The company initially offloaded 17.2% of Sony Music Entertainment’s holding on the first day of the IPO on the New York Stock Exchange and has now confirmed it has since sold a further 32%.
Sony has reported that it estimates an approximate 100 billion yen (£667.8m) gain on its entire Spotify stock holding, with the remaining proceeds to be distributed to artists and labels. The exact price at which shares were sold was not revealed.
The major will now have to establish the formula for distributing proceeds from the windfall to artists and distributed labels. Sony is the only major to so far confirm it will pass on proceeds from the sale of stock to both.
“Sony Music and The Orchard are committed to sharing with their artists and distributed labels any net gain they may realise from a sale of Sony Music’s equity stake in Spotify,” the company has reiterated. “This is consistent with our previously announced policy of sharing breakage and equity proceeds from digital catalogue licenses with our artists and distributed labels.
Sony Music Entertainment originally owned 5.71% of Spotify’s stock, the largest holding among the majors. However, some of that stock may have been acquired separately to the licensing deals and there is speculation that not all the windfall would be passed on.
In an SEC filing and webcast by CFO Hiroki Totoki, Sony Corp revealed the extent of Spotify stock that has been sold up to April 27.
“Sony owned 5.707% of Spotify’s shares (5.082% on a fully diluted basis) at the time of the public listing,” said the filing. “Due to the public listing and the subsequent sale of a portion of such shares owned by Sony, Sony expects to record an unrealized valuation gain for the shares Sony continues to hold after the listing and a realized gain for the shares sold, net of the estimated amount to be shared with its artists and distributed labels. The sum of the unrealized valuation gain (net) and the gain on the sale of shares (net) to be recorded for the fiscal year ending March 31, 2019 is expected to be approximately 100 billion yen in total.”
Spotify is set to announce Q1 results later today (May 2).