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Spotify’s third-quarter earnings results helped give investors confidence about the company’s path and sent its shares up 10.3% to $170.63 on Tuesday before closing at $159.35 on Friday — up 6.3% for the week. Not only did the streaming giant turn an operating profit of 32 million euros ($34.8 million) — compared to a $247 million euro ($269 million) operating loss a year earlier — it added 6 million subscribers in the same quarter a price increase went into effect.
That third-quarter growth will help the NYSE-listed, Swedish company exceed its expectations for subscriber gains this year. “We walked into 2023 thinking we would do just over 20 million in net subscriber adds for the full year,” CEO Daniel Ek said during Tuesday’s earnings call, “but we’re actually on track to deliver 30 million.”
Morgan Stanley analysts raised their Spotify price target from $190 to $200 on Wednesday, writing in an investor note that the company is “a superior product with pricing power” that will continue to expand gross margins. Likewise, analysts at JP Morgan increased their Spotify price target from $190 to $205 with a belief that the operating margin and free cash flow milestones reached in the quarter will attract more investors to the company.
Led by Anghami’s 11.5% improvement to $1.07, six music streaming companies had an average gain of 4.3% this week. China’s Tencent Music Entertainment, which will report third-quarter results on Nov. 14, gained 7.2% to $7.13, while another Chinese music streamer, Cloud Music, gained 3.3% to 85.50 HKD ($10.93). Meanwhile, U.S.-based LiveOne gained 1% to $1.00.
Overall, the 21-stock Billboard Global Music Index dropped 0.7% to 1,304.74 this week, marking its third consecutive weekly loss and tenth down week in the second half of 2023. The slight decline dropped the index’s year-to-date gain to 11.7%. Of its 21 stocks, 13 finished the week in negative territory, seven posted gains and one, Round Hill Music Royalty Fund, was unchanged. (Round Hill’s purchase by Concord for $469 million was approved by shareholders on Oct. 18.)
Despite the widespread losses across the music business, the Billboard Global Music Index fared better than many indexes. In the United States, the S&P 500 and the Nasdaq composite each declined 1.9%, while the United Kingdom’s FTSE 100 dropped 1.5% and South Korea’s KOSPI composite index fell 3%.
The Nasdaq has slipped 10.3% from its peak on July 31, officially putting it in correction territory — a 10% decline from a high — on Wednesday. The Billboard Global Music Index hasn’t entered a correction yet, but it’s close, having declined 9.9% from its peak of 1,447.32 on July 21.
Shares of Universal Music Group (UMG) fell 4.2% to 23.31 euros ($24.46) this week, with the company’s third-quarter results on Thursday preceding a 7.2% decline on Friday. Guggenheim analysts maintained both their buy rating on UMG’s stock and their 27.00 euro ($28.56) price target. But the analysts dropped their fourth-quarter forecasts for UMG’s streaming revenue (from 4.4% to 3.5%) and subscription revenue growth (13.0% to 12.8%).
Radio stocks were hit particularly hard in the wake of Cumulus Media’s third-quarter earnings, which showed that the company’s revenue declined 11% year-over-year, to $207.4 million. That was chalked up to “weakness in national markets,” the company said on Friday. Cumulus Media’s share price fell 11.7% to $4.77 on Friday and finished the week down 5.4%. iHeartMedia, which will report earnings on November 9, fell 4.9% on Friday and finished the week down 12.7%.
K-pop stocks had a tumultuous week following Wednesday’s arrest of Lee Sun-kyun — an actor and member of the group BIGBANG known as G-Dragon — on charges of using illegal drugs. Lee, whose exclusive contract with YG Entertainment ended in June, denied the charges. Following his arrest, shares of YG Entertainment fell 7.9% to 50,200 won ($37.01) on Thursday, though they recovered most of the loss to finish the week down 2% to 52,600 won ($38.78).
News of Lee’s arrest sparked days of frenetic media coverage in South Korea, hurting other K-pop stocks and eliciting statements from K-pop agencies to quash any speculation their artists might be involved. Shares of HYBE fell 10.7% to 204,000 won ($150.42) on Thursday. The company issued a statement to the local press saying “BTS is in no way related to the rumors spreading online,” according to reports. HYBE shares recovered some of Thursday’s losses with a 3.9% gain on Friday and finished the week down 5.6% to 212,000 won ($156.32).
