Chinese entertainment conglomerate Tencent Holdings TCEHY is attempting to take a stake in Universal Music Group, the record label giant that owns the rights to artists such as The Beatles, Ariana Grande, Queen and Drake.
What Happened
Tencent is looking to buy a 10% stake in Universal Music from Vivendi SA VIVEF for around 3 billion euros ($3.36 billion), The Wall Street Journal reported Tuesday.
Tencent is looking to increase its exposure to the global music industry at a time when Chinese consumers are showing a willingness to pay for streaming music platforms, the Journal said.
Tencent extending its reach into American media and entertainment isn't a new phenomenon. The company's movie production unit Tencent Pictures is behind multiple high-profile movies, including the soon to be released "Terminator: Dark Fate."
Tencent also owns a stake in streaming music company Spotify Technology SA SPOT.
Why It's Important
Tencent's stake in one of the major music labels would offer the Chinese company an inside look into how the industry is developing, WSJ quoted analysts as saying.
This could help Tencent fend off rival TikTok app owner Bytedance from winning music licensing deals.
"If there is anything that can create pressure on TikTok, it's music," Shawn Yang, managing director of research firm Blue Lotus, told WSJ. "It still relies heavily on music copyright."
As part of the agreement, Tencent would hold the right to buy another 10% stake in Universal at the same terms within one year.
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