Warner Music Group (WMG)
Music record label, Warner Music Group, listed on the Nasdaq this week in what was the largest IPO this year. The group raised $1.93 billion by offering 77 million Class A shares at $25 (the upper end of the range), placing the company’s value at $12.75 billion.
Warner negotiates with music streaming companies and radio stations on behalf of the artists it represents. Each time a song is played, the artists get 40% as royalties. The Group posted a net loss of $74 million in Q2 2020, compared to a profit of $67 million in the same period a year ago. The company has debt totaling $2.98 billion. Recorded music made up 86% of Warner's total sales in 2019. This was partly thanks to streaming sales or licensing, which increased by 23% in the period. Whilst the company lost out because of cancelled concerts and merchandising in the lockdown, folks still listened to music to ease the stress associated with being quarantined. Warner Music’s music streaming revenue grew 11% in Q2 2020 whilst it's music publishing digital revenue increased 17% compared to the same period last year.
The company is the parent of Warner Records, Atlantic Records, Parlophone, Elecktra Records, Uproxx, Rhino Entertainment, the Alternative Distribution Alliance, EMP Merchandising and Warner Chappelle Music. Readers may be more familiar with some of the artists they represent, such as Ed Sheeren, Bruno Mars, Madonna, and the Rolling stones. The full client list is rather impressive.
The group is the third largest of the three global major music labels after Universal Music and Sony Music (both of which are owned by large multinational conglomerate organisations). This means that Warner Music is the only pure music play. Warner Music is majority owned by billionaire Len Blavatnik's Access Industries, and the proceeds from the listing will go to him. Universal Music is owned by French entertainment company Vivendi (90%) and China’s Tencent (10%), whilst Sony Music, is owned (via subsidiaries) by Sony in Japan.