SM Entertainment, home to K-pop groups NCT and Red Velvet, fell 5.1% on Thursday and closed the week down 8.4% to 103,900 ($73.61). JYP Entertainment, the agency behind Stray Kids and Twice, lost 6.2% on Thursday but finished the week up 2.7% to 103,600 won ($76.39).
Shares of K-pop companies sank this week following news that a member of K-pop ground EXO is leaving SM Entertainment for a different agency. According to reports, D.O. will leave SM Entertainment for a new agency being established by his longtime manager. D.O.’s contract expires in early November, SM Entertainment said in a statement, and the artist “will continue with his EXO activities with SM” but pursue acting and other activities through the new agency.
SM Entertainment shares fell 9% to 113,400 won ($83.93). Shares of YG Entertainment, home of girl group BLACKPINK, dropped 9.3% to 53,700 won ($39.74). Shares of JYP Entertainment, home of Stray Kids and Twice, plummeted 11.1% to 100,900 won ($74.67). HYBE, home to BTS and Tomorrow X Together, fell 8.2% to 224,500 won ($166.15). Shares of Kakao Corp. dropped 9.6% to 39,050 won ($28.90). Kakao and its subsidiary Kakao Entertainment own 40% of SM Entertainment’s common stock. Earlier this year, Kakao Entertainment formed a North American joint venture with SM Entertainment.
With all K-pop stocks moving in synch, investors appear to be concerned that the established agencies could be threatened by upstarts. Because Korean companies have far smaller rosters than publicly traded Western music companies such as Universal Music Group, Warner Music Group and Believe, any one departure can have an outsized impact. When BTS announced it planned to go on hiatus, HYBE’s share price dropped nearly 25% the following day.
Separately, the chief investment officer of Kakao, Bae Jae-hyun, was charged with manipulating SM Entertainment’s stock price in connection with Kakao’s bidding war against HYBE over SM Entertainment in the first quarter of the year. According to Bloomberg, the executive was arrested Thursday for buying 240 billion won ($178 million) worth of SM Entertainment shares in an effort to disrupt HYBE’s tender offer.
Despite the week’s heavy losses, K-pop stocks are among the best performing music stocks in 2023. Through Friday, HYBE, SM Entertainment, YG Entertainment and JYP Entertainment have gained an average of 37.1% year to date. JYP Entertainment leads the four companies with a year-to-date improvement of 48.8%.
The 21-stock Billboard Global Music Index fell 3.1% to 1,313.44, lowering its year-to-date gain to 12.5%. It was the biggest one-week drop for the index since July and just the seventh time this year the index dropped by more than 3% in a week. Losses were widespread and only four of the 21 stocks posted gains.
Stocks generally had a miserable week. In the United States, the Nasdaq composite index fell 3.2% and the S&P 500 declined 2.4%. In the United Kingdom, the FTSE 100 dropped 2.6%. South Korea’s KOSPI composite index sank 3.3%. As the first wave of companies released third-quarter earnings this week, one of the standouts was Netflix. The streaming video giant gained 16.1% on Thursday after announcing it added 9 million subscribers in the quarter and will raise prices in the U.S., U.K. and France.
Anghami was the index’s greatest gainer for the second straight week after increasing 16.6% to $0.96. Last week, shares of the Abu Dhabi-based music streamer jumped 18% after the company received a written notification from the Nasdaq Stock Market on Oct. 12 regarding its closing share price falling below $1.00 for the previous 30 days. On Tuesday, Anghami issued a press release to reveal the Nasdaq Stock Market issued a written notification notifying the company it is not in compliance with the exchange’s requirement that listed companies maintain a minimum market value of $15 million. Anghami fell below the $15 million threshold from Aug. 29 to Oct. 10. Anghami has until April 8, 2024, to regain compliance.
