Talk about glee!
Universal Music Group worth $22B
Talk about a change of tune. Vivendi’s Universal Music Group, the world’s biggest music label, is worth a stunning $22 billion, the French owner of the label said Tuesday
Most on Wall Street had pegged the value of Universal, home to Selena Gomez, U2, Drake and Lady Gaga, among many others, at closer to $13 billion.
But Universal’s sales have been improving and a music industry tracker confirmed on Tuesday that total worldwide music revenue, aided by a rapid rise in streaming, leaped by 6 percent in 2016, to $15.7 billion.
Vivendi, the Paris-based media conglomerate that owns stakes in pay-TV and telecom firms across Europe, has been under pressure to spin off at least a piece of UMG.
Vivendi’s estimate of UMG’s value came from investment bankers’ estimates of the label value.
No banker has been hired to undertake an initial public offering, however.
The last major label to be acquired was Warner Music Group in 2012. It cost owner Len Blavatnik $3.3 billion.
Around that time, UMG paid $1.9 billion for EMI’s recorded music business. Sony paid $2.2 billion for EMI’s publishing business.
Vivendi held its annual shareholder meeting on Tuesday and the company’s chairman and controlling shareholder, Vincent Bolloré, gave word about the new eyepopping valuation.
Vivendi General Counsel Frédéric Crépin revealed the firm had received an offer of $8.5 billion in 2013, reportedly from SoftBank. Crépin said it had also received an offer of $15 billion in 2015. Liberty Media was rumored to be circling at that time.
UMG’s profits before interest, taxes and amortization grew 8.4 percent in 2016 on a 3.1 percent rise in revenue.
Back in October, Bank of America analyst Daniel Kerven told investors in a note: “It would be hard to conceive a better story — a transformed product that drives a multiple of revenue from a very low base after 20 years of disruption, whose take up is being paid for, subsidized by telco and internet companies.”