TALK about rubbing salt in the wound. Everyone knows that the Warner Music Group flotation wasn’t much to sing about but now Merrill Lynch — which pulled out of the sale after Jessica Reif Cohen, its star media analyst, said the shares were overpriced — has stuck the boot in again.
Ms Reif Cohen has put a “sell” recommendation on the company. She says that WMG “should trade at a discount to diversified media groups”, given concerns over whether digital sales can make up for falling physical sales. She also notes that Warner may not be investing enough in scouting for new artists. “A focus on hits has allowed for short-term ebitda (earnings before interest, tax, depreciation and amortisation) gains but these may be unsustainable and eventually lost to either higher spending or lower revenue,” she says. Perhaps Edgar Bronfman Jr, WMG’s chairman and chief executive, should turn his lyrical skills to the blues.
Two facts emerged yesterday that show that digital music isn’t as influential as some make out. IFPI, the global trade body, said that one in three discs sold is counterfeit.
Separately, Apple said that its online music store, iTunes, sold more than 50 million songs in Europe over the past year. But at roughly £1 a song that’s not a lot of money — the global piracy market is worth more than $1 billion (£550 million).