Hipgnosis Songs Fund gained 4.9% to 0.775 GBP ($0.94) this week despite dropping 9.3% on Monday following news the company canceled a planned dividend payment. As the week progressed, the London Stock Exchange-listed company’s stock price steadily increased and was helped by the board of director’s announcement on Thursday of a strategic review to help calm investors’ nerves. After Monday’s decline, the share price rose 15.6% through Friday (Oct. 20) to reach its highest closing price since Oct. 3. At the company’s annual meeting on Oct. 26, shareholders will vote to approve a $440 million catalog sale intended to reduce the share price’s discount to Hipgnosis Songs Fund’s net asset value. Shareholders will also vote on a continuation resolution.
Live Nation, Sphere Entertainment Co. and CTS Eventim were the top three music stocks this week amidst news that consumers continue to spend despite nagging inflation and a resumption of U.S. student loan payments for millions of borrowers. Live Nation shares rose 6% to $88.00, narrowly beating Sphere Entertainment’s 5.9% gain to $39.35. German promoter and ticketing company CTS Eventim jumped 4.7% to 56.40 euros ($59.79).
Despite some economic warning signs, consumers continue to spend on experiences such as concerts, travel and luxury goods. Americans spent 5.8% more in August than in the prior-year period, according to the National Retail Federation. Many consumers are now facing the resumption of monthly student loan payments after a long grace period caused by the COVID-19 pandemic — it was one factor in retail giant Target cutting its profit forecasts in August. Gas prices are on the rise in much of the United States. Still, concert ticket sales are booming and airlines reported strong revenue this summer. More encouraging news came from Friday’s U.S. jobs report from the Bureau of Labor Statistics: Non-farm employment rose by 336,000 and the unemployment rate was unchanged at 3.8%.
It was a big week for Sphere Entertainment as its shares climbed 11.1% on Monday following U2’s opening weekend at Sphere in Las Vegas. The rave reviews and mind-blowing videos pushed Sphere Entertainment’s stock price as high as $43.59, up 17.3%, before falling 5% to $39.23 at the end of the trading day. Sphere Entertainment didn’t maintain the momentum, however, and dropped 5% from Tuesday to Friday. Still, Sphere’s opening provided a boost to the company and validated Sphere Entertainment CEO James Dolan’s vision to create a new category of venue built specifically for music. Now, investors will likely consider how many other artists have the necessarily large and fervent fan bases to book Sphere residencies and build productions worthy of Dolan’s $2.3 billion gamble.
The 21-stock Billboard Global Music Index improved 2.1% to 1,373.62 as 12 stocks finished the week in positive territory. The index’s four live music companies had an average gain of 4.3%. Six streaming companies had an average gain of 1.6% while eight companies in recorded music and publishing dropped an average of 0.9% and three radio companies fell an average of 7.6%.
Music outperformed many indexes as stocks had a mixed week. In the United States, the S&P 500 improved 0.8% and the tech-heavy Nasdaq composite improved 1.8%. In the United Kingdom, the FTSE 100 fell 1.5%. South Korea’s KOSPI composite index fell 2.3%.
Another of the index’s more prominent components, Warner Music Group (WMG), rose 4.5% to $32.80, the fourth-largest gain of the week. WMG closed its year-to-date deficit to 6.3% after gaining 2.8% on Friday and pushing its market capitalization to nearly $17 billion. Universal Music Group improved less than 0.1%. Two K-pop companies, HYBE and SM Entertainment, fell 3.8% and 1.9%, respectively.
Spotify, a major player on the index with a $31.3 billion market capitalization, improved 3.5% to $160.07 and took its year-to-date gain to 102.7%. Spotify announced on Wednesday that it’s giving subscribers in the United Kingdom and Australia up to 15 hours of audiobook streaming time per month; the allotment will roll out to U.S. subscribers later this year. Audiobooks are an integral part of Spotify’s plans to become a one-stop audio destination. The news wasn’t cause for concern that Spotify will incur a previously undisclosed expense from this streaming allotment. Guggenheim analysts wrote in a report on Tuesday that they don’t expect audiobook streaming to add to expenses and that Spotify likely built those costs into its latest guidance (which is 26% gross margin and a $45 million operating loss in the third quarter).
