Universal Music Group’s reported bid for Queen’s recorded back catalogue could be a risky investment given anticipated high costs, according to Citi Group analysts.
According to CNN sources, Disney Music Group is in talks with UMG for rights to Freddie Mercury’s band’s music rights, with the deal potentially fetching a US$1bn price tag.
Citi analysts were sceptical of the deal however, noting that the auction process would likely be expensive for UMG and impact free cash flow leverage.
Losing out in the auction could also impact UMG’s revenue growth, analysts said, leaving more “risk than reward” in pursuing the deal.
“A successful purchase of the catalogue would likely cement its competitive position and enhance margins,” though, Citi added, acknowledging the opportunity from such a deal.
Queen hit ‘Bohemian Rhapsody’ surpassed two billion streams on Spotify last December, placing it among the most played songs ever on the app.
If the deal was signed for Queen’s catalogue, it would mark a record for the music industry, surpassing the current most valuable sale of an artist's rights by Bruce Springsteen for US$500mln in 2021.