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Warner Music officially launches its IPO

By | Published on Wednesday 27 May 2020

Warner Music

So it’s official: soon anyone will be able to buy shares in the Warner Music Group. Yes, even Saudi Arabia. What would the Warner brothers say? Ah, who cares what they’d say, they’re long dead. Fuck them. They only set up a record company because they were pissed off one of their actors had made a record with a label owned by rival studio. Or so the legend goes.

Actually, there’d been earlier dabblings in the record industry back in the 1930s, but they ended when the increasing popularity of a new technology fucked things up. Fucking radio! Fucking new technology! Though somehow the brothers managed to sell that earlier label on not once but twice. Which was quite a sneaky trick.

Anyway, what I’m saying is, the Initial Public Offering of the Warner Music Group is officially go. Are you excited? No? Oh. Well could you pretend to be excited for the next 711 words? Good.

Current owners of the Warner Music Group – that’ll be Len Blavatnik’s Access Industries – announced plans earlier this year to offload a slice of the music company via a stock market listing. Cynics would say Blavatnik is seeking to cash in on the increased interest in music rights within investment circles on the back of the streaming boom. Cynics would be right.

The IPO plans, however, were delayed somewhat because of pesky COVID-19, which was a bit of a pain for the top guard at Access. I’d assume. I mean, in the wider scheme of things, not that much of a pain. Live Nation had most of its revenue streams turned off overnight. Imagine how much they’d love the big stress right now to be having to put off an IPO by a few months. But, nevertheless, things were delayed, and that was probably annoying.

But the delay is over, my friend! After all, through some genius strategic planning by the powers that be (aka blind luck) the record industry now makes most of its money from the sale of subscriptions by Spotify, Apple and Amazon, ie the one entertainment industry revenue stream that has been pretty resistant to the negative impact on the COVID-19 shutdown. So pandemic be damned, let’s get some shares on sale!

How many shares? 70 million no less! Count them. One, two, three, four, five – actually, don’t count them. Just accept that’s a lot of shares. Though, actually, only 14% of the company’s entire stock, so maybe not that many.

Access – which will get the loot from the share sale (ie it won’t be pumped back into Warner) – has set a target price of between $23 and $26 a share. Those targets value the Warner music company – with its labels, publisher and other musical widgets and whatnots – at between $11.7 billion and $13.3 billion.

Access, by the way, paid a neat $3.3 billion when it bought the music company back in 2011. Which – when you take inflation into account – wasn’t really that much more than the $2.6 billion a consortium led by Edgar Bronfmann Jr had paid when they bought Warner Music from the wider Time Warner business in 2003.

Which is further confirmation that the 2010s were a much better decade to be in the recorded music business. See, fucking new technology usually comes good eventually.

The IPO will take place on the Nasdaq stock exchange, which we already knew, but yesterday’s official confirmation of the share sale confirmed that again. The music firm will be listed on said stock exchange with the unimaginative ticker code WMG.

The sale of 14% of the Warner Music Group via IPO follows the sale of 10% of the Universal Music Group by its owner Vivendi to Chinese web giant Tencent at the end of last year. Vivendi, like Access, is keen to cash in on the big fat streaming boom and the revival it has caused in the record industry’s fortunes.

Now’s the time to get those sales done too.

Before any major re-slicing of the digital pie or contract adjustments in Europe hit the streaming income of the labels at large. While artist wins over termination rights in the US reduce the value of catalogue. And a slow shift to fixed-term assignment record deals as a result of more competition in the artist marketplace damages the profitability of the major label business model.

Yeah, definitely before any of that shit happens.

As a sideshow, there were recent rumours that the nation of Saudi Arabia, having identified the entertainment business as something to invest in, was interested in buying some or all of the Warner Music Group. There was then speculation that could be instead of the IPO.

Given the politics of that country, such an acquisition would be controversial, of course. Though, once shares are on the open market, there’s nothing anyone can do to stop the Saudi Public Investment Fund from buying up Warner stock in the same way it recently bought itself a 5.7% stake in Live Nation on the New York Stock Exchange.

But what would Harry have said? And Albert? And Sam? And Jack? Or, maybe more importantly, what WILL Ed say? And Bruno? And Chris? And Cardi? And Mike?