Women in Music 2019

European Indie Label Body IMPALA to Challenge Tencent Universal Music Deal

Rafael Henrique/SOPA Images/LightRocket via Getty Images
Tencent Music Entertainment logo is seen displayed on a smartphone. 

LONDON — European independent labels body IMPALA has said it will formally challenge Tencent's plans to buy up to 20% of Universal Music Group, citing competition concerns for consumers and independent music companies.

Preliminary talks between China's Tencent Holdings and UMG owners, French media group Vivendi, began in August over the sale of an initial 10% stake in Universal, valued at €3 billion based on a €30 billion ($33 billion) total valuation of Universal.

Tencent, which operates China's leading streaming services, QQ Music, Kugou and Kuwu, and has minority stakes in Spotify and India's Gaana, would also have a one-year option to buy a further 10% of Universal on the same terms.  

Tencent, which is estimated to account for an 60-70% share of China's digital music market, is understood to be in talks with potential co-investors to help fund the deal. Meanwhile, in the background, China's competition watchdog is looking into Tencent's licensing deals with all three major labels. 

IMPALA claims the impact of Tencent acquiring up to 20% of UMG would "change the whole music ecosystem" with smaller companies among the first to lose out.

"Even at a low level of shareholding, we believe the risk of harm for consumers and competitors from such a transaction would be a concern because of the impact in both the digital market and the music sector, with independents being squeezed further and artists also losing out," said executive chair Helen Smith in a statement.

The Brussels-based organization also said it was concerned about who might purchase any additional Universal Music Group shares.

"We believe it would be difficult for Tencent and other companies with power in a vertical market to acquire influence over the world's biggest set of repertoire," said Smith.

Universal Music and Tencent have been contacted for comment, but are yet to respond.

UPDATE: An earlier version of this story said Tencent's share of China's digital music market was estimated at 80-90%.  


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