Warner Music Group (WMG) launched its initial public offering (IPO) on 26 May. The music group will offer 70 million shares in the public offering, whose price is expected to be between $23 and $26 each.
WMG says the offer consists entirely of secondary shares to be sold by its parent company Access Industries, LLC and certain related selling stockholders.
Underwriters will have a 30-day option to purchase up to an additional 10.5 million shares of Class A common stock from the selling stockholders. The company will not receive any proceeds from the offering.
Its S1 regulatory filing was published(link is external) this week. The group was approved to be listed on Nasdaq with the ticker symbol WMG. After the IPO, Access will still control more than 99% of the total combined voting power of WMG’s outstanding common stock.
WMG owns minority equity stakes in both Deezer and Tencent Music, and Access Industries owns a controlling equity share in Deezer, too.
In 2017, 2018 and 2019 Deezer paid it about $36m, $39m and $49m respectively for its sound recordings licensing deals. Deezer paid another $1m to Warner Chappell in fiscal 2019 for direct publishing licences.
In last year’s fiscal year, WMG’s recorded music business generated about $3.84bn in revenue, with its publishing arm adding another $643m.
WMG’s top two digital partners, Spotify and Apple, together accounted for 27% of its total revenues in 2019 – 14% for Spotify and 13% for Apple.
Warner has its eyes set on striking more deals in the music publishing space.
“The traditional barriers to widespread distribution of music have been erased,” it said. “The tools to make and distribute music are at every musician’s fingertips, and today’s technology makes it possible for music to travel around the world in an instant.”
“We have the opportunity to generate significant value by acquiring other music publishers and extracting cost savings (as acquired catalogues can be administered with little incremental cost), as well as by increasing revenues through more aggressive monetisation efforts. We will also continue to evaluate opportunities to add to our catalogue or acquire or make investments in companies engaged in businesses that we believe will help to advance our strategies.”
WMG also said that in the six months ended 31 March 2020, it had spent $16m on acquiring publishing rights.
The company’s Distribution Alliance Division also recently partnered with African music distributor Africori.