media sale was a category 1 transaction, requiring a shareholder vote and a circular. The 2020 Gallo sale was a category 2, which required neither. Shareholders were told; they were not asked.

Who bought it, and who the record says bought it

Here the documents diverge, and the divergence is the story. The filing names one purchaser: Arena Holdings Proprietary Limited. Neither the March 2020 nor the June 2019 announcement applies related party language to the transaction.

A 2024 investigative account of South African royalties states that Gallo and the film company were sold for R75 million cash to Tiso Blackstar’s own parent, Lebashe Investment Group. A trade report from September 2021 states that Gallo Music Investments had been incorporated into Arena Holdings, and that Arena is wholly owned by Lebashe. If both are right, the accounts describe one outcome at two levels of the structure: the filing names the immediate counterparty, the reporting names the ultimate owner. We could not obtain a shareholding document for Arena, so that relationship as at March 2020 is reported, not filed.

On the price, the divergence is cleaner. Contemporary trade coverage reported R75 million for Gallo Music and a further R10 million for Indigenous Film Distribution, implying R85 million in total. The filing states R75,000,000 in total, allocated R65,000,000 to Gallo and R10,000,000 to the film company. This publication’s own directory carried the R75 million figure against Gallo. That was wrong, it came from the trade record rather than the filing, and it has been corrected.

What happened next

On 21 May 2020, roughly ten weeks later, FlightMode Digital, the vehicle of Nkosinathi Maphumulo, who records as Black Coffee, announced the acquisition of a stake in Gallo Music Investments. The seller was named as Lebashe Investment Group. The stake was described as “significant” and was not sized, nor was the price disclosed. Whether it is a majority or a minority is not stated in any document we have read. Black Coffee said the partnership to invest “in the catalog and masters, is more than just a business transaction”. A later trade report dates the same acquisition to May 2021; the contemporaneous coverage is the more reliable.

In September 2021, Gallo Music Investments acquired 45 percent of the distributor Content Connect Africa, at a price that was not disclosed. Gallo’s site today carries the line “a proud division of Arena Holdings”.

The rights deals this publication has documented sit on top of that ownership layer, not inside it. The Sony Music Publishing arrangement with Gallo Music Publishers and the Virgin Music Group distribution extension are licences, not transfers. The March 2020 share sale moved ownership of the company that holds the rights those deals licence.

What could not be established

Five things resisted us. Which masters Gallo owns outright as against controls under licence, because no filing or registry we reached itemises the catalogue. The size or price of the FlightMode Digital stake, because neither party disclosed it. Lebashe’s shareholding in Arena Holdings, for want of a filed document. The quantum of the unpaid royalties carved out at clause 4.1. And whether competition approval was required, though the unconditional wording suggests not. South Africa’s companies registry has no public interface we could query, and the exchange’s document server refused our requests, so the announcement was retrieved from the issuer’s own published copy.

What this means for artists

First, a share sale is invisible from inside a recording or publishing contract. Nothing in an ordinary artist agreement is triggered when the shares above it change hands, which is why change of control provisions matter and why the moment to negotiate one is at signature, not when the news breaks. If your deal is with a company rather than a person, the company can be sold around you.

Second, royalty arrears are not an accident in these transactions. They are a priced, negotiated line item. Here they were expressly excluded from the debt-free basis, which means both sides looked at them, agreed they would stay with the business, and settled a number accordingly.

Third, the number itself. R65,000,000 for a company operating as Gallo Record Company and Gallo Music Publishers, in March 2020, ahead of the catalogue repricing that swept the global market over the following two years. The filing reports net assets of the sale equity at 30 June 2019 of R37,364,000, and audited profits after tax of R2,631,000 for the year to that date. Those figures cover both companies together, so a Gallo-only earnings multiple cannot be calculated from this document.

Limits of this record: every transaction fact above, the parties, consideration, allocation, category classification, royalty carve-out and financial effects, comes from the Tiso Blackstar Group SE announcement of 6 March 2020, retrieved and read in full. The June 2019 disposal terms, the held for sale reclassification and the R59.0 million realised loss come from that issuer’s announcements of 27 June 2019, 1 April 2020 and 16 September 2020. The FlightMode Digital stake, the Content Connect Africa acquisition and the Arena and Lebashe relationship are reported rather than filed, and are attributed as such above.