Three radio companies were among the four worst-performing music stocks of the week. iHeartMedia shares fell 14.2% to $2.71, bringing the year-to-date loss to 55.8%. Cumulus Media shares dropped 4.5% and SiriusXM shares fell 4.0%. The other notable decline of the week came from Hipgnosis Songs Fund, which fell a further 7.1% to 0.745 GBP ($0.91) in the wake of its Sept. 14 announcement that it will sell $465 million in catalog assets to help lift its struggling share price.
Sphere Entertainment Co. shares rose 11.1% to $41.99 on Monday (Oct. 2) — and reached a high of $43.59, up 17.3% from Friday’s closing price — after the world got its first glimpses of the revolutionary concert venue over the weekend. The $2.3 billion venue opened on Friday (Sept. 29) with the first of 25 […]
SiriusXM shares rose 11.1% to $4.52 this week following an offer from Liberty Media on Tuesday (Sept. 26) to combine its tracking stock, The Liberty SiriusXM Group, with SiriusXM’s stock to form a new public company.
Liberty Media, which owns 83% of SiriusXM’s outstanding shares, proposed a complicated transaction that would “provide value to all shareholders with a more flexible and attractive currency” in the newly formed SiriusXM stock, Liberty Media president/CEO Greg Maffei said in a statement. SiriusXM said in a statement that a special committee of its board of directors is evaluating the proposal and provided no assurance a deal would eventually happen.
The effect appeared to be a short squeeze — albeit one smaller than the instance that inflated SiriusXM’s share price by 49% in one week in July. Because SiriusXM shares are heavily shorted and have a small float, sudden demand for the stock can create large price fluctuations. SiriusXM shares rose 15% on Thursday (Sept. 28) alone, while shares of The Liberty SiriusXM Group tracking stock finished the week up 13.4%.
While overall stocks were mixed this week, music stocks performed well. The 21-stock Billboard Global Music Index improved 1.1% to 1,344.99, better than the 0.1% gain eked out by the tech-heavy Nasdaq composite and easily besting the S&P 500’s 1.3% loss. In the United Kingdom, the FTSE 100 fell 1%, while South Korea’s KOSPI composite index dropped 1.7%. Eleven of the Billboard Global Music Index’s 21 stocks finished the week in positive territory, eight lost ground and two were unchanged.
Helped by Deezer’s double-digit improvement, streaming stocks had an average gain of 3.1%. Chinese music streamers Cloud Music and Tencent Music Entertainment gained 6.5% and 1.3%, respectively. Spotify shares dropped 2.1% to $154.63 but have gained 95.9% year to date. LiveOne shares fell 8.6% to $0.96, marking its third successive weekly loss since spinning off its PodcastOne division. This week, Billboard reported that LiveOne took out a high-interest loan to lure UFC fighter-turned-podcaster Brendan Schaub after Kast Media failed to pay him advertising money. LiveOne agreed to acquire Kast Media in May and offered Schaub and other podcasters settlements that included a mix of cash, promissory notes and PodcastOne stock.
Music’s greatest gainer this week was French streaming company Deezer. Despite there being no news — neither a press release nor a regulatory filing — that normally leads to such a substantial change, Deezer shares rose 21.8% to 2.735 euros ($2.90), including a 14.8% gain on Thursday with one of the highest trading volumes since the company went public in September 2022. Nothing indicated the company has substantially improved its earnings outlook in recent days, but Deezer had been in the news prior to this week. Three weeks ago, Deezer announced a partnership with Universal Music Group to create a new system for calculating artist royalties; and last week, the company revealed plans to increase subscription prices for new individual and family plans in the United Kingdom, Spain, Italy, the Netherlands and its largest market, France.
Live Nation shares rose 4.1% to $83.05 following news the company will help developing artists by providing a financial stipend and eliminating fees charged on merchandise sales at a number of its owned and operated clubs in the United States. Although the move will cost Live Nation money, it also comes with some strategic advantages, according to LightShed Partners analyst Brandon Ross. The decision is “great for Live Nation because it actually throws up another barrier to entry,” Ross said in the Friday (Sept. 29) episode of the LightShed podcast. “Artists are going to want to play your venue where the economics for them are better rather than somebody else’s venue.”
