Vivendi talks Universal with Tencent to tap music revival

) is in talks to sell up to 20% of Universal Music Group to Tencent, valuing its prized asset at around 30 billion euros , as both firms look outside their core regions to expand in a recovering global music market.

Tencent, which already holds stakes in the world’s most popular music streaming service, Sweden’s Spotify , and India’s Gaana, as well as owning Joox, the biggest music streaming app in many major Asian markets, would also have an option to buy a further 10% of Universal. Dellis also said in a note to clients that U.S. political opposition to Chinese investment in what could be considered a strategic asset could obstruct a deal.A deal with Tencent could boost Universal’s presence and fit well with TME, which tends to outbid its local competitors in acquiring music copy rights in mainland China.

Universal still generates the bulk of its revenues out of the North America and Europe, which together represented more than three quarters of the division’s recorded music sales in the first half, while Asia produced only 14%. Unlike Western players such as Sweden’s Spotify, Tencent Music generates only a fraction of revenue from music subscription packages, and instead relies heavily on services popular in China such as online karaoke and live streaming.

Meanwhile Tencent, whose shares closed 1% lower in Hong Kong, after Vivendi’s announcement, declined to comment.

Source: Entertainment Trends (entertainmenttrends.net)

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