The Universal Music Group (UMG) made major headlines at the start of the year, after selling 10 percent of its stake, valued at around $3.3 billion to Chinese entertainment and tech giant Tencent. The Chinese corporate giant will be allowed to raise its total stake in the company to 20 percent by 2021, if it chooses to, and will also be given minority stake in UMG’s China operations.
UMG, which hosts musical superstars such as The Beatles, Mariah Carey, Rihanna, Queen, Coldplay, Metallica Kanye West and Taylor Swift, are believed to have explored this sale to expand their global reach. The burgeoning music streaming industry has also been extremely profitable for the music industry, creating an interest in foreign markets.
This deal is expected to be one of the one of the largest U.S.-Asia partnerships, and may hint at further partnerships between the western music industry and Asia in the future. Tencent, also currently holds a 7.5 percernt stake in streaming industry leader Spotify, and hosts distribution agreements with Sony, Warner Music Group and YG Entertainment.
“With the exception of additional resources to further advance our strategy, everything else will remain the same: our strategic vision; our company, label and business unit names; our locations; and of course, our outstanding people,” UMG chief Sir Lucian Grainge said in a memo to employees, according to Rolling Stone. “This is an exciting development reflecting a strong validation of our business strategy, our incredible team and your excellent work. It also reflects our shared optimism about UMG’s continued role as the driving force in our industry and how focused we are on the future.”