IMPALA to challenge UMG-Tencent deal

IMPALA to challenge UMG-Tencent deal

IMPALA is to formally oppose the strategic partnership between Tencent Holdings and Universal Music Group.

The indie sector’s increasing concerns about the deal are revealed in the latest issue of Music Week. IMPALA made the decision at its board meeting this month to challenge the deal.

IMPALA executive chair Helen Smith said: “Even at a low level of shareholding, we believe the risk of harm for consumers and competitors from such a transaction would be a concern because of the impact in both the digital market and the music sector, with independents being squeezed further and artists also losing out.”

IMPALA will push for regulatory scrutiny of the deal. The Chinese competition watchdog is aleady looking into Tencent Music’s licensing deals with majors.

“We also need to see how the plan to sell the rest of the [minority stake] plays out,” said Smith. “There could be any number of outcomes.”

Parent company Vivendi selected Tencent Holdings as its strategic investor for a 10% stake, with an option to add a further 10%. Vivendi has also revealed plans to sell an additional stake.

We believe the risk of harm for consumers and competitors from such a transaction would be a concern

Helen Smith

China is a growing market and now at No.7 in the IFPI rankings.

UMG and Vivendi declined to comment. Tencent did not respond to requests for comment.

The major has successfully allayed concerns about the effect on competition, such as the takeover of EMI in 2011.

UMG CEO/chairman Sir Lucian Grainge has stressed that the major remains focused on maintaining creative and commercial resources for artists.

In a memo to staff in August, he said the “possibilities to accelerate and broaden our strategy are exciting”.

To read the full story pick up the latest issue – or subscribers can click here.

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