Shake it off! Taylor Swift label Universal Music plans stock market flotation

Mark Sweney
Photograph: Isabel Infantes/PA

Universal Music, the world’s biggest record company, is planning to list on the stock market, as the label that is home to stars from Taylor Swift to the Beatles looks to cash in on the streaming revolution.

Vivendi, the music group’s French parent company, said it aimed to float by “early 2023 at the latest”.

Universal is currently valued at €30bn (£25bn), following the sale of a 10% stake to a consortium led by the Chinese conglomerate Tencent Holdings for €3bn in December.

The flotation plan comes a week after smaller rival Warner Music, home to stars including Katy Perry, filed for an initial public offering. The billionaire Len Blavatnik’s Access Industries paid $3.3bn for Warner Music in 2011.

After years of struggling to make up for plummeting sales of CDs, for decades the backbone of global profits, the industry is finally reaping the benefits of the digital streaming revolution.

In the UK, music streaming revenues totalled £31.5m in 2010, the first year they reached a scale able to be measured. Last year they passed £1bn for the first time, at 23.5% annual growth, accounting for 71% of all UK music revenues. The demise of the CD has been equally precipitous, falling from £873m in 2010 to £318m last year, according to the Entertainment Retailers Association.

The triumvirate that dominates global streaming – Spotify, Amazon Music and Apple Music – have more than 250 million paying subscribers between them. Including those on ad-funded tiers, that number rises to almost 400 million globally.

Universal announced its intention to float as part of the company’s full-year results, which showed total revenues rising a healthy 14% year on year to €7.1bn (£5.9bn), driven by a 21.5% jump in streaming revenues. Profits rose 22% year on year to €1.1bn. As the streaming market moves closer to maturity, growth rates are beginning to slow. Universal’s streaming revenues grew 16.8% in the fourth quarter last year, compared with 28% in the first three months of 2019.

Vivendi had looked at publicly listing Universal in 2017, but the plan was abandoned the following year as being “too complex”. Vivendi has not said what level of shareholding it is seeking to retain in Universal after the flotation.

The Tencent-led consortium has the option to buy another stake of up to 10% at the same price in Universal by next January. Vivendi has said it is also in separate talks to sell a minority stake to another unnamed investor, or investors, at a similar price.