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Warner Music announces plans to IPO
By Chris Cooke | Published on Friday 7 February 2020
Those of you who were disappointed when Vivendi decided not to go the IPO route in order to sell off chunks of its Universal Music business, worry not! Warner Music is now going to IPO, so you can buy yourself some lovely shares in that instead.
The mini-major announced last night that it had “filed a registration statement on Form S-1 with the US Securities And Exchange Commission for a proposed initial public offering of its common stock”. The bankers at Morgan Stanley, Credit Suisse and Goldman Sachs will oversee the share sale, which hopes to capitalise on the renewed interest in music rights among investment types thanks to the streaming boom.
Warner Music used to be part of the wider Warner entertainment business, of course, hence it using the surname of those pesky Warner brothers. It was spun off as a standalone entity via an acquisition led by Edgar Bronfman Jr in 2004, who then floated the company on the New York Stock Exchange a year later. Current owner Access Industries then acquired the firm for $3.3 billion in 2011, taking it back into private ownership.
For Access and its chief Len Blavatnik, that was a smart time to buy, the record industry being at its lowest ebb in 2011 after a decade of turmoil caused by the rapid shift to digital consumption of recorded music. Since then the streaming boom has put the music rights sector back into growth and – while there remains plenty of questions about the sustainability of the streaming music business model and the future power of the labels in an evolving music industry – the investment community is definitely interested in music again.
Vivendi was the first to seek to cash in from that renewal in interest, initially indicating that it planned to sell off some of its music company Universal in 2017. It also toyed with going the IPO route, but in the end decided to negotiate directly with interested parties. A consortium led by Chinese web giant Tencent finalised a deal to take 10% of the business late last year, of course. Talks with other bidders are ongoing.
Both Vivendi and Access seem keen to retain a controlling stake in their music companies, but are seeking to cash in as the valuations of their recording and song catalogues sore – the Tencent deal valued Universal Music at about $33 billion.
Warner – with its portfolio of labels, Warner/Chappell publishing division and ADA label services company – is significantly smaller than Universal. But is still now worth considerably more than Access paid for it back in 2011.
The specifics of Warner’s IPO plans are yet to be fully revealed, but the investment community and wider music industry will be watching the mini-major’s march to the stock market very closely indeed.
