From Common’s 10% sell-off to Sony Music underneath investigation: It’s MBW’s Weekly Spherical-Up
Welcome to Music Business Worldwide’s weekly recap we make sure you got the top five stories of the past seven days in our headlines. MBW Roundup is backed by Centtrip, which helps over 500 of the world’s best-selling artists maximize their income and reduce their tour costs.
Who is the most powerful company in music today? If you work for the Universal Music Group, then you are also choosing Vivendi, which is headquartered in Paris.
Vivendi has been UMG’s parent company for two decades … but that will soon change. Vivendi now seems to be ready to sell as much UMG as possible – at the puffiest price.
In the past 14 months, the French company has already sold 20% of Universal to a consortium led by China’s Tencent for a total of EUR 6 billion (around USD 7.3 billion at current exchange rates).
Vivendi (and its largest shareholder, Vincent Bolloré) will spin off another 60% of UMG on the Amsterdam Stock Exchange in the coming months, which should bring in another USD 20 billion or more than USD 30 billion in the current valuation discussed by UMG.
And earlier this week, MBW broke news that Vivendi is in talks with an unnamed “American investor” to outsource another 10% of Universal at a cost of billions of dollars.
If all of this comes about – the sale of Tencent’s shares, followed by the Amsterdam listing and the purchase of the “US investor” – it would mean Vivendi ends up selling 90% of the Universal Music Group within 18 months.
By the math, the sale of that 90% stake would likely raise Vivendi somewhere north of a total of $ 40 billion.
Vivendi informed its shareholders this week that it has to hold 10% of the UMG for the time being in order to maintain the “protection of EU legislation”. This in turn indicates that it might have sold / outsourced the entire UMG if EU law had not made this difficult.
Which all raises a seismic question for the music business: Why is Vivendi so interested in benefiting from UMG now?
Skeptics might suspect that the inevitability that large record companies will lose global streaming market share to the indie and DIY sectors in the future is preoccupying the French company. Or that there might be reservations about the constantly growing bargaining power of star artists against labels. (It’s not for nothing that Olivia Rodrigo’s debut album Sour, credited as (c) Olivia Rodrigo on Spotify under the exclusive license of Geffen Records, is today’s biggest release.)
The opposite view – the bullish one for UMG – would suggest that the global music law industry still has massive growth ahead of it over the next 10 years. And even if UMG never publishes a record again, its gigantic catalog ensures that UMG will be a main beneficiary of this upward trend.
There’s perhaps a simpler motivation: if Vivendi actually made $ 40 billion from the 90% of UMGs it is allowed to outsource, it would easily surpass the $ 34 billion the French company spent in 2000 for acquiring Seagram paid in shares.
That purchase brought in not only Vivendi UMG, but the Universal film, television, and theme park businesses (which were later sold to General Electric / NBC for $ 14 billion).
Elsewhere in the music industry, Sony Music announced this week that Kobalt’s acquisition of AWAL and Neighboring Rights businesses had been completed – just as the UK competition watchdog opened an investigation into the deal. The major also signed a duo of important new agreements in China.
Meanwhile, Joe Kentish – the UK chief executive who signed Dua Lipa – was named President of Warner Records in the UK when Deezer got a new CEO.
Here’s a coda for this week’s round-up: Ron Perry, chairman / CEO of Columbia Records, is recognized as the songwriter and producer of BTS ‘new single Butter, according to Variety.
Given that the title would be a bang (and it would trigger smash-level royalties), even if it comprised 30.5 seconds of terrible belching, Mr Perry might have become the hottest addition to music publishing right now.
MBW noted that Scooter Braun was recognized as the author of a Justin Bieber / Ariana Grande single last year.
They know what they are saying: everyone has a hit in them. Step forward, Mr. Bolloré!
Here’s the rest of the news you need to know …
1) WHICH US COMPANY CAN BUY 10% OF UNIVERSAL MUSIC GROUP SOON?
In an update for investors, Vivendi stated that it may only keep a 10% stake in UMG after the IPO instead of 20% – another 10% of its stake will be sold before the Big Amsterdam listing.
Vivendi said this week that it is currently “analyzing the possibility” of selling this additional 10% in UMG (dramatic chord if you wish, Maestro …) to “an American investor”.
This teasing rough sketch clearly suggests Vivendi is already in talks with such a party and it will inevitably result in the industry tongues waving.
2) SONY MUSIC ENDS AWAL $ 430M SALE – BUT UK BODY INVESTIGATES DEAL
Sony Music has confirmed it has completed the acquisition of two Kobalt Music Group companies: the music company AWAL plus Neighboring Rights (formerly Kobalt Neighboring Rights).
Not every hurdle has been cleared, however: Sony’s announcement comes the same week that the UK’s Competition and Markets Authority (CMA) confirms it is opening an investigation into the double acquisition, which Sony previously valued at $ 430 million. (Kobalt Music Group Ltd is a UK based company.)
3) Sony Music signs new licensing agreements with Tencent Music and NetEase Cloud Music in China
Sony Music Entertainment has signed new multi-year license agreements with the two largest owners of music streaming platforms in China – NetEase Cloud Music and Tencent Music Entertainment (TME).
The news marks a new licensing structure for Sony Music in China, which previously licensed its catalog exclusively through TME in the region.
4) FORMER DATING COMPANY BOSS NAME NEW CEO OF DEEZER
Global audio streaming service Deezer has hired Jeronimo Folgueira as its new CEO.
He takes on the role of Hans-Holger Albrecht, who has headed Deezer since 2015.
Announcing the arrival of Folgueira earlier this week, Deezer also released an official update of its stats, noting that there are currently “16 million monthly active users around the world” [with] a leading catalog of 73 million tracks, podcasts and radio stations ”.
5) JOE KENTISH NAMED PRESIDENT OF WARNER RECORDS UK
There is a major change in leadership in the UK music industry.
Joe Kentish becomes President of Warner Records UK on June 1st. Kentish will step up from his current role as Head of A&R at the label, replacing Phil Christie, who has decided to step down.Music business worldwide