From Common Music Group’s $40bn-plus valuation to Tommy Boy’s sale: It’s MBW’s Weekly Spherical-Up
Welcome to Music Business Worldwide’s weekly roundup – where we make sure you know the five biggest stories that made our headlines over the past seven days. The MBW roundup is backed by Centtrip, which helps over 500 of the world’s best-selling artists maximize their income and reduce their touring costs.
Sir Lucian Grainge is clearly a master at solving professional challenges whenever they arise. But even he will struggle to get all of Universal Music Group’s institutional owners on a single Zoom call anytime soon: time zones will have a devastating effect.
This morning (June 4th) we learned that New York-based Bill Ackmans SPAC, Pershing Square Tontine Holdings (PSTH), will purchase 10% of UMG from Vivendi in a $ 4 billion transaction.
This does not lead to a merger of UMG with PTSH. In fact, Vivendi is pushing ahead with its plan to spin off 60% of Universal to the Amsterdam Stock Exchange by the end of September.
Instead, if the PSTH deal and Amsterdam float both go as intended, it means UMG owns: 10% of US-based PSTH; 10% of Vivendi based in France; 20% from a consortium led by China-based Tencent; and 60% listed in Europe.
Talk about a global music business!
Will any of these institutional owners want to play around with Universal’s current strategy and its continued high investment in A&R and marketing at the forefront?
Maybe not: Ackman praised Grainge and its leaders today, calling them “one of the most outstanding management teams I have ever seen.”
However, PSTH informs its own shareholders that UMG offers “predictable, recurring revenue streams that require minimal capital despite high growth”. (Each UMG label president before the budget meeting next year: “No, no; he must have meant the maximum capital …”)
Ackman is also very interested in UMG’s potential for “long-term margin expansion” – also known as the idea that the bigger the streaming, the more profitable the Universal Music Group.
Vivendi will love that, of course: Ackman has just set expectations of a company valuation of at least $ 40 billion for UMG when that 60% stake is placed in Amsterdam in the coming months.
Elsewhere it was, well, a little quiet this week … until today.
Today we learned that the French sales / service company Believe was able to raise EUR 300 million très facile, as it is called in Paris.
Denis Ladegaillerie and his company have already covered the entire book order of their IPO, in which around 15% of Believe will be placed on Parisian Euronext – a process that is slated to be completed next week.
Now a fitting musical interlude courtesy of Coolio: “Power and the money; Money and power / minute by minute, hour by hour. “
Yes, we also learned today that New York-based Reservoir has acquired Tommy Boy Music in a $ 100 million deal – and has acquired over 6,000 masters, including Gangsta’s Paradise.
Reservoir itself will become a publicly traded company sometime this year through a SPAC merger with Roth CH Acquisition Co. II valued at nearly $ 800 million.
Until then, you can check out the summary of the last five days of MBW in the music store below …
1) CONFIRMED: 10% OF THE UNIVERSAL SET WILL BE IN AN “ICONIC TRANSACTION” OF 4 BILLION. $ SOLD TO PERSHING SQUARE SPAC
New York-based Pershing Square Tontine Holdings (PSTH) confirmed this morning (June 4th) that it is in talks to acquire 10% of Universal Music Group for approximately $ 4 billion.
NYSE-listed PSTH is a Pershing Square Holdings-affiliated special purpose vehicle (SPAC) and is led by billionaire CEO Bill Ackman.
Pershing Square and Vivendi both confirm that the proposed transaction would represent an enterprise value for UMG of 35 billion euros (42.4 billion US dollars at current exchange rates).
2) BELIEVE THAT IT WILL EASILY DRAW ENOUGH DEMAND TO BUY 300 MILLION. € IPO TO BE FULFILLED … WITHIN THREE DAYS
According to reports from Bloomberg and Reuters this morning (June 4th), Believe has already attracted enough investor demand to fill the entire order book for the initial offering of 15,384,616 shares from the IPO. It did so within just three working days of the Tuesday morning announcement.
In addition, Believe has also secured maximum demand for a greenshoe allotment of additional shares valued at 10% of the initial issue.
In other words, it’s a surefire thing that Believe has completed IPO share sell orders that will bring in the desired $ 300 million plus 10% more (totaling $ 330 million).
3) RESERVOIR TO BUY TOMMY BOY MUSIC FOR $ 100M
New York-based music rights company Reservoir has acquired the legendary US record label and music publisher Tommy Boy Music LLC for approximately $ 100 million.
Founded in 1981 in New York by Tom Silverman, Tommy Boy helped launch the careers of Queen Latifah, Afrika Bambaataa, Digital Underground, Coolio, De La Soul, House of Pain and Naughty By Nature, among others.
Reservoir’s purchase agreement for Tommy Boy includes more than 6,000 masters, including Coolio’s Gangsta’s Paradise, House of Pain’s Jump Around, and Afrika Bambaataa & The Soulsonic Force’s Planet Rock, according to a media release.
4) LYOR COHEN: YOUTUBE MUSIC IS “THE FASTEST GROWING SUBSCRIPTION SERVICE”
Lyor Cohen has Spotify’s throne in view.
On Wednesday June 2, Cohen – YouTube’s Global Head of Music – announced that YouTube had paid the music industry over $ 4 billion in the past 12 months via the “twin engines” of advertising and subscription revenue.
Cohen also stated that the goal of his platform was “to become the leading sales driver for the music industry”. That would mean beating Spotify’s annual royalty payments, which exceeded $ 5 billion in 2020.
Yesterday (June 3rd) Cohen Daniel Ek and Co. once again put the gauntlet down.
Photo credit: Caspar Camille Rubin5) TWITCH ‘DISAPPOINTED’ THE MUSIC PUBLISHING INDUSTRY WHEN IT ARRIVED WITH 1,000 COPYRIGHT VIOLATIONS
The live streaming platform Twitch, which belongs to Amazon, announced its users last Friday (28.
The company sent out an email stating that these new DMCA deactivation notifications contained “approximately 1,000 individual claims” about the use of copyrighted music played in the background of recorded VODs (on-demand video).
In the email sent to users on Friday, shared on Twitter by journalist Rod Breslau, Twitch stated that “this is our first such contact from the music publishing industry”.
It added: “[We] are disappointed that they decided to send takedowns when we were ready and willing to talk to them about solutions ”.Music business worldwide