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Tencent's music services merged with CMC

By Meng Jing | China Daily | Updated: 2016-07-16 07:52

Tencent Holdings Ltd said on Friday that it will merge its QQ music service with China Music Corp, a move combining some of the country's most popular streaming music platforms to build a giant in the digital music market.

The merger will give the Shenzhen-based internet giant the majority stake in the newly formed entity, which is looking at an initial public offering in the future, according to a Tencent statement.

Under the agreement, the new company will run services including Tencent's flagship QQ music and CMC's Kugou and Kuwo, all of which "will continue to manage their existing brands and operations independently".

The Hong Kong-listed Tencent didn't reveal the financial details of the merger. But a report from the Wall Street Journal said that Tencent was buying control of CMC in a deal that valued the target company at $2.7 billion.

According to Tencent's statement, Tencent Vice-President Pang Kar Shun will become the chief executive officer of the new entity. Xie Guomin and Xie Zhenyu, co-chief executive officers of China Music Corp, will become co-presidents of the new company.

Analysts said that the merger will make the new entity the dominant player in the digital music market not only because QQ music, Kugou and Kuwo are the top three most-used music streaming services in China, but also because the three together will be able to build up a large licensed music library.

"The competition in digital music in the end is the competition for the intellectual property rights of music. Via the merger, Tencent and CMC can open the music IP pool to each other, which will eventually cut costs in the cash-burning competition to obtain licensed music," said Xue Yongfeng, with Beijing-based internet consultancy Analysys International.

mengjing@chinadaily.com.cn

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