Tencent Holdings Ltd., one of China’s largest internet firms renowned for creating engaging video games and apps like PUBG mobile and WeChat, has recently made headlines when it announced inking a €3 billion ($4.76 billion) record deal with Universal Music Group.
According to reliable sources, this deal would allow Tencent to grab hold on music sung by Justin Bieber, Taylor Swift and Adele as well as the back catalogs of Queen and the Beatles. Tencent is also planning on purchasing 10% stake in Universal Music Group along with an option to double its share within a year.
Reportedly, the Chinese internet firm owns Tencent Music, a platform which moderates popular music-streaming apps in the country. As per recent estimates, Tencent is ranked as Asia’s most valuable firm with a total valuation of $658 billion.
Meanwhile, Universal Music is slated as the world’s biggest music label operating in Los Angeles. It is basically a unit of the French media group, Vivendi that owns several other companies like the pay-TV company, Havas and Canal+.
With a stake in Universal, Tencent could leverage over licensing agreements with rivals. As for Universal, it could easily expand into the Chinese market. Moreover, Tencent Music and Vivendi are planning to sign a separate deal that would provide Tencent Music an opportunity to purchase a minority stake in Universal’s business in Greater China.
Earlier in August, Vivendi was in talks with Tencent to sell a share of Universal, a music label that is home to artists like Drake, Kendrick Lamar, and Lady Gaga. Clarifying on which, Sir Lucian Grainge, Chief Executive Officer, Universal Music Group, said that besides the extra resources, everything else ranging from the company’s vision to its business unit names would remain the same.
Prior to this move, Tencent Holdings had made a huge splash in the Chinese tech market when it launched its video conference software dubbed Tencent Meeting.