Analysts mixed about impact on UMG from reported ByteDance music streaming expansion

Deezer SA

13/10/2022 13:38

(Adds analyst comments, updates shares)
    ** Shares in Universal Music Group (UMG)  UMG.AS  rise
3%after WSJ reported TikTok parent ByteDance was talking with
labels to expand its music streaming service Resso to compete
with Spotify  SPOT.N , though analysts diverge on the potential
impact
    ** The news lifted peer Warner Music Group  WMG.O  shares on
Wall Street on Wednesday
    ** "(It would) provide another source of revenue for UMG and
improve balance of power for labels vs DSPs (digital service
providers)," Credit Suisse says
    ** Redburn analyst Nick Delfas doubts it'd provide "a major
expansion of the addressable market for labels" as they wouldn't
license at materially different rates to what they already sell
at to Spotify
    ** ByteDance, which did not immediately respond to a
Reuters' request for comment, wants through expansion to
eventually integrate music streaming within TikTok, WSJ reported
citing sources
    ** Bernstein's Matti Littunen says Resso seems to have
expanded ad-funded listening in emerging markets, where piracy
levels are high - an incremental, if small, opportunity for
labels
    ** He warns there's a risk that "the strengthened ByteDance
product might attract existing, better monetized streaming music
consumers from platforms which already pay UMG"
    ** "The market could be more positive on this than we are,"
Littunen adds
    ** Mark Zgutowicz from Benchmark says ByteDance's potential
expansion would be on record labels' terms, noting how Sony
Music cut ties with Resso in September
    ** Separately, analysts at Goldman Sachs and J.P.Morgan
publish positive forecasts for UMG's Q3 results expected on Oct.
27
 (Reporting by Olivier Sorgho)
 ((Olivier.Sorgho@thomsonreuters.com))