Apparently, the biggest industry grumble ahead of this year’s BRITs concerns the lack of room for tables on the revamped O2 Arena floor, after the ceremony revamp took up more space for staging. Proof, surely, that the revived biz is awash with cash, and many companies are in the mood to spend it.
But they’re also in the mood to make it. So much so, even Len Blavatnik, multi-billionaire owner of Warner Music Group parent Access Industries, fancies getting his hands on even more of it.
The news that WMG is pursuing an IPO blindsided much of the biz, but actually makes perfect sense. Warner may have struggled during its previous time as a public company (which ended in 2011 when Blavatnik bought in), but the climate is completely different now. Stock that was once in the toilet is now being treated as a blue chip investment by the huge banks brokering the float.
Stock that was once in the toilet is now being treated as a blue chip investment
The only question now is how big the valuation will be. Warner declined to comment on any aspect of the IPO, but you can guarantee it will come in higher than the $3.3 billion Blavatnik shelled out. The $30bn valuation of Universal Music – which announced its own IPO plans at the end of last week – is based on what Tencent is paying for its 10% stake, and while that is considered a tad over-priced by many, it’s likely they paid a premium to buy into the market-leader.
The picture around Universal's IPO, due by 2023, is complicated by that Tencent deal but Warner looks simple enough. According to most analyses, Warner has a global market share of around 18%, more than half Universal’s estimated 31%, suggesting a mark of $15bn could be achievable. That kind of money – assuming Blavatnik, who will likely maintain a controlling interest, makes funds available to WMG – would mean Steve Cooper and co could compete for any acquisition they fancy, while not being intimidated by Spotify's own IPO-fuelled wealth. Don’t expect them to hang around either – with a US election this year, and the effect that could have on the markets, Access will surely want to move sooner rather than later.
Either way, after Spotify and numerous other smaller companies took the plunge to go public, coupled with the feverish atmosphere around industry mergers and acquisitions, these proposed major label IPOs are further confirmation of just how many people out there want to give the music business their money right now. With BRITs tables ruled out, the biz’s biggest challenge will be working out how to spend it wisely...