AUDIO SECTOR REPORT Contact: JOHN LAMBROS Music Streaming Liftoff! Managing Director Tel: +1 (212) 999-7083 Q2 2020
[email protected] EXECUTIVE SUMMARY Q2 2020 Music Sector Wrap-Up » While COVID-19 positively impacted the growth of music streaming – as it has with online video, ecommerce and digital health and wellness apps and technologies – there were three other significant events in the quarter that impacted the sector: » First, Warner Music Group (WMG) priced its initial public offering at $25 per share for 77 million shares, raising a total of $1.925 billion at a ~$13 billion valuation ― This was the largest IPO of the year thus far in terms of dollars, most of which went to selling shareholder / owner Access Industries » Second, Goldman Sachs’ highly anticipated annual "Music in the Air" report was published in May ― While some of the near-term forecasts for live music and adjacent sectors were hurt due to the pandemic, digital music growth remained strong and the long-term outlook on the general music industry remains bullish ― Recent public market activity of music companies underpins the success of the category in Q2 despite adverse macroeconomic trends » Third, Spotify’s (SPOT) market cap appreciated over 70% since January, and we expect to see the company use its equity to continue its aggressive M&A strategy ― In May, the company announced an exclusive multi-year deal with “The Joe Rogan Experience” worth over $100 million ― In June, the company announced podcast partnerships with Warner Bros / DC Comics and Kim Kardashian