Shares in One Media IP Group PLC (LON:OMIP) slumped on Friday as the music and video streaming specialist, backed by two of the UK’s best-known media titans, announced plans to raise £7.9mln at a big discount.
A placing of shares of 6p – some 4.4p below Thursday’s closing price – will bring in £1.9mln, while One Media will raise the remaining £6mln from the issue of loan notes.
Michael Grade and Ivan Dunleavy, who first invested in the AIM-listed company last December, are taking part in the placing, putting in a combined £75,000.
READ: Media heavyweights join One Media board
Grade is the ex-chief executive of Channel 4 and former chairman of the BBC, ITV and Pinewood Studios, while Dunleavy ran Pinewood for 17 years until its sale in 2016 for £323mln.
Once the fundraise is completed, it is expected that Dunleavy will become executive chairman.
One Media will use the cash injection to acquire more music publishing rights, artist recordings and songwriters’ rights.
The fundraise comes at a time when the music industry is in the middle of yet another sea-change in the way content is delivered, and chief executive Michael Infante has often said his company is at the forefront of this movement.
Forget purchases or downloads, subscription services and streaming are the way forward, which plays into the hands of companies with a catalogue of popular songs such as One Media IP.
The company has a string of artists from the fifties, sixties, seventies and eighties on its roster and every time one of its songs is streamed, it gets paid a small amount.
Shares retreated back towards the placing price on Friday morning, falling by a third to 7.1p.