Tencent Music says dealing with elevated China scrutiny, is dedicated to legal guidelines, Telecom Information, ET Telecom
Tencent Music Entertainment Group confirmed Tuesday that it is under scrutiny from Chinese regulators. She added that she “worked actively with them” and made a commitment to comply with all laws, “including those relating to antitrust law”.
This is the first time the Tencent Group has publicly commented on the matter.
Reuters reported last month that Tencent Holdings, which controls music streaming company Tencent Music, has been ordered by Chinese antitrust authorities to pay a fine, give up exclusive music rights and sell some of its music assets. Tencent did not comment at the time.
The action against Tencent took place amid widespread antitrust action by China against its internet giants.
“In the past few months we have received increased regulatory oversight from the relevant authorities and have actively worked and communicated with the relevant regulatory authorities,” said Tony Yip, Tencent Music’s chief strategy officer, on a conference call on the results.
Declined to comment or predict the outcome of the discussions with regulators, Yip said, “We are committed to complying with all relevant laws and regulations, including antitrust provisions.”
On Monday, Sony Music Entertainment announced digital distribution agreements with Tencent Music and NetEase Cloud Music, ending an exclusive agreement with Tencent Music.
News of regulatory scrutiny put Tencent Group’s shares under pressure last month, with Tencent Music falling more than 14%.
Tencent Music surpassed quarterly earnings and revenue estimates on Monday, driven by strong growth in subscription and advertising revenue from its music streaming platform. However, the monthly active user numbers decreased.
The company, known as Spotify in China, has expanded its music library through new partnerships and multi-year license agreements. This, along with efforts to diversify the content base through long-form shows and live talk shows, has helped attract more paying users as well as advertisers.
Although the number of paying users for the music platform has increased, Monthly Active Users (MAUs) for both music and social entertainment platforms decreased 6.4% and 14.2%, respectively.
“Users have generally stopped growing. The past year has been a high base due to the COVID,” said Tian Hou, an analyst at TH Capital Research.
Income attributable to Tencent Music’s shareholders increased from 887 million yuan a year ago to 926 million yuan ($ 143.94 million) for the quarter.
Excluding items, the company earned 69 yuan per American Depository Share (ADS), up from estimates of 55 yuan per ADS.
Revenue rose 24% to 7.82 billion yuan, while analysts expected 7.73 billion yuan, according to IBES data from Refinitiv.