Universal Music Group’s Value Surges to $33.3 Billion Following the Increase of Music Streaming Users!
Thanks to the increased number of users streaming songs from renowned Hollywood artists like Drake and Taylor Swift, UMG’s net value also increased to an astounding $33.3 billion!
According to Deutsche Bank‘s latest report, UMG’s stakes rose to $33.3 billion while users continue to stream songs of Ariana Grande, Guns N’Roses, The Beatles, Jay-Z, Queen, Pink Floyd, and U2. The latest addition to their streaming playlists are the songs of Drake and Taylor Swift.
The Frankfurt-based valuation report initially estimated UMG’s value would reach around a few billion euros. Deutsche raised their initial estimates to twice their previous estimates of 20 billion euros last year.
However, UMG surpassed their estimates when it garnered 28.3 billion euros in the market capitalization of its parent company Vivendi. The management says it’s not surprising for UMG to achieve such a milestone.
According to the company’s analysis, UMG’s valuation was already worth $40 billion as of 2017. According to the company, the analysts also failed to consider its price-earnings ratio and profits from 2017.
According to Deutsche’s analysts, they anticipate UMG’s stake sale and valuation will continue rising until late 2019. They also expect the company’s present streaming revenue rate will increase from $7 billion last year up to $21 billion in the next four years, especially since UMG took the initiative to ink a deal with famous artists.
Last November, UMG made a deal with Taylor Swift stating a portion of their profit will be given to the artists from their Spotify shares. Aside from that, Deutsche Bank listed Spotify as one of UMG’s possible buyers, along with other tech-giants like Alibaba, Apple, Amazon, Facebook, and Google. The latter company is a subsidiary of Alphabet and Tencent.
Despite UMG’s success, most business analysts couldn’t help but express their concern about the acquisition proposal. According to them, should UMG get acquired by one of these tech-giants, competition would cease to exist and monopoly and domination would prevail.
Aside from these tech-giants, Liberty Media also expressed its interest to buy UMG. So far, the company has become the front-runner as it works on becoming the largest music-entertainment company in the world to compete against Sony and Warner. Currently, the company has a Formula One Group and SiriusXM.
A Strong Year Ahead
In the year-end party of UMG, the company’s chairman Lucian Grainge was hopeful the company would continue to accelerate and become global key innovators in the music streaming industry. He also expressed his deep gratitude for the Vivendi Management Board for their endless support and providing them the resources UMG needs to drive their transformation.
Despite Vivendi’s plan to sell out 50% of UMG’s music arm, Grainge said their parent company would still continue giving them all the support they need. The chairman also looked back on the milestones and achievements they accomplished the previous year.
He highlights one of the most notable accomplishments UMG obtained in the year 2018 was the landmark distribution partnership they had with Boomplay. The leading music streaming service in Africa announced the signing of a partnership contract that would allow UMG to penetrate multiple music streaming markets in Africa by licensing its catalog to Boomplay.
Boomplay then holds the sole distribution rights to stream and download UMG’s renowned global labels in Ghana, Kenya, Nigeria, Rwanda, Tanzania, Uganda, and Zambia. Grainge said back then how they looked forward to introducing their artists’ creativity and extraordinary music to African users as soon as possible.
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