Hipgnosis Songs Fund has set a date of Oct. 26 for its shareholders to vote on the proposed sale of some 29 song catalogs and a separate vote on whether to keep the fund going under founder Merck Mercuriadis‘ advisory, the company said on Thursday (Sept. 29).
Earlier this month, Hipgnosis announced its plans to sell a package of assets that includes rights to songs performed by Shakira, Barry Manilow, Rick James and others to its sister fund — the privately held Blackstone-backed entity, Hipgnosis Songs Capital — for $440 million.
Hipgnosis Songs Fund — or SONG, as it’s abbreviated on the London Stock Exchange — has struggled with a sagging share price that values the company at a discount to its assets’ worth. The Oct. 26 shareholder vote represents a key milestone in the young company’s five-year lifespan.
In its statement on Thursday, Hipgnosis Songs Fund’s board said it’s in talks with third parties to consider outside bids for the package of assets, with those discussions set to resolve by Oct. 23. The board previously said it would use proceeds of any asset sales to buy back up to $180 million of the company’s stock and pay down its revolving debt balance, two measures aimed at achieving a “re-rating of the share price.”
If a majority of shareholders vote “yes” on the company’s continuation vote, the board has committed to holding the next continuation vote in January 2026, followed by a third in 2028.
The board also said that if the discount between Hipgnosis Songs Fund’s share price and operative net asset value reaches 10% or more on average over the month of January 2025, it will terminate its investment advisory agreement with Mercuriadis’ Hipgnosis Song Management. The agreement with the founder as an investment advisor will be “terminable by the company on 12 months’ notice,” according to the statement.
The board added that chair Andrew Sutch will retire as a director before the next annual meeting in 2024, and that Andrew Wilkinson will retire from his director role by the end of this year. Cindy Rampersaud will take Wilkinson’s place after he retires. The departures mean Hipgnosis Songs Fund will have five directors in the future.
In a vote of support for retaining Mercuriadis’ Hipgnosis Song Management as SONG’s investment adviser, the board said its approach had led to a 44% total return on the 29 music catalogs that Hipgnosis Songs Fund proposes to sell to its private sister fund since the initial dates of purchase.
“The board and the investment adviser firmly believe that the company has a unique portfolio of iconic, culturally significant songs that will deliver strong long-term value as they benefit from the structural tailwinds in the music industry,” according to the statement. “Furthermore, the board believes that the investment adviser’s approach to song management should enable the company to outperform the wider music market.”
Shares of YG Entertainment plummeted 16.3% this week amidst speculation the agency has not renewed the contracts of the members of girl group BLACKPINK. Following a spate of reports out of South Korea, the company’s share price dropped 13.3% on Thursday (Sept. 21) and another 4.1% on Friday (Sept. 22).
On Thursday, Korean news outlet Daily Sports Seoul reported that three members of BLACKPINK — Jennie, Jisoo and Lisa — will leave YG Entertainment and spend just six months out of the year as part of the group. In response to that report and the flurry of media attention that followed, YG Entertainment issued a brief statement: “Currently, BLACKPINK’s contract renewal has not been confirmed and is being discussed.”
BLACKPINK became the first K-pop girl group to play Coachella in 2019 and headlined the festival in 2023. The quartet was also the first K-pop girl group — and the third K-pop group overall — to top the Billboard 200, with its 2022 album, Born Pink.
A week ago, YG Entertainment’s share price was up 80.8% year to date and was outpacing its K-pop competitors. Following the BLACKPINK news, shares of YG Entertainment fell to 130,300 KRW ($97.56), dropping its year-to-date gain to 51.4%. That put YG Entertainment below SM Entertainment’s 69.9% year-to-date gain and JYP Entertainment’s 55.6% improvement.
Overall, the 21-stock Billboard Global Music Index fell 1.9% to 1,330.12 this week, lowering its year-to-date gain to 13.9%. Eleven stocks ended the week in negative territory and two were unchanged. Of the eight stocks that finished in positive territory, only Cumulus Media, which gained 7.9% to $4.80, appreciated more than 3%.
