Simply final week, outstanding music business analyst William Packer of BNP Paribas Exane Upgraded version universal music groupFor the second time in a yr, there may be inventory.
As a vote of confidence in UMG’s future worth, packaging machine Elevating his inventory ranking from “impartial” arrive”Outperform”.
The information comes simply days after we reported confidence Reflected in UMG’s long-term prospects Invoice Ackerman’s Pershing Sq. Holdings, Inc., Owns approx. 10% Fairness Curiosity in UMG.
Now, there’s extra optimistic information for the worldwide recorded music business. Fitch Rankings, One of many “large three” credit standing companies in the US, Designated UMG competitor Warner Music Group The primary long-term Issuer Default Ranking (IDR) wasblood mind barrier‘.
in response to Rating System Guide At Fitch The web site’s IDR ranking is blood mind barrier That is excellent news for firms that get scores.
Fitch wrote in a analysis report launched on Wednesday (September 4) that WMG’s ranking “displays the[s] Its main place within the music leisure business is pushed by its broad portfolio of music property and diversified income base.”
The ranking additionally takes into consideration “the corporate’s modest leverage and powerful free money movement (FCF) technology, balanced by the inherent volatility of its hit-driven recorded music phase,” the report added.
Fitch stated its outlook for WMG additionally consists of expectations for “continued development in paid music streaming, growth into rising markets, and new monetization alternatives from new platforms and dependable tremendous followers.”
With William Packer’s improve on UMG inventory, Pershing Sq.’s optimistic view on Common Footage, and Fitch Rankings’ BBB ranking on Warner Music Group, the timing could not be higher for the worldwide music business.
In current days, questions have been raised about the way forward for the U.S. streaming subscription market following the discharge of information in the marketplace. Recording Industry Association of America This exhibits that subscription development within the US market is steadily decelerating.
Business revenues in world’s largest recorded music market solely develop 4% annual enhance by way of the primary six months of 2024, in response to RIAA information. The overall variety of streaming subscription accounts within the U.S. solely grew Annual enhance of two.7% throughout the identical interval.
As we have famous in our reporting over the previous few days, the U.S. could be the world’s largest recorded music market, however its development charges usually are not reflective of all different markets all over the world, particularly fast-growing rising markets the place paid streaming There may be nonetheless a number of room for adoption.
Take Brazil as an examplethe place streaming media makes up 99% Home recorded music market circumstances, information revealed by native commerce our bodies skilled music Following final week’s pessimism attributable to RIAA information, this week has given the worldwide business purpose to rejoice.
Recorded music business income grows in Brazil 21% annual enhance Within the first half of 2024, it would attain $257 million (R$ 1.442 billion) Throughout this era, in response to information launched by native commerce our bodies, Skilled music”.
The nation’s recorded music enterprise generates 1.43 billion reais ($255 million) Since streaming within the first half of 2024, A rise of 21.1% in contrast with the identical interval final yr.
Of this quantity, subscription streaming contributed 995 million reais ($177 million)up Annual enhance of 28.4%whereas ad-supported streaming platforms contributed R$436 million (US$78 million)up A rise of 6.6% in contrast with the identical interval final yr.
In actual fact, in explaining this week’s choice to provide Warner Music Group a BBB ranking, Fitch noted “The worldwide music business has robust development potential, together with continued adoption of paid streaming providers, rising digital service supplier (DSP) costs, development in rising markets, monetization of recent platforms and premium initiatives from tremendous followers. Likelihood”.
Fitch added that it “believes [WMG] We’re well-positioned to make the most of rising market alternatives”.
The ranking company added: “Though main report labels have signed licensing rights with platforms comparable to Meta and TikTok, Fitch believes there may be nonetheless appreciable danger of unlicensed use of music by rising platforms comparable to brief movies, sports activities, video games and stay streaming. worth hole”.
One other key purpose for Fitch’s confidence not solely in Warner Music Group however in music rights as a complete is what it sees because the “continued relevance of the foremost labels”
Fitch stated, “Music streaming and digital media platforms have created a crowded atmosphere by democratizing music discovery and promotion.
“Nonetheless, Fitch believes massive gamers like WMG are uniquely positioned as a result of their world scale, differentiated platforms and experience.”
Fitch additionally cited WMG’s “constant capital allocation,” saying “WMG prioritizes investments for development and delivering shareholder returns by way of dividends and energetic capital construction administration.”
Fitch stated it “expects WMG to develop by way of natural investments and strategic acquisitions to increase music rights, geographic protection and providers.”
One in every of these investments got here in July, when Warner Music Group acquired a minority stake in Brazil’s Sua Música, which operates a UGC music platform and providers enterprise throughout a number of sectors. digital distributionartist administration and publishing.
Warner stated in a July 17 press launch that Sua Música “might be an essential companion in its technique” to “increase its presence in all areas of the Brazilian market, strengthening its presence in regional music, native partnerships authority on the topic and share experience in discovering new music.” Creating the sound of the catalog of the long run”.
Chief Government Officer, Warner Music Group Robert Kinkel Have had it earlier than indicated he wishes to develop WMG’s Exists within the so-called “center class” artist market.world music enterprise
