What Will Warner Music Be Worth When It Goes Public?

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With Warner Music Group's announcement Thursday of plans to go public with an upcoming IPO, now begins a waiting game to see how much of the company will be sold and how the shares will be priced, determining the company's overall valuation.

Len Blavatnik attends the Warner Music Pre-Grammy Party at the NoMad Hotel on Feb. 7, 2019 in Los Angeles.With Warner Music Group's announcement Thursday ofwith an upcoming IPO, now begins a waiting game to see how much of the company will be sold and how the shares will be priced, determining the company's overall valuation. That job will be left up to Morgan Stanley, Credit Suisse and Goldman Sachs, the stock offering's underwriters.

"After the completion of this offering, we will be a controlled company," the prospectus states. That means that Blavatnik will likely retain control of the company, even if his two entities sell 50% of the common shares, and Access will be the recipient of whatever proceeds the IPO brings in. "That said, we are in the process of evaluating what impact Tencent's investment in Universal [Music Group] have on current valuation; and the resultant impact to variable compensation expense and future cash payout," to the plan, he added.

Let's turn our attention to WMG. In addition to its latest quarter, it also recently announced annual results for the year ended Sept. 30, 2019 when it posted $256 million in net income on revenues of $4.475 billion. That was up 11.7% in revenue from the prior year's total o $4.005 billion but net income was down 17.9% from $312 million in the prior fiscal year.

 

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