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Share price surges after Warner Music’s $1.9 billion IPO

By | Published on Thursday 4 June 2020

Warner Music

Warner Music is a publicly owned company again after the mini-major’s owner since 2011, Access Industries, sold 77 million shares on the Nasdaq stock-exchange yesterday. It was the biggest initial public offering in the US so far this year.

Access delayed publishing the price it would charge for each share at launch by 24 hours as Warner itself – like much of the music industry – participated in the Black Out Tuesday initiative in support of the Black Lives Matter movement.

That price, one confirmed, was $25 a share, at the upper end of the previously published price bracket, giving the Warner Music Group a market capitalisation value at the point of its listing of about $12.8 billion. Once trading began, the share price surged, peaking at just below $31 on the first day of trading.

Access announced its intent to sell a minority slice of Warner Music back in February, though the IPO plans were then paused as the COVID-19 pandemic struck. Although the music rights industry – especially recordings – is more immune to the impact of the COVID-19 shutdown compared to the live sector, it will nevertheless be hit. That said, the IPO was more delayed because of the impact shutdown had on the investment markets.

The $1.9 billion+ profits from yesterday’s share sale will go to Access Industries, rather than being reinvested back into its music company.

Given that Access paid $3.3 billion for the whole of Warner Music in 2011 and retains more than 80% of the company’s stock even after yesterday’s IPO, the share sale is proof that Access and its owner Len Blavatnik chose a good time to buy into the record industry, ie when it was at its lowest ebb, a few years before the streaming boom really kicked in.

Perhaps aware that the IPO was, to use a technical term, a fucking big pay day for Access – in the midst of a pandemic that has put the spotlight back on the precarious financial position of many artists, and in a week when campaigners called on the corporates of the music industry to back up their statements supporting the Black Lives Matter movement with money – the Nasdaq listing was accompanied by a significant philanthropic gesture.

As the IPO got underway it was announced that the “Warner Music Group, its directors and management, and the Blavatnik Family Foundation” were launching “a $100 million fund to support charitable causes related to the music industry, social justice and campaigns against violence and racism”.

The statement added: “An advisory panel made up of appointees from Warner Music Group and the Blavatnik Family Foundation will establish procedures to identify and support those in the music community, and organisations strengthening education, and promoting equality, opportunity, diversity and inclusion”.

Warner Music boss Steve Cooper then said: “This fund will support the extraordinary, dedicated organisations that are on the front lines of the fight against racism and injustice, and that help those in need across the music industry. Our advisory panel, which will draw from a diverse cross-section of people from our team and the wider community, will help us be very thoughtful and accountable in how we make an impact. We’re determined to contribute, on a sustained long-term basis, to the effort to bring about real change”.