WMG Sells Spotify Shares

In its earnings call on Monday morning, Warner Music Group announced that it has sold around 75% of its Spotify equity for approximately $400 million, according to Variety.

“We will be sharing equity proceeds with distributed labels,” Cooper said, if that stipulation is included in their agreements with the company. Separately, but as part of the same earnings report in which the sale of its Spotify earnings were announced, Warner said $300 million will go to shareholders.

Earlier this year Sony Music announced that it has sold 17.2% of its shares in Spotify, yielding a gain for the label of $260 million or more, according to a notice Sony shared with investors.

WMG CEO Stephen Cooper was quick to note that the company’s decision does not reflect a lack of confidence in Spotify’s future. “Just so there won’t be any misinterpretation about the rationale for our decision to sell, let me be clear:  We’re a music company, and not, by our nature, long-term holders of publicly traded equity,” he said. “This sale has nothing to do with our view of Spotify’s future. We’re hugely optimistic about the growth of subscription streaming, we know it has only just begun to fulfill its potential for global scale.  We fully expect Spotify to continue to play a major role in that growth.”

Warner’s percentage of ownership was not disclosed, although it is less than 5%, the minimum that would make the company obligated to disclose changes in its holdings under SEC rules. At the time of Spotify’s initial public offering, Sony Music Entertainment owned 5.7% of Spotify’s outstanding shares, or 10.16 million shares. With the sale, Sony Music retains 8.4 million Spotify shares, or 4.7% of the internet company’s total ordinary shares.