How TONO finances the purchase of Kongens gate 12

The case is taken from TONO's transparency report, read the full report here

TONO and other organizations like us have – and must have – money “on the books”. First, it is impossible to avoid in a business and industry like ours – and second, it is necessary to have a robust cash balance so that we are sure that we have money to settle accounts with our members. Also in cases where our customers may not pay their TONO bill.

TONOs has tens of thousands of customers from broadcasters, to film and music streaming services, concert organizers, hairdressers, hotel chains and so on. The money comes into TONO in different ways, at different times. Sometimes we get larger back payments and settlements after unresolved cases have been processed in the legal system.

In parallel, we are working to collect enormous amounts of information from users about what kind of musical works have been performed and played. The reports also come in at different times. Some continuously, some in batches, some reports come late, perhaps only one or two years after performances.

Everything must be processed and quality checked before we can pay out money to rights holders at home and abroad.

Money must be managed in the best possible way

The money we have to take care of in this process must be managed in the best possible way. We can have everything in an account, where bank fees eat away at the money, and perhaps exceed the interest. We can place it in funds or bonds – or we can do what appears to be a more sensible strategy: Investing part of the funds in real estate. This is also in line with TONO's investment policy, which was adopted by TONO's members at the annual meeting in 2023.

TONO has good experience with investing in real estate. We sold TONO's old premises in Tøyenbekken, which we owned from 1989 to 2021, for NOK 81,4 million. A significant gain, and these funds will now benefit TONO's members, including the construction of studios and meeting spaces in Kongens gate.

Financial income is used for settlements

It is also worth noting that regardless of whether we invest in funds, bonds or property, this provides a return in the form of financial income, and there are also funds that are used for settlements to the licensees. In practice, we have now, based on the annual meeting resolution in 2023, moved some of TONO's holdings from bank deposits and money market funds to an investment in the property market.

This gives us several advantages. A more diverse mix of investments typically reduces risk. Kongens gate is located in a central and attractive area, and real estate is considered a safe way to invest funds. By renting out premises to other organizations, we get a stable and good return, while the value of the building will increase in the future. When we own the premises ourselves, we also do not have to pay rent to others, as we do today at Møllergata 4.

TONO had a turnover of NOK 997,9 million in 2023, see the press release about the results here

Not uncommon

The purchase of Kongens gate a safe and well-considered business decision. It is in line with TONO's investment strategy adopted at its annual meeting and the Act on Collective Management of Copyright, which requires collective management organizations such as TONO, Gramo, BONO, Norwaco and Kopinor to invest their funds in a way that safeguards the interests of copyright holders.

It is not entirely uncommon for organizations to invest funds in buildings. Another member-owned cooperative – TINE – has a large property portfolio. So do the Oslo Red Cross, Blue Cross and many other organizations. Organizations that invest in property in this way create security that they will have financial muscle in the future.