Anything Warner Music Group can do, Universal Music can do… later. With WMG having sprung plans for an IPO on the industry earlier this month, now Vivendi has announced that plans are afoot for a UMG public listing too, but with a potentially longer lead time. “An initial public offering is currently planned for early 2023 at the latest,” explained a single-sentence surprise within Vivendi’s latest financials announcement.

This is on the back of a Tencent-led consortium’s purchase of a 10% stake in UMG, valuing the music group at €30bn, with an option to buy up to 10% more by mid-January 2021. That transaction has now been approved by regulators, said Vivendi, and should close by the end of June. It added that there are “ongoing negotiations regarding the possible sale of additional minority interests” based on the same valuation.

We’re certainly moving into a new era of intermingled public music companies. There’s Spotify and Tencent Music, with their 2017 equity swap; Tencent Music soon with a stake in Universal Music; Warner Music with its minority stakes in Deezer and Tencent Music, and a parent company (Access Industries) with a controlling equity interest in Deezer, which still harbours its own ambitions of an IPO. Oh, and SiriusXM, which owns Pandora and now a minority stake in SoundCloud, and has a majority owner (Liberty Media) which still hasn’t been ruled out as one of the potential additional investors in Universal Music.

All this, at a time when the growth of those streaming services is driving new models for releasing music and renewed debate about the nature of artist contracts and rights ownership, which may have significant knock-on effects (positive and negative) for the businesses of those major music rightsholders. It’s a fascinating tangle of implications for the industry, although also one that (as indie body Impala’s views on the UMG/Tencent tie-up showed) may also be controversial.

Amid all this, we shouldn’t forget that for now, Universal Music’s business is booming. UMG’s revenues in 2019 grew by 18.9% to €7.16bn, including a 16.7% bump for recorded music revenues to €5.63bn, and 11.7% growth for publishing to €1.05bn. Within the recorded music figures, subscription and streaming was up by 28.1% to €3.33bn, while even physical sales grew – by 6.5% to €1.01bn.

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Stuart Dredge

Music Ally's Head of Insight

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