AMSTERDAM, Sept 21 (Reuters) - Universal Music Group's
shares leapt more than a third in their stock market
debut on Tuesday as investors bet a boom in music streaming
still has a long way to run.
Here are facts about Universal and its flotation:
FROM THE BEATLES TO BILLIE EILISH
By revenue, Universal Music Group or UMG is the largest of
the "big three" record labels. It represents a huge range of
musicians and song catalogs, from Billie Eilish to The Rolling
Stones and Bob Dylan.
Major competitors include Sony Music, part of Sony,
and Warner Music Group. The "big three" are estimated to
account for just under 60% of global sales generated by music
rights from their catalogs.
Universal started out in the early 1930s when British label
Decca Records set up a U.S. branch, which later merged with
other music companies. In 2011 Universal swooped on EMI's
recorded music business for $1.9 billion, giving it access to
catalogs for The Beatles, Radiohead and Pink Floyd.
A SHIFTING MUSIC INDUSTRY
Universal is benefiting from a boom in streaming revenues,
with young music fans in particular relying on their smartphones
to listen to songs. It makes money from subscription services
through deals with the likes of Spotify.
It also has deals in place with ad-based social media
companies such as TikTok and YouTube to compensate artists for
the use of their songs in "user-generated content" on those
platforms - though the terms of those deals are not public.
While digital piracy cut into music sales in the first
decade of the century, Universal is now pushing into areas such
as social media platforms which use its music, such as TikTok,
as well as fitness applications and video games.
Universal still faces competition from independent labels
and startups looking to release music in a purely digital
fashion. The company said in its listing prospectus that it
expected to grow its streaming business in markets such as South
Korea, Brazil, India and Russia.
Universal was spun off by French media group Vivendi
. Vivendi's investors, including its controlling
shareholder Vincent Bollore, received 60% of the shares of
Universal after it listed in Amsterdam.
Universal saw its market value leap to almost 47 billion
euros ($55 billion) on Tuesday in Europe's largest listing of
Vivendi will continue to hold 10% of Universal after the
transaction. A consortium led by China's Tencent will
have 20% and billionaire hedge fund investor William Ackman's
Pershing Square Holdings will hold 10%.
Bollore and Tencent have agreed to consult each other on
matters such as dividend policy and some aspects of the board
ahead of general meetings, Universal said in its prospectus.
REVENUES AND COVID-19 IMPACT
Universal reported earnings before interest, taxes,
depreciation and amortization (EBITDA) of 1.49 billion euros on
sales of 7.43 billion euros in 2020. The company has 2 billion
euros of net debt.
For the mid-term, Universal forecasts sales growth in the
high single digits, with an EBITDA margin in the mid 20% range.
($1 = 0.8465 euros)
(Reporting by Toby Sterling and Sarah White
Editing by Keith Weir and Mark Potter)