Q&A   DAVID PULLMAN

Investment banker David Pullman first made a name for himself in the music industry in 1997 when he became the first financial professional to securitize intellectual property based on future royalty income with the U.S.$55 million "Bowie Bond" for David Bowie.  You can find out more about the managing director of The Pullman Group, which had conducted well over $1 billion in transactions through last June, at a Canadian Music Week keynote address on March 4.   Last month, Steve McLean got an early indication what the music-loving businessman will talk about.

What first gave you the idea to securitize David Bowie's songs based on his future royalty income?
It was spontaneous.  I had been working with Bowie's business manager and he was looking to sell his masters or his publishing, but this was a much better deal for him.   He didn't know anything about securitization, I just came up with the idea and presented it to him and they decided to go ahead.

It there a minimum amount of income needed to make these deals worthwhile?
It will work for anyone that has several hundred thousand dollars and up in annual royalties --- whether it be from music, TV, film, literary or high-tech royalties.   Typically we're working for the creator of the assets.  We're working on deals in other areas, but there are about 1,000 deals to do in music because it's such a diversified and fragmented business.

Even though Alanis Morissette has essentially put out two albums, would she be a good candidate for a securitization deal?
Anything that did 25 million units in terms of a first album and did five million in its second year as catalogue is going to sell forever.  Five, 10 or 20 years from now, she might be selling half-a-million units a year, but it will sell something.   Nothing is that big without making a lasting impression.  But forget how many records it sells.  Even if it sells zero, there's still tremendous value because of the publishing income from radio airplay it will get in the future, as well as use in films, TV shows and commercials.

You've done deals for Holland Dozier Holland and Ashford and Simpson.  What other artists are you working with now?
Right now we're working a similar caliber artists, who are basically songwriters and performers who have their writer's share of the publishing and their record royalties.   We have a couple of other blockbuster deals in the works that we haven't announced yet, but they're similar to the type we've been doing.

Are you going out and approaching artists about making such deals?
We've received more than 1,000 inquiries over the last year, and we do call on them as well.  I travel all over the place for meetings.

You were the first person to do this, but others are now getting into it.
Other people have attempted to do it, but to date all the outstanding securitization bonds that are being traded are ours.  We've done more than $100 million worth of deals.   Other artists are looking to do this, but their bonds haven't been sold.   There was a Rod Stewart loan made, but the bonds were never sold.  You have to very careful in structuring these deals.

Isn't Charles Koppelman supposed to be involved with arranging similar deals?
Yeah, but he hasn't done a deal yet.  Not one dollar.  But if more people get involved it's good for us.  They help market the idea.  Everyone and their brother has tried to copy us in the last two years, but no one's been able to successful do it.  They're very difficult transactions and we're experts.

Do you see this as a growth area?
Of course.  It's the tip of the iceberg.  The size of the market cap of intellectual property and entertainment assets is probably a trillion dollars.  So car we've done about $100 million.  So we've got a long way to go.

Are you looking forward to Canadian Music Week?
Yes, because there are a number of top catalogues there and you're seeing a growth in the music and film businesses in Canada.  And they're very sophisticated in Canada in terms of securitization.

The Record, March 8, 1999.