Tencent Music says facing increased China scrutiny, is committed to laws

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Tencent Music Entertainment Group confirmed on Tuesday it is facing heightened scrutiny from Chinese regulators, including it was “actively co-operating” with them and is committed to complying with all laws “including those related to anti-trust”.

This is the primary time the Tencent group has publicly commented on the matter.

Reuters reported final month that Tencent Holdings, which controls music streaming firm Tencent Music, was advised by Chinese anti-trust regulators to pay a positive, surrender unique music rights and promote a few of its music property. Tencent didn’t remark then.

The motion in opposition to Tencent got here amid a sweeping anti-trust clampdown by China on its web giants.

“In recent months, we have received increased regulatory scrutiny from relevant authorities, and have been actively co-operating and communicating with the relevant regulators,” Tony Yip, chief technique officer of Tencent Music, advised an earnings convention name.

Yip declined to remark additional or predict the end result of the talks with the regulators, however mentioned “we are committed to comply with all relevant laws and regulations, including those related to anti-trust.”

On Monday, Sony Music Entertainment introduced digital distribution agreements with each Tencent Music and NetEase Cloud Music, ending an unique association with Tencent Music.

News of the regulatory scrutiny has pressured Tencent group shares over the previous month, with Tencent Music down greater than 14%.

Tencent Music beat quarterly revenue and income estimates on Monday, pushed by robust development in subscription and promoting income from its music streaming platform. But its month-to-month energetic customers numbers fell.

The firm, referred to as China’s Spotify, has been increasing its music library via new partnerships and multi-year licensing offers. That, coupled with efforts to diversify its content material base via long-form reveals and dwell speak reveals have helped lure extra paying customers in addition to advertisers.

Although paying customers for its music platform jumped, month-to-month energetic customers (MAUs) for each music and social leisure platforms declined by 6.4% and 14.2%, respectively.

“Users have stopped growing in general; last year was a high base due to the COVID,” mentioned Tian Hou, analyst at T.H. Capital Research.

Profit attributable to fairness holders of Tencent Music rose to 926 million yuan ($143.94 million) within the quarter from 887 million yuan a yr earlier.

Excluding objects, the corporate earned 69 yuan per American Depository Share (ADS), above estimates of 55 yuan per ADS.

Revenue rose 24% to 7.82 billion yuan, whereas analysts have been anticipating 7.73 billion yuan, in accordance to IBES information from Refinitiv.

($1 = 6.4333 Chinese yuan renminbi)

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