For Sale: As Much As Half of Universal -- WSJ
31 Luglio 2018 - 9:02AM
Dow Jones News
By Nick Kostov in Paris and Anne Steele in Los Angeles
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 31, 2018).
Universal Music Group's parent will try to sell up to 50% of the
world's biggest music company in an attempt to cash in on a
resurgent recording industry.
Vivendi SA said it would look for one or more strategic buyers
for the Universal stake. The French media conglomerate said it
would hire banks soon to assist in the sales process it plans to
kick off in the fall and aim to complete it within 18 months.
"Our goal is to determine a list of potential partners that
would help us to obtain the best valuation for Universal while
accelerating its growth," Vivendi Chief Executive Arnaud de
Puyfontaine said.
The move is a stark turnaround for Vivendi, which three years
ago rebuffed an activist investor's call to sell some or all of
Universal and use the funds to boost cash returns. At the time,
Vivendi placated U.S. hedge fund P. Schoenfeld Asset Management LP
by boosting its dividend. It also turned down an $8.5 billion offer
from SoftBank Corp. for Universal in 2013.
Mr. de Puyfontaine last year suggested the company could float a
minority stake in Universal. The company Monday said it had
scrapped plans for the initial public offering, saying it was
proving too complex.
Universal Music has been a bright spot for Vivendi. It has
benefitted from subscription-based streaming services like Spotify
Technology SA and Apple Inc.'s Apple Music, which have emerged as
revenue growth drivers for the once-beleaguered music industry.
Their growth is outpacing declines in physical music sales and
digital downloads.
Spotify, which sold shares to the public via direct listing in
April, has rekindled investor interest in the music business. Even
though it has never reported an annual profit, the listing valued
the company at $26.54 billion. Universal, meanwhile, reported a
13.4% operating margin last year.
Universal and its rivals -- Warner Music Group Corp. and Sony
Corp.'s Sony Music Entertainment -- rake in royalty payments
whenever listeners access their songs through the streaming
services.
In 2017, the industry's global revenue from recorded music grew
by 8.1%, to $17.3 billion, according to the International
Federation of the Phonographic Industry. That was the third
consecutive year of growth following 15 years of declining revenue
amid plummeting physical and digital format sales.
The rise was almost entirely due to a 41% surge in streaming
revenue -- which now amounts to the single largest sales source for
the industry -- thanks to 176 million users of paid services like
Spotify.
While revenue for 2017 was still just 68% of the market's peak
in 1999, industry watchers say the upside for streaming could be
much larger with mobile-phone penetration in developing markets and
as more people become familiar with the service.
Universal's performance in the first half was "very good,"
Vivendi Chief Financial Officer Hervé Philippe said on a call with
analysts, adding that he is "confident for the rest of the year"
despite uncertainty over the level of new releases and CD
sales.
Universal is Vivendi's biggest unit, and accounted for more than
half of the company's core earnings in the first half. Its
second-biggest unit, French pay-TV group Canal Plus, has been
struggling from competition for sports rights and online video
services.
Universal is the largest music company in the world by revenue
and market share, and alone it took in nearly 30% of all
music-industry revenue in 2017, according to MIDiA Research. Last
year, Goldman Sachs boosted Universal Music's valuation 16% to
$23.5 billion.
Mr. Philippe said Vivendi hasn't decided on the size of the
stake to be sold or the floor price for a deal. Vivendi would use
the proceeds from the sale to make a "significant" share
repurchase, he said, or for bolt-on acquisitions.
(END) Dow Jones Newswires
July 31, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Grafico Azioni Vivendi (EU:VIV)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Vivendi (EU:VIV)
Storico
Da Apr 2023 a Apr 2024