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- Universal to list as music streaming picks up
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[September 14, 2021]
AMSTERDAM (Reuters) - Vivendi, the
French media conglomerate, is spinning off
Universal Music Group, the largest part of its
business and the label behind singers such as
Taylor Swift, in a listing on the Euronext stock
exchange in Amsterdam. |
Here are facts about Universal
and its flotation:
FROM THE BEATLES TO BILLIE EILISH
By revenue, Universal Music Group or UMG is the
largest of the "big three" record labels. It
represents a huge range of musicians and song
catalogs, from Billie Eilish to The Rolling
Stones and Bob Dylan.
Major competitors include Sony Music, part of
Sony, and Warner Music Group. The "big three"
are estimated to account for just under 60% of
global sales generated by music rights from
their catalogs.
Universal started out in the early 1930s when
British label Decca Records set up a U.S.
branch, which later merged with other music
companies. In 2011 Universal swooped on EMI's
recorded music business for $1.9 billion, giving
it access to catalogs for The Beatles, Radiohead
and Pink Floyd.
A SHIFTING MUSIC INDUSTRY
Universal is benefiting from a boom in streaming
revenues, with young music fans in particular
relying on their smartphones to listen to songs.
It makes money from subscription services
through deals with the likes of Spotify.
It also has deals in place with ad-based social
media companies such as TikTok and YouTube to
compensate artists for the use of their songs in
"user-generated content" on those platforms -
though the terms of those deals are not public.
While digital piracy cut into music sales in the
first decade of the century, it is now pushing
into areas such as social media platforms which
use its music, such as TikTok, as well as
fitness applications and video games.
Universal still faces competition from
independent labels and start-ups looking to
release music in a purely digital fashion. The
company said in its listing prospectus that it
expected to grow its streaming business in
markets such as South Korea, Brazil, India and
Russia.
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THE LISTING
Vivendi's investors, including its controlling
shareholder Vincent Bollore, are due to receive
60% of the shares of the company once Universal
lists in Amsterdam, with trading due to start on
Sept. 21.
The company is aiming for a market
capitalisation of 33 billion euros ($39
billion). No new shares are being issued.
Vivendi will continue to hold 10% of Universal
after the transaction. A consortium led by
China's Tencent will have 20% and billionaire
hedge fund investor William Ackman's Pershing
Square Holdings will hold 10%.
Bollore and Tencent have agreed to consult each
other on matters such as dividend policy and
some aspects of the board ahead of general
meetings, Universal said in its prospectus.
REVENUES AND COVID-19 IMPACT
Universal reported earnings before interest,
taxes, depreciation and amortization (EBITDA) of
1.49 billion euros on sales of 7.43 billion
euros in 2020. The company has 2 billion euros
of net debt.
For the mid-term, Universal forecasts sales
growth in the high single digits, with an EBITDA
margin in the mid 20% range.
Universal said in its prospectus that the
COVID-19 pandemic initially hit some streaming
revenues, including when people told to stay at
home stopped listening to music at the gym or on
long commutes. Universal said this had now
normalised and picked up again, with sales of
merchandising that are often done at concerts
the main pain point.
($1 = 0.8465 euros)
(Reporting by Toby Sterling and Sarah White;
Editing by Edmund Blair)
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