Music stocks outperformed some major indexes, though. In the United States, the S&P 500 dropped 2.4% to 4,345.64 and the Nasdaq composite fell 3.6% to 13,211.81. Overseas, the United Kingdom’s FTSE 100 fell 0.4% to 7,683.91 while South Korea’s KOSPI composite index declined 3.6% to 2,508.13.
Led by Cumulus Media’s 7.9% gain, the three radio companies in the index had an average gain of 3.8% — the only segment in positive territory — with SiriusXM gaining 2% to $4.07 and iHeartMedia rising 1.5% to $3.45. Meanwhile, the eight stocks covering record labels and music publishers lost an average of 1.1%, and four live music stocks fell by an average of 1.7%. The six streaming companies in the Billboard Global Music Index lost an average of 6.9%.
Two streaming companies, LiveOne and Anghami, had the sharpest declines of the week. Abu Dhabi-based Anghami dropped 19% to $0.68, bringing its year-to-date loss to 57.4%. U.S. music streamer LiveOne fell 23.4% to $1.05 and has lost 36% of its value since spinning off its PodcastOne division on Sept. 11 and attracting media attention over allegations its Kast Media division did not pay some advertising revenues to podcasters. The spinoff hasn’t helped the company’s combined value: Trading under the name Courtside Group, the podcast company’s share price fell to $2.05 this week, 52% below its opening trading price on Sept. 8. The other streaming stocks almost broke even this week: Spotify, Tencent Music Entertainment, Cloud Music and Deezer had an average share price decline of just 0.2%.
Hipgnosis Songs Fund rose 2.8% to 0.832 pounds ($1.02) a week after dropping 12.8% on news the publicly traded investment trust plans to sell some catalogs for $465 million. The sale proceeds would fund share buybacks and repurchase debt, which Hipgnosis believes will support the beleaguered share price and reset the company’s net asset value.
Shares of Warner Music Group (WMG) dropped 4.7% to $30.76 this week following the announcement on Monday (Sept. 18) that BMG is taking control of its digital distribution and will no longer use WMG’s ADA Distribution (though it will continue to outsource its physical distribution). The news didn’t impact WMG’s share price until Wednesday (Sept. 20), when a report by analysts at Guggenheim stated that BMG’s decision would cause “a staggered reduction in WMG gross revenue” beginning Dec. 31 of roughly $250 million annually. Losing BMG’s digital business won’t be a major hit to WMG’s earnings before interest, taxes, depreciation and amortization (EBITDA), however: Guggenheim believes WMG’s revenue from BMG had an EBITDA margin in the low single digits and would have “minimal free cash flow impact.” Guggenheim has a $37 price target on WMG, which implies 20% of upside from Friday’s closing price.
PodcastOne debuted its long-awaited listing Friday (Sept. 8), with officials from parent company LiveOne ringing the opening bell on the trading floor of the NASDAQ to celebrate what CEO Rob Ellin says is first ever spinoff of a minority stake in a publicly traded company. Shares of the new LiveOne subsidiary Courtside Group, better known as PodcastOne, fell 45% shortly after trading opened, dropping from $8 per share to close at $4.39.
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The tumble came amid growing criticism of one of PodcastOne’s acquisition targets — California-based Kast Media — by major podcasters like comedian Theo Von who accused Kast of failing to pay out $4 million in advertising fees collected by Kast on behalf of its podcaster clients.
In a video viewed more than 1 million times, titled “This Man Defrauded Our Podcast,” Von alleges that Kast Media founder and CEO Colin Thomson did not pay his show This Past Weekend with Theo Von for the advertisements it sold and booked for Von’s show. Von claimed This Past Weekend eventually cut ties with Kast Media, only to later be approached by Thomson and Ellin and was told on a phone call, “If you come over to our new network PodcastOne, we’ll pay some of what you’re owed in stock,” Von said, adding “it felt like to me they’re trying to leverage our podcast and other podcasts to then make their stock do well and if that happens, then we’ll get a share of our money.”
Von told viewers he declined the offer.
Ellin addressed the Kast Media scandal on Friday during a post-market opening interview with Yahoo News. He noted that PodcastOne is no longer hiring Thomson to join his the publicly traded company, but noted he hoped to help creators hurt by the Kast Media controversy.
