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Impala to oppose Tencent investment in Universal Music Group


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Independent-music body Impala has come out against plans for Chinese technology company Tencent to buy a 10% stake in Universal Music Group, with an option to buy a further 10%.

“Even at a low level of shareholding, we believe the risk of harm for consumers and competitors from such a transaction would be a concern because of the impact in both the digital market and the music sector, with independents being squeezed further and artists also losing out,” said Impala’s executive chair Helen Smith, in a statement this morning.

Impala has campaigned actively and influentially (if not always successfully, in terms of persuading regulators to step in) against consolidation of the music industry’s major labels and publishers. The proposed Tencent / UMG investment represents a new front for the body’s concerns.

In its announcement, Impala pointed to UMG’s status as the world’s largest label, as well as Tencent’s scale in China with its three music-streaming services plus karaoke and live-video apps. Smith said that the body’s concerns also extend to UMG parent company Vivendi’s plans to sell other stakes, if possible.

“We also need to see how the plan to sell the rest of the UMG shares available plays out. There could be any number of outcomes,” said Smith. “We would expect regulators to also be concerned about the Spotify-Tencent link. We believe it would be difficult for Tencent and other companies with power in a vertical market to acquire influence over the world’s biggest set of repertoire.”

The latest update from Vivendi on the plans came in October, when it said that the due diligence and legal documentation should be finished within a few weeks. It also said that other potential investors had emerged showing “interest” in buying a stake at the same $33bn valuation (for the whole of UMG) as Tencent.

More recently, a report on news site Bloomberg suggested that Tencent was in talks with potential co-investors for its bid, meaning that the initial 10% stake would be acquired by a consortium, rather than the company alone.

Stuart Dredge

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