Universal Music’s solo project is a big hit with investors
AMSTERDAM (Reuters) – Shares of Universal Music Group jumped by more than a third when they debuted on Tuesday, with investors betting a music streaming boom still has a long way to go.
Here are some facts about Universal and its flotation:
FROM BEATLES TO BILLIE EILISH
In terms of revenue, Universal Music Group or UMG is the largest of the “big three” labels. He represents a wide range of musicians and song catalogs, from Billie Eilish to the Rolling Stones and Bob Dylan.
Major competitors include Sony Music, which is part of Sony, and Warner Music Group. It is estimated that the “big three” represent a little less than 60% of the worldwide sales generated by the musical rights of their catalogs.
Universal began in the early 1930s when British label Decca Records established a branch in the United States, which later merged with other music companies. In 2011, Universal seized EMI’s recorded music business for $ 1.9 billion, giving it access to the Beatles, Radiohead and Pink Floyd catalogs.
A CHANGING MUSIC INDUSTRY
Universal is enjoying a boom in streaming revenues, with young music fans in particular relying on their smartphones to listen to songs. He earns money from subscription services through deals with Spotify.
It also has agreements with social media companies such as TikTok and YouTube to pay artists for the use of their songs in “user-generated content” on these platforms – although the terms of those agreements are not public.
While digital piracy reduced music sales in the first decade of the century, Universal is now tackling areas such as the social media platforms that use its music, such as TikTok, as well as fitness apps. and video games.
Universal still faces competition from independent labels and startups looking to release music in a purely digital way. The company said in its listing prospectus that it plans to expand its streaming business in markets such as South Korea, Brazil, India and Russia.
Universal was split by French media group Vivendi. Vivendi’s investors, including its controlling shareholder Vincent Bolloré, received 60% of Universal’s shares after its initial public offering in Amsterdam.
Universal saw its market value jump to nearly 47 billion euros ($ 55 billion) on Tuesday in the highest European listing of the year.
Vivendi will keep 10% of Universal after the transaction. A consortium led by Chinese Tencent will hold 20% and Pershing Square Holdings of billionaire investor William Ackman will hold 10%.
Bolloré and Tencent have agreed to consult on issues such as dividend policy and certain aspects of the board ahead of general meetings, Universal said in its prospectus.
COVID-19 REVENUES AND IMPACT
Universal reported earnings before interest, taxes, depreciation and amortization (EBITDA) of 1.49 billion euros on revenue of 7.43 billion euros in 2020. The company has 2 billion euros of net debt.
Over the medium term, Universal expects single-digit sales growth, with an EBITDA margin of around 20%.
($ 1 = 0.8465 euros)
(Reporting by Toby Sterling and Sarah White; Editing by Keith Weir and Mark Potter)