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Vivendi has no imminent plans to float Universal Music, but won’t rule it out

By | Published on Wednesday 24 May 2017

Universal Music

When senior execs at Universal Music owner Vivendi suddenly started discussing a possible valuation for its big music asset at a shareholders meeting last month – a valuation of up to 20 billion euros being referenced – speculation predictably followed that that probably meant the French entertainment conglom was looking to sell the music major, or more likely a slice of it.

The Vivendi top guard have, in the past, resisted calls from some shareholders to sell or float some of the Universal Music Group. However, Vivendi CEO Arnaud de Puyfontaine has now told the Wall Street Journal that, while there are no imminent plans to IPO the music firm, his company could as yet float a minority stake in Universal.

“This is not a sacred cow”, de Puyfontaine stated, regarding whether or not his company would sell some or all of its music business. Of course, any such moves now could be seen as an effort to capitalise on the wider record industry’s return to growth, and the potential to spin that to Vivendi’s advantage within investment circles. “I remember the people a few years ago who explained to us that music was a dying business and would never recover”, de Puyfontaine added. “I have a good memory, and facts are proving them wrong”.

Of course, the record industry has a long way to go to return to the revenue levels it enjoyed during the CD boom of the 1990s, and recent revenue increases have been mainly fuelled by the mega-bucks flowing in to the music industry each month from the entirely loss-making streaming sector. But if you are willing to believe that Spotify et al can reach the kind of scale they need to become profitable, there is room for some optimism. And the majors have, to date, been the biggest beneficiaries of the streaming boom, Universal in particular.

Though, even if Vivendi thought it could convince the investment community that the future of recorded music is looking bright – maximising the value of the 15% stake in Universal it would likely look to offload – there may be other reasons why the media conglom would have second thoughts about that plan.

Vivendi – and especially Chairman and key shareholder Vincent Bolloré – is keen to encourage more synergies between the group’s various businesses, including its TV and movie division Canal+, digital platform DailyMotion and the firm’s growing interests in ticketing. And also with the Havas advertising business that Bolloré also controls, and which he is busy trying to basically merge with Vivendi. Floating a minority stake in Universal Music wouldn’t necessarily stop any of that for happening, though it could be a distraction that gets in the way of Bolloré’s grand vision.

Sources say that any IPO wasn’t on the agenda when Bolloré last met with Universal Music overlord Lucian Grainge. Speculation will no doubt continue, even more so given de Puyfontaine’s albeit non-committal statements.