Sir Leonard Blavatnik may not be a person well known to many. Mr Blavatnik could once have been described as an Ukrainian oligarch.
He once owned a substantial stake in the Russian Oil company TNK – BP. He sold this stake to shift into the music market.
He was one of the initial investors in Beats Music. This is a music subscription service and it is now owned by Apple.
In 2011, Mr Blavatnik bought Warner Music Group (WMG), which is the record label of artists like Ed Sheeran and many other famous names.
WMG is now preparing to list its shares on the Nasdaq stock exchange.The estimated value to be just under £11 billion. This is approximately four times greater than what Mr Blavatnik paid for WMG.
As many of my students will know, valuation of businesses are based upon FUTURE profits and free cash flows. The industry data is a major factor to predict these future values.
The music industry has seen a rise of paid streaming services such as Apple and Spotify. In 2019, global music revenues rose 8.2% to $20.2bn – more than half of which came from streaming services.
The valuation appears to be based upon a solid foundation.