Tencent Music near $2.4 billion deal to accumulate podcast agency Ximalaya – with a possible payday for Sony Music
Tencent Music Leisure (TME) is reportedly in superior negotiations to accumulate Chinese language podcasting firm Ximalaya Inc. in a deal valued at USD $2.4 billion, in accordance with Bloomberg.
The acquisition, which might considerably broaden TME’s audio content material choices past music, is anticipated to contain a mix of money and shares, Bloomberg reviews, citing folks acquainted with the matter who requested to not be named.
Ximalaya’s present shareholders reportedly embody TME’s majority-parent firm, Tencent Holdings, plus Baidu and Sony Music Leisure.
In accordance with an SEC submitting reviewed by MBW, Sony Music acquired 4.6 million Sequence E-2 most well-liked shares in Ximalaya for a consideration of USD $50 million in 2020.
A sale to Tencent Music may probably be finalized “as quickly as the approaching weeks,” in accordance with Bloomberg’s sources, although discussions are ongoing and no last selections have been made.
Each Tencent Music and Ximalaya have declined to touch upon the potential deal.
The mooted acquisition comes as TME, China’s largest music streaming firm, continues to diversify its enterprise past conventional music streaming.
Earlier this week, TME revealed in its ESG report that it has considerably expanded its AI capabilities throughout its platforms, together with music creation instruments that permit customers to generate tracks and publish them on to its QQ Music streaming service.
In accordance with a list software filed final 12 months, Ximalaya boasted 303 million month-to-month lively customers as of 2023. The podcast platform had beforehand filed for an IPO in 2021 however delayed these plans.
The acquisition would probably place TME to extra straight compete with world streaming giants like Spotify, which has been aggressively increasing past music into podcasts and audiobooks lately.
TME’s increasing enterprise
TME’s reported curiosity in Ximalaya aligns with its broader technique of diversification and development.
TME reported sturdy monetary outcomes in 2024, with subscription income rising 25.9% year-over-year to RMB 15.23 billion (USD $2.12 billion).
This development was partially attributed to TME’s premium “Tremendous VIP” (SVIP) subscription tier.
TME’s paying music subscribers reached 121 million in This fall 2024, representing a 13.4% improve from the earlier 12 months.
TME has additionally been making vital investments in AI know-how.
As detailed in its latest ESG report, the corporate has built-in DeepSeek’s massive language fashions throughout its platforms, together with its AI Songwriter device, which permits musicians to generate unique AI songs that may be revealed on to QQ Music “with only one click on.”
Podcasts and audiobooks: The brand new streaming battleground
The potential acquisition of Ximalaya by TME would comply with a development amongst music streaming companies to broaden into podcasts and audiobooks, with Spotify main the cost.
Spotify has been significantly aggressive in its push into podcasting, having made substantial investments buying podcast networks, studios, and unique content material offers over the previous few years
Extra not too long ago, Spotify has made vital investments in audiobooks.
Final 12 months the corporate added 15 hours of month-to-month audiobook listening to its Premium subscription tiers, a transfer that sparked controversy within the music trade.
The change resulted in Spotify reclassifying its Premium subscription tiers as “bundles” in the US which allowed the corporate to pay a decrease mechanical royalty charge to publishers and songwriters within the US below the Phonorecords IV settlement.
Spotify has since inked direct licensing agreements for publishing and information – within the US and elsewhere – with Common Music Group and Warner Music Group.Music Enterprise Worldwide
