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Tencent Music's second-quarter profit beat Wall Street
expectations on Monday, as its advertising business rebounded
and more people subscribed to its music streaming platform.
Paid subscribers for the company's online music service grew 41%
to 66.2 million, a record high, boosted by investments in
long-form audio and a refreshed music library expanded by
licensing deals with Universal Music Group, Sony Music and other
labels.
Shares in Tencent Music rose 3.1% in extended trading after its
earnings release, paring back losses that saw it fall 9% earlier
on Monday.
The shares have lost half their market value this year due to
Beijing's crackdown on its tech giants and a ruling that barred
the company's parent, Tencent Holdings Ltd, from exclusive music
copyright agreements.
Tencent Music's CEO Liang Zhu told analysts that they believed
Chinese regulators ultimately were keen to promote the healthy
development of the music industry and the firm fully accepted
the government's policies.
The company expects the decision on copyright agreements to have
some impact on its operations, it said in its report without
specifying a figure, but Liang said they did not think it would
have a big impact on its online subscriptions.
Frank Zhao, a Beijing-based independent music industry analyst,
said Tencent Music made most of its income from social
entertainment such as online Karaoke and livestreaming
businesses.
"Tencent Music is now focusing on content creation and user
experience improvement," Zhao said. "They are on the right road
as the fight over copyright is over."
Tencent Music's social entertainment services business, which
includes karaoke platforms where users can live stream concerts,
posted a 7.4% rise in revenue to 5.06 billion yuan in the
quarter and accounted for most of its revenue.
Total revenue rose by 15.5% to 8.01 billion yuan ($1.24
billion), but missed a Refinitiv IBES estimate of 8.13 billion
yuan.
The company earned 0.66 yuan per American depository share on an
adjusted basis, more than estimates of 0.62 yuan.
($1 = 6.4742 Chinese yuan)
(Reporting by Eva Mathews in Bengaluru; Sophie Yu in Beijing;
Brenda Goh in Shanghai; Editing by Jacqueline Wong)
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