Storied Warner Music set for 2020’s biggest Nasdaq IPO at $1.9bn
The company, home to Cardi B and Ed Sheeran, saw a 12% jump in music streaming revenue in April as live events are mothballed
New York — Warner Music Group, one of the globe’s “big three” recording companies, said on Wednesday that it raised more than $1.9bn in an initial public offering (IPO) that underscores how streaming has re-invigorated the industry.
Warner stock is expected to start trading later Wednesday on the Nasdaq under the ticker WMG after the IPO was priced at $25 a share. The company increased the offering to 77-million shares from the 70-million initially envisioned, making it the biggest IPO of 2020 according to Renaissance Capital.
The Wall Street unveiling represents yet another chapter for a company with a storied history in the recording industry, a sector that has taken its knocks, most recently from the coronavirus, which has obliterated live entertainment for the time-being.
The Covid-19 pandemic also delayed the company’s IPO, which was originally scheduled for February. However, Tuesday’s IPO reflects how streaming music has revived an industry and also comes amid a decisive upswing in the broader stock market.
Access Industries, a group of investors headed by billionaire Len Blavatnik, which acquired Warner Music for $3.3bn in 2011, will retain its majority stake in the company.
Warner is the home of artists such as Cardi B and Ed Sheeran and holds the lucrative back catalogues from the likes of Madonna. It also owns and operates some of the world’s most successful labels, including Atlantic Records, Elektra Records, Warner Records and Parlophone.
The company is riding the streaming wave, a major revenue source for record companies and publishers even as artists complain of measly royalties. In April, Warner Music saw a 12% jump in streaming revenue, which accounted for more than half its $4.5bn in revenues in 2019.
Ups and downs
Film mogul Jack Warner founded the Music Publishers Holding Company to provide cheap access to music for his films in 1929. It was not until 1957 when the film studio’s clean-cut heart-throb Tab Hunter jumped onto the top music charts with the hit Young Love that the company decided to establish an official music arm: Warner Bros Records.
In 1963 the company acquired Reprise Records, a label founded by Frank Sinatra, who desired more control over his music.
In the 1960s, the company nabbed the storied Atlantic Records — a top brand famous for producing landmark soul recordings of Aretha Franklin and Otis Redding — after Seven Arts Productions purchased Warner Bros in 1967.
But the company, which later added the Doors, the Talking Heads and other top names, suffered a number of controversies in the 1990s, including a public spar with Prince over artistic freedom as well as fury over the song Cop Killer from the heavy metal/rap group Body Count, led by Ice-T, widely denounced including by then-president George W Bush.
Internal power struggles also marred the label with a number of major executive departures, leading to spats that included a lawsuit from Metallica over the shake-up.
The company dropped Interscope, the label behind the Cop Killer controversy that also saw disputes with Snoop Dogg and Dr Dre.
It was a boon for rivals: Interscope was scooped up by rival MCA — now known as Universal Music Group, today the largest record company in the world.
Suffering after the dot-com crash and a CD price-fixing scandal, Time Warner spun off Warner Music Group in 2004 to a group of investors for $2.6bn. It went private in 2011 after the Blavatnik conglomerate’s purchase.