“We’ve bought a distressed asset called Kast Media, a very distressed, troubled asset (that) owed a lot of money to its podcasters and couldn’t really afford to pay them. And the banks pulled out. And that host pulled out. So we acquired those and have added some very serious revenues to it,” he said.
Von isn’t the only podcaster to go public about the Kast Media scandal. Pro Wrestling podcaster Jim Cornette and cohost Brian Last have detailed their own experience with Kast Media and PodcastOne in a series of at least seven podcast episodes over the last two months. Former Sirius XM host Jason Ellis has also spoken out against Kast Media in a recent viral video.
Von said he will continue pursuing Thomson for the money he is owed by Kast Media.
“You f—ed with the wrong rat, homie” Von said while a picture of Thompson aired on the screen. “You can’t get me to shut up.”
Thomson did not respond to multiple requests for comment.
News that Concord plans to buy Round Hill Music Royalty Fund for $1.15 per share sent Round Hill shares soaring 64.4% on Friday (Sept. 8), from $0.6875 to $1.13 per share. They finished the week up 62.6%, leading all music stocks by a wide margin.
The deal, which must be approved by at least 75% of Round Hill’s shareholders at the company’s Oct. 18 general meeting, values the rights in the fund at nearly $469 million. On March 6, an independent valuation from Citron Cooperman put Round Hill’s economic net asset value at $519.6 million, according to the company’s 2022 annual report. That puts Concord’s bid at a 9.7% discount to economic NAV — a vast improvement from the 46% discount the stock had been trading at before the deal was announced.
Round Hill competitor Hipgnosis Songs Fund was also a beneficiary of Concord’s announcement. Shares of Hipgnosis rose 15.7% to 0.923 pounds ($1.15) on Friday, bringing the stock’s one-week gain to 16.8%. Hipgnosis shares have been trading at a steep discount to the company’s net asset value — a measure of the company’s catalog, less liabilities — and hadn’t closed above 0.923 pounds since Sept. 27, 2022. The fact that Concord found a buyer at a price close to its NAV could have signaled to Hipgnosis investors that its shares should be trading closer to its NAV. Some Hipgnosis investors may have also believed that, like the Concord deal, Hipgnosis could also find a suitor that would bid close to the NAV.
Round Hill and Hipgnosis were — by far — the biggest gainers of the week. Overall, the 21-stock Billboard Global Music Index dropped 0.8% to 1,348.41. Year-to-date, the index has gained 15.5%.
No other music stocks had a double-digit gain, and just six others finished the week in positive territory. Twelve stocks lost ground this week and one stock, music streamer Anghami, was unchanged. French music streamer Deezer gained 6.8% and was probably helped by its announcement of a partnership with Universal Music Group to adopt a new system for calculating streaming royalties. Universal Music Group shares improved 3.8% to 23.52 euros ($25.20).
Stocks were down around the world this week. In the United States, the S&P 500 fell 1.3% and the Nasdaq composite dropped 1.9%. South Korea’s KOSPI composite index lost 0.6%. In the United Kingdom, the FTSE 100 was a bright spot with a slight 0.2% gain.
With the help of Round Hill and Hipgnosis, the eight stocks in the record labels and publishing category on the Billboard Global Music Index had an average gain of 10.3%. The other categories saw losses; four live music stocks had a 0.9% average decline, six streaming stocks dropped an average of 3.9% and three radio stocks had a 4.7% average decline.
LiveOne shares fell 10.4% on Friday following the company’s spin-off of its PodcastOne segment on the Nasdaq exchange. That brought its shares’ one-week loss to 21.8%. LiveOne distributed about 19% of PodcastOne shares to LiveOne shareholders of record as of Sept. 5, but the podcast company’s trading debut got off to a rocky start on Friday. Trading under the ticker PODC, shares of PodcastOne owner and operater Courtside Group fell 45.1% to $4.39 from a starting price of $8 per share.
Spotify led a group of high-flying streaming stocks this week by gaining 14.8% to $157.54 per share, increasing its market capitalization by nearly $4 billion to $30.7 billion. The world’s largest streaming company, which boasted 220 million subscribers as of June 30, has clawed back nearly all its losses since its share price dropped 14% […]