Vevo On the Block; Owners Try To Sweeten The Pot
August 4, 2014 at 4:03 AM (PT)
The owners of the VEVO music video website -- UMG, SONY MUSIC, ABU DHABI MEDIA and GOOGLE -- are reworking their P&L sheet to attract an interested suitor, RECORDE.NET reports. GOLDMAN SACHS and THE RAINE GROUP are looking for equity investors; marketing materials are being prepared for release.
VEVO generates six billion views a month and generated revenue of $250 million last year. But with the music labels, music publishers and GOOGLE divvying up 90% of that gross, VEVO operates at a loss, forcing the owners to invest more capital to keep the business afloat. “The thing is worth less than zero today. You’d have to pay someone to take it,” said someone who has looked at the company’s books.
In response, sources report that GOLDMAN’s bankers want UNIVERSAL and SONY to cut their revenue share down from roughly 55%, in order to give a new owner the chance of earning a profit. Ideally, that would raise valuation of the company. Some analysts believe that "a cut of a few percentage points could give VEVO a potential value of anywhere from $700 million to $1 billion, or even more."
That, in turn, could open up the number of potential buyers to possibly include DREAMWORKS, THE CHERNIN GROUP, LIBERTY MEDIA, AMAZON, YAHOO and even part-owner GOOGLE, which could buy it out and use it as a sister music video website with YOUTUBE.