AMSTERDAM (Reuters) – Vivendi (OTC:), the French media conglomerate, is spinning off Common Music Group, the most important a part of its enterprise and the label behind singers corresponding to Taylor Swift, in an inventory on the Euronext inventory change in Amsterdam.
Listed here are details about Common and its flotation:
FROM THE BEATLES TO BILLIE EILISH
By income, Common Music Group or UMG is the most important of the “huge three” file labels. It represents an enormous vary of musicians and track catalogs, from Billie Eilish to The Rolling Stones and Bob Dylan.
Main opponents embrace Sony (NYSE:) Music, a part of Sony, and Warner Music Group. The “huge three” are estimated to account for slightly below 60% of world gross sales generated by music rights from their catalogs.
Common began out within the early Nineteen Thirties when British label Decca Data arrange a U.S. department, which later merged with different music firms. In 2011 Common swooped on EMI’s recorded music enterprise for $1.9 billion, giving it entry to catalogs for The Beatles, Radiohead and Pink Floyd.
A SHIFTING MUSIC INDUSTRY
Common is benefiting from a growth in streaming revenues, with younger music followers particularly counting on their smartphones to hearken to songs. It makes cash from subscription providers via offers with the likes of Spotify (NYSE:).
It additionally has offers in place with ad-based social media firms corresponding to TikTok and YouTube to compensate artists for the usage of their songs in “user-generated content material” on these platforms – although the phrases of these offers are usually not public.
Whereas digital piracy reduce into music gross sales within the first decade of the century, it’s now pushing into areas corresponding to social media platforms which use its music, corresponding to TikTok, in addition to health functions and video video games.
Common nonetheless faces competitors from unbiased labels and start-ups seeking to launch music in a purely digital vogue. The corporate mentioned in its itemizing prospectus that it anticipated to develop its streaming enterprise in markets corresponding to South Korea, Brazil, India and Russia.
Vivendi’s buyers, together with its controlling shareholder Vincent Bollore, are resulting from obtain 60% of the shares of the corporate as soon as Common lists in Amsterdam, with buying and selling resulting from begin on Sept. 21.
The corporate is aiming for a market capitalisation of 33 billion euros ($39 billion). No new shares are being issued.
Vivendi will proceed to carry 10% of Common after the transaction. A consortium led by China’s Tencent could have 20% and billionaire hedge fund investor William Ackman’s Pershing Sq. Holdings will maintain 10%.
Bollore and Tencent have agreed to seek the advice of one another on issues corresponding to dividend coverage and a few elements of the board forward of basic conferences, Common mentioned in its prospectus.
REVENUES AND COVID-19 IMPACT
Common reported earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) of 1.49 billion euros on gross sales of seven.43 billion euros in 2020. The corporate has 2 billion euros of web debt.
For the mid-term, Common forecasts gross sales development within the excessive single digits, with an EBITDA margin within the mid 20% vary.
Common mentioned in its prospectus that the COVID-19 pandemic initially hit some streaming revenues, together with when folks instructed to remain at house stopped listening to music on the health club or on lengthy commutes. Common mentioned this had now normalised and picked up once more, with gross sales of merchandising which might be usually performed at concert events the primary ache level.
($1 = 0.8465 euros)