WHY, IN A POST-TENCENT/UNIVERSAL WORLD, THE THREE MAJOR MUSIC COMPANIES ARE WORTH NEARLY $90BN
The three major music companies are collectively worth more than $85 billion – and they have Tencent to thank. MBW can publish that number with more certainty than we’ve been able to in some time, thanks to last week’s news that China’s Tencent Holdings Ltd. has made a bid to acquire 10%-20% of Universal Music Group, at a company-wide valuation for UMG of €30bn ($33.63bn). By default, this approach from Tencent (run by CEO & Chairman, Ma ‘Pony Ma’ Huateng, pictured) has become the first market-tested barometer of what the strategic value of a major music company may be today. Tencent’s bid slaps a 30X multiple on UMG’s EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) profit figure for the 12 calendar months of 2018 – i.e. the last fiscal year of the music company and its French parent, Vivendi. In February, Universal confirmed its EBITA figure was €902m for this FY2018 period. In order to transition this €902m into an annual EBITDA number, we need ...