Warner Music Group Is Finally Ready for Its IPO

More than three months after filing its initial public offering request, Warner Music Group — owner of storied major labels like Atlantic, Warner Records, and Elektra, as well as music publisher Warner Chappell — has officially kicked off its IPO, the company announced on Tuesday.
WMG, which is home to modern pop and hip-hop stars such as Lizzo and Cardi B, as well as legacy acts like Led Zeppelin, previously delayed its IPO launch amid the pandemic. According to filings, the company expects to fetch between $23 and $26 per share and will put up 70 million shares on Nasdaq, which could raise more than $1.8 billion for shareholders. That’s 13.7 percent of its common stock, valuing the company at as much as $13.3 billion.
The offering consists entirely of secondary shares to be sold by WMG’s parent company, Access Industries, headed by founder Len Blavatnik, and Warner itself won’t get any proceeds from the offering, the company said. Morgan Stanley, Credit Suisse, and Goldman Sachs, underwriters on the offering, will have a 30-day option to buy another 10.5 million shares. Access Industries purchased WMG in 2011 for $3.3 billion and turned it private, making the new IPO the music company’s second time around on the public market.
WMG’s offering comes as the music industry found new prosperity through streaming, which has taken the business out of the piracy and download era. Eighty percent of revenue for the recorded-music business came from streaming in 2019, according to a February report from the Recording Industry Association of America. Total revenue from streaming grew almost 20 percent, to about $8.8 billion, in 2019, the report said.
Before the pandemic hit, WMG’s IPO announcement was yet another sign of a thriving industry. Universal Music Group, the largest music company in the world, had also been considering an IPO following a 10 percent-stake sale to Chinese company Tencent, UMG’s parent Vivendi said earlier this year. Warner’s recorded-music business generated $3.84 billion last year, according to the company’s prospectus, making up 86 percent of the company’s revenue.
While the recorded music business is still poised to grow as streaming leaves its infancy, the music industry faces a new struggle with COVID-19. WMG lists the impact of the coronavirus as a risk factor in its prospectus. Some of its artists have delayed albums over marketing complications from social distancing measures. Physical sales, already heavily declining over the past decade, have taken a further hit amid the crisis, and with live music completely stalled — save for a few more experimental options like crowdless and drive-in concerts — WMG’s concert promotion and merchandise revenues have dropped.