Chinese tech giant Tencent and its music streaming subsidiary, Tencent Music Entertainment, have agreed to acquire a 10% stake in Thai entertainment company GMM Music for $70 million.
The consideration will be paid via a combination of cash and a minority stake in music streaming app JOOX Thailand, GMM said in a press release on Monday (June 3).
The deal, which values GMM Music at $700 million, comes nearly a year after its parent company, GMM Grammy, approved a plan to spin off the firm and list it on the Thailand Stock Exchange.
The agreement also builds on an earlier alliance between GMM Grammy and Tencent Music. In August 2020, TME and GMM Grammy entered into a strategic partnership to promote TME’s WeSing karaoke app in Thailand with the help of GMM’s publishing catalog.
For GMM Music, Tencent and TME’s investment will “strengthen” its spin-off plan as it gears up for its upcoming initial public offering, the company said. The deal will also allow GMM Music to “expand its business, achieve sustainable growth, acquire world-class expertise, and invest in future music innovations to keep pace with the rapid evolution of the global music industry,” the company added.
“We believe there is solid support for the success of the company’s IPO.”
Fahmai Damrongchaitham, GMM Music
“We believe there is solid support for the success of the company’s IPO. Fundamentally, we also strive to drive sustainable growth with continuous exchange of competencies and know-how, extending markets and sales beyond territories, and contributing deep resources in user insight and technology for future music innovations,” said Fahmai Damrongchaitham, Chief Marketing Officer of GMM Music.
In addition to the stake purchase and the investment in JOOX Thailand, the partnership will leverage TME’s technologies to develop advanced platform experience for a new generation of audiences, GMM Music said. GMM, in turn, will contribute its content management, in addition to its ongoing collaborations with other music labels.
GMM Music is bullish that the partnership with Tencent and TME will make a “fandom economy possible,” opening up new business opportunities by offering activities and channels that bring artists and fans together across Thailand, China and other countries.
“As the music industry is entering the second wave boom, with revenue surpassing all time high and continuing on the upswing, GMM Music has developed a new strategic roadmap to drive our future growth, along with continuously improving the infrastructure for the Thai music industry,” said Phawit Chitrakorn, Chief Executive Officer of GMM Music.
“One of our key strategies is to develop collaborative partnerships with international music industry leaders, who believe in the potential of Thai Music.”
Phawit Chitrakorn, GMM Music
“One of our key strategies is to develop collaborative partnerships with international music industry leaders, who believe in the potential of Thai Music. We are greatly delighted that TME and Tencent have agreed to make a strategic investment in GMM Music by acquiring 10% of our shares for approximately $70 million, unlocking the company value of $700 million.”
Chitrakorn stressed that the investment will “solidify our spin-off plan, with an ambition to drive the New Music Economy in Thailand towards sustainable growth.”
Damrongchaitham added: “Through this partnership, TME and Tencent will fuel GMM Music in accelerating growth, allowing us to capture new levels of opportunities in the emerging market, while enhancing our capabilities with the best of global music resources.”
“We will be in the position to become – ‘The Next Asia’s Dragon.’ This enables us to create ‘Upscale Opportunities’ to expand in all aspects of the music business. The company will make advances in the Music and Digital Businesses, which is the key driver for growth in the future of music industry, and expand in the Artist and Showbiz Businesses, bringing our talents to Asia and to the World through networks of global outreach from both TME and Tencent.”
“We will be in the position to become – ‘The Next Asia’s Dragon.’ This enables us to create ‘Upscale Opportunities’ to expand in all aspects of the music business.”
Fahmai Damrongchaitham, GMM Music
In China alone, TME, which operates music services QQ Music, Kugo and Kuwou, added 6.8 million paying subscribers in the first three months of 2024, ending the quarter with 113.5 million paying subs, versus 106.7 million at the end of 2023. TME said this marks its largest quarter-over-quarter net increase in paying subs to date.
Music Business Worldwide [STAGING]
