Welcome to Music Business Worldwide’s weekly round-up – where we make sure you caught the five biggest stories to hit our headlines over the past seven days. MBW’s round-up is supported by Centtrip, which helps over 500 of the world’s best-selling artists maximise their income and reduce their touring costs.
Sir Lucian Grainge is clearly a master at solving professional challenges whenever they arise. But even he’s going to struggle to get all of Universal Music Group‘s institutional owners on a single Zoom call pretty soon: the time zones are going to play havoc.
This morning (June 4) we learned that Bill Ackman’s New York-based SPAC, Pershing Square Tontine Holdings (PSTH), is set to buy 10% of UMG from Vivendi in a $4bn transaction.
This won’t result in UMG merging in any way with PTSH. Indeed, Vivendi is still pushing ahead with its plan to spin out 60% of Universal on the Amsterdam stock exchange before the end of September.
Instead, if the PSTH deal and Amsterdam float both go through as intended, it will mean UMG ends up being owned thusly: 10% by US-based PSTH; 10% by France-based Vivendi; 20% by a consortium led by China-based Tencent; and 60% publicly traded in Europe.
Talk about a global music business!
Will any of these institutional owners want to fiddle with Universal’s current strategy, and its continued heavy investment in frontline A&R and marketing?
Perhaps not: Ackman was full of praise for Grainge and his executive leaders today, calling them “one of the most outstanding management teams that I have ever encountered”.
That said, PSTH is telling its own shareholders that UMG offers “predictable, recurring revenue streams that require minimal capital despite high growth”. (Every UMG label President before next year’s budget meeting: “No, no; he must have meant maximum capital…”)
Ackman is also very keen on UMG’s potential for “long-term margin expansion” – aka, the idea that the bigger streaming gets, the more profitable Universal Music Group becomes.
Vivendi will be loving this, of course: Ackman just set the expectation of a minimum $40 billion company valuation for UMG when that 60% shareholding is floated in Amsterdam in the coming months.
Elsewhere this week, well, it was a bit quiet… until today.
Denis Ladegaillerie and his company have already covered the entire book order of their IPO, which will see around 15% of Believe floated on the Paris Euronext – a process due to be completed next week.
Now, an apt musical interlude courtesy of Coolio: “Power and the money; money and the power / Minute after minute, hour after hour.”
Reservoir is itself becoming a publicly-traded company at some point this year, via a SPAC merger with Roth CH Acquisition Co. II worth nearly $800 million.
Until then, check out MBW’s round-up of the past five days in the music biz below…
New York-based Pershing Square Tontine Holdings (PSTH) has this morning (June 4) confirmed it’s in discussions to acquire 10% of Universal Music Group for approximately $4 billion.
NYSE-listed PSTH is a special purpose acquisition company (SPAC) affiliated with Pershing Square Holdings, and is led by billionaire CEO Bill Ackman.
Pershing Square and Vivendi both confirm that the proposed transaction would represent an enterprise value for UMG of €35 billion ($42.4 billion at current exchange rates).
According to reports in both Bloomberg and Reuters this morning (June 4), Believe has already attracted enough investor demand to cover the entirety of the order book for its IPO’s 15,384,616 initial share issue. It did so within the space of just three working days, following its Tuesday morning announcement.
Not only that, Believe has also secured maxed-out demand for a ‘greenshoe’ allocation of additional shares, worth 10% of its initial issue.
In other words, it’s a safe bet that Believe has locked in IPO share sale orders that will raise the €300 million it wanted, plus 10% more (i.e. €330 million in total).
New York-based music rights company Reservoir has acquired legendary US record label and music publishing company Tommy Boy Music LLC in a deal valued at approximately $100 million.
Founded in New York in 1981 by Tom Silverman, Tommy Boy helped launch the careers of Queen Latifah, Afrika Bambaataa, Digital Underground, Coolio, De La Soul, House of Pain and Naughty By Nature, among others.
According to a media release states that Reservoir’s deal to buy Tommy Boy comprises 6,000+ masters including Coolio’s Gangsta’s Paradise, House of Pain’s Jump Around, and Afrika Bambaataa & The Soulsonic Force’s Planet Rock.
Lyor Cohen has his eye on Spotify‘s throne.
On Wednesday (June 2), Cohen – YouTube‘s Global Head of Music – revealed that YouTube paid the music industry over $4 billion in the previous 12 months via the “twin engines” of advertising and subscription revenue.
Cohen also stated that his platform’s aim is “to become the leading revenue generator for the music industry”. That would mean overtaking Spotify’s annual royalty payments, which in 2020 surpassed $5 billion.
Yesterday (June 3), Cohen laid down the gauntlet to Daniel Ek and co once again.
Amazon-owned live streaming platform Twitch told its users last Friday (May 28) that it’s been sent a “batch” of new copyright infringement claims from music publishers.
The company sent out an email stating that these new DMCA takedown notifications include “about 1,000 individual claims” over the use of copyrighted music played in the background of recorded VODs (on-demand videos).
In the email sent to users on Friday, shared by journalist Rod Breslau on Twitter, Twitch stated that “this is our first such contact from the music publishing industry”.
It added: “[We] are disappointed that they decided to send takedowns when we were willing and ready to speak to them about solutions”.Music Business Worldwide