Report: Google Kicking The Tires On Soundcloud?
January 5, 2017 at 2:34 PM (PT)
With SPOTIFY reportedly planning an IPO this year, MUSIC BUSINESS WORLDWIDE has speculated that GOOGLE might have designs on acquiring competing streaming service SOUNDCLOUD for $500 million, according to this article, which ran TUESDAY and is now getting picked up everywhere.
It was reported TODAY that SOUNDCLOUD's latest financial filings show its 2015 revenue climbing to $22 million but its net losses also rising to $52 million. SOUNDCLOUD finished 2015 with $13.1 million cash in the bank and a $13.8 million net cash position. SOUNDCLOUD launched its $9.99-per-month subscription service, SOUNDCLOUD GO, in the U.S., UK and GERMANY last year.
After SPOTIFY turned down the opportunity to acquire SOUNDCLOUD, GOOGLE has reportedly stepped up to the plate to acquire the BERLIN-based company, which sports more than 175 million users worldwide.
SOUNDCLOUD's price tag for SPOTIFY was apparently close to a billion in the last half of 2016, a price tag that supposedly chased away SOUNDCLOUD investor TWITTER in 2014.
SOUNDCLOUD recently hired former GOOGLE exec HOLLY LIM as its first-ever CFO in SEPTEMBER, another sign that the company is hoping to do a deal with GOOGLE.
MBW's research did reveal that SOUNDCLOUD's sale could well benefit the top three major music groups, with UNIVERSAL MUSIC GROUP, SONY MUSIC ENTERTAINMENT and WARNER MUSIC GROUP all owning stakes in the business of varying sizes.
A rough approximation (not taking into account individual value of shares – which are likely to increase these stakes slightly) gives UMG a 4% holding in the company, with SONY on 3% and WMG with somewhere between 1% and 2%.
If SOUNDCLOUD was sold for $500m, the majors would therefore get a cut of around $45m between them.
Other deals in the rumor mill, according to MBW, included PANDORA getting "swallowed up" by SIRIUSXM at some point in the near-future. However, speaking at a CITIGROUP conference, SIRIUSXM CFO DAVID FREAR expressed doubts about PANDORA's strategy and wasn't sure about cross-selling opportunities. His pessimism about acquiring the Net radio service prompted PANDORA MEDIA shares to fall 3.2% in post-market trading, SEEKING ALPHA reports.