Markets are rebounding and the U.S. economy is starting to open back up — conditions that may inspire Warner Music Group's owner to cash in on Wall Street.
Markets are rebounding and the U.S. economy is starting to open back up — conditions that may inspire WMG's owner to cash in on Wall Street.
So with the stock market performing decently right now, thanks to a pricing comeback after a historic pandemic-related plunge -- and with parts of the U.S. economy beginning to open up -- it looks like's Access Industries, which owns WMG, will take advantage of this window of opportunity to cash in on some of the value it created from its 2011 acquisition of the company.
That leaves plenty of leeway for the highly-leveraged WMG to handle an estimated $140 million in annual interest payments, as well as take on an additional debt load down the road should management decide that's what's needed as circumstances evolve.
Besides that, industry sources point out that such a deal with the PIF is unlikely for several reasons. For example, with the recorded music business model now largely dependent on streaming -- WMG's latest recorded-music revenue was 64% digital -- the company is somewhat immune to the economic recession caused by the current pandemic.
But the latter seems unlikely. Access' IPO will be through a stock offering that would allow it to retain complete control of WMG by issuing two stock classes, one to new investors and one, with all voting power, going to insiders. That's a move that could turn off some institutional investors.
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