THUMBS DOWN ON TENCENT/UMG DEAL

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THUMBS DOWN ON TENCENT/UMG DEAL

11/26/19

European independent trade body IMPALA is gearing up to oppose Tencent’s buyout of a 10% stake in Universal Music Group, warning that the transaction will result in “independents being squeezed further and artists also losing out.”

Vivendi has started negotiations with Tencent for a 10% investment in UMG, with a one-year call option to purchase another 10% at the same price and terms. IMPALA believes the sale “would change the whole music ecosystem, and smaller companies will be the first to lose out.”

The org points out that as UMG is the world's biggest music company—and Tencent currently owns four out of five of the leading music apps with an estimated 90% market share in the growing Chinese market—the "creeping influence" of newly combined major companies "will not escape regulatory scrutiny.”