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VIVENDI-UMG-TENCENT: ANATOMY OF A DEAL

An intricate series of negotiations between Vivendi, UMG and Tencent is said to have transpired through the holidays. The result, insiders say, is a complex deal that has enabled the participants to get what they want to make it work—and while Vivendi gets the collar for the sale, Universal’s players had to make sure it was operational. At the direction of Sir Lucian Grainge, Jeff Harleston and Boyd Muir did considerable heavy lifting in the process.

The $3.3 billion-$3.6b Tencent is paying for 10% of UMG will furnish ample foie gras, rare-vintage burgundies and designer swag from Rue Montaigne. This reflects not only the enormous growth experienced throughout the biz over the last decade but, especially, the growth in valuation effected under Sir Grainge, whose $1.6b payout for EMI in 2012 was a canny maneuver, to say the least. It’s also worth noting that Len Blavatnik paid $3.3b, in 2011, for all of WMG.

UMG, insiders report, gave up no operational control in the negotiations. Tencent has been keen to establish a greater sphere of influence in China and the rest of Asia, but UMG has diligently protected its right to make deals with other partners.

Meanwhile, a new UMG licensing pact with hot viral platform TikTok is also said to be in place. Although somewhat experimental and limited in scope, it marks the beginning of a framework for a future deal. The pact is believed to be short-term so it can be renegotiated once the potential growth on the platform is realized. Stay tuned.

Pictured: Sir Lucian (left) and Vivendi's Arnaud de Puyfontaine

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