Warner Music Group Offers IPO

Warner Music Group Corp. (WMG), one of the biggest music recording companies worldwide, is offering its stocks to the general public. Warner Group, as it is also called, plans to list its shares through an initial public offering (IPO) on The Nasdaq Stock Market. The perceived value of the conglomerate's equity is up to $13.3 billion.

Under the Warner Group record label are artists such as Ed Sheeran, Bruno Mars. Madonna, Dua Lipa, Coldplay, Cardi B, Metallica, Camilla Cabello, and a host of numerous musicians.

As stated on its official website, there will be a total flotation of 70 million IPO shares of its Class A common stock. This equates to 13.7 percent of the common stocks. The IPO price is pegged between $23.00 to $26.00 per share.

The company will not receive any proceeds from the sale. Instead, the offering is coming from the shares of Access Industries and other selling stockholders. It will be listed under the ticker symbol "WMG." Warner Group is anticipating to raise $1.8 billion through the public listing.

Access Industries is owned by Ukraine-born Sir Leonard Blavatnik, a British-American businessman who acquired WMG for $3.3 billion in 2011. The investment firm also has significant shares in several other industries, including fashion label Tory Burch.

Forbes has ranked the business tycoon as No. 51 on Billionaires 2020 List with his current net worth of $19.3B. Access Industries will retain the majority of voting rights in WMG.

Blavatnik purchased the record label when the music industry was on a major slump for several years since 2011. Music sales have improved over recent years with the advent of paid streaming platforms such as Spotify and Apple Music. Last year, the global music industry posted $20.2 billion in revenue sales worldwide. According to industry group International Federation of the Phonographic Industry (IFPI), half of the gains came from streaming services. The posted sales were $6.2 billion higher than in 2014.

Based on Warner Group's prospectus, the underwriters, which are Morgan Stanley, Credit Suisse, and Goldman Sachs hold a 30-day option to purchase an additional of 10.5 million shares from the selling stockholders.

WMG is the third-largest recording company in the music industry, next to Universal Music Group (UMG) and Sony Music Entertainment (SME). WMG, with interests also in music publishing and artist services, currently represents more than 80,000 songwriters and composers including Beethoven.

In its most recent fiscal year that ended in September 2019, Warner Music posted $4.5 billion in revenue with a profit of $256 million. This was based on the report on their prospectus.

The business of streaming contributes largely to the major turnaround of the declining music industry. According to the Recording Industry Association of America, earnings from the platform now account for nearly 80 percent of retail sales revenue in the U.S.

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Warner Music initially announced the IPO flotation plans in February but was disrupted due to the coronavirus pandemic. Financial markets around the globe suffered severe blows.