There wasn’t a Whole Lotta Love for Warner’s IPO today, leaving corporate masters Dazed and Confused.
Warner Music Group’s initial public offering sure didn’t find a Stairway To Heaven today, even though they brought along legendary Led Zeppelin guitarist Jimmy Page to play at the New York Stock Exchange. It didn’t help; the company received No Quarter from unimpressed shareholders.
First, reports criticized the initial pricing of $24 per share as seriously overvaluing the stock. The price was reduced to $22. The market dropped that to $16.40 at the 4 pm close.
When the offering was initially announced, Warner came under fire from its best-selling music act, Linkin Park. The band decried recent practices by the company, criticized the IPO as a money grab by the company’s new ownership, and demanded to be released from their contract. One of those owners is Edgar Bronfman, Jr.
Warner plans to use only $7 million USD of the $554 million USD generated by the first day’s sales of 32.6 million shares. The balance goes toward paying down debts incurred by the group who purchased Warner Music from Time Warner, as noted in a filing with the Securities and Exchange Commission.
Seven million dollars isn’t very much when it comes to promoting bands, like Linkin Park. One of the band’s criticisms, refuted by Warner Music, claimed the company will not adequately promote their future albums.
The band owes Warner Music four more CDs under its current contract.
David Utter is a staff writer for Murdok covering technology and business. Email him here.
