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Spotify Leads Music Stocks, SM Entertainment Shares Dip on Sex Scandal

Spotify’s stock price rose 3.9% this week after the company’s announcement of a U.S. price increase on Monday (June 3) sent the stock on a roller-coaster ride. Shares rose to a new 52-week high of $331.08 on Wednesday — its highest point since Feb. 25, 2021 — before closing at $308.11 on Friday (June 7). 

After raising subscription prices in the United States and many other major markets in July 2023, Spotify further hiked rates in the United Kingdom and Australia in May. The additional U.S. price increase, which goes into effect in July, will raise individual rates to $11.99 per month and family plans to $19.99 per month. The higher prices will help Spotify cover the costs of bundling music with limited free streaming of audiobooks. The streamer is giving its customers plenty of options, though. A music-only tier has been introduced in the United Kingdom that costs 10.99 pounds ($13.99) per month, compared to 11.99 pounds ($15.26) per month for the music-and-audiobook option. Two-person Duo plans and student plans also offer discounts to the standard individual plan.

The Billboard Global Music Index rose 0.1% to 1,801.44 as Spotify’s gain helped overshadow losses by 13 of the index’s 20 companies. Other of the index’s largest companies posted modest declines this week: Warner Music Group fell 0.9% to $29.51, Universal Music Group fell 1.2% to 28.23 euros ($30.53) and Live Nation dropped 3.4% to $90.56. The index is 2.5% below its high of 1,847.64, set the week ended May 3, 2024.

iHeartMedia, the index’s greatest gainer for the second consecutive week, rose 35% to $1.25 a week after gaining 6.4%. In just two weeks, iHeartMedia’s year-to-date loss has improved from 67.4% to 53.2% without any major news releases or regulatory filings. At the company’s annual general meeting on Wednesday (June 5), shareholders reelected CEO Bob Pittman and CFO/COO Rich Bressler to the board of directors and approved an advisory vote on the company’s 2023 executive compensation. 

SM Entertainment dropped 8.5% to 83,500 won ($60.51) amidst controversy over an alleged sex scandal involving Johnny and Haechan of the group NCT, which SM Entertainment has denied. Such a large drop isn’t uncommon when a K-pop company’s artists are plastered across the South Korean news. In October, K-pop stocks dropped on news that SM Entertainment artist Exo was leaving for a different agency. In April, HYBE shares fell sharply after news broke that Min Hee-jin, CEO of HYBE imprint ADOR, had attempted to take over management of the subsidiary label.

Elsewhere, CTS Eventim rose 4.3% to 82.80 euros ($89.56). On Thursday (June 6), the German concert promoter and ticketing company finalized a $327 million acquisition of Vivendi’s festival and ticketing businesses. Last year, See Tickets sold 44 million tickets and had revenue of 105 million euros ($114 million). The deal does not include See Tickets France. 

SiriusXM shares fell 9.5% to $2.56 this week, bringing its year-to-date loss to 53.2%. The satellite radio company, which also owns streaming platform Pandora, is betting on the success of the new streaming app it launched in December and its $9.99-per-month price. The in-car satellite product, which includes streaming access, costs “about $19” per month, CEO Jennifer Witz said at the J.P. Morgan Global Technology, Media and Communications Conference Conference on May 21. The company is attempting to maintain those satellite customers while attracting new streaming customers and reducing its reliance on promotional discounts. “I do think we’ll have opportunities to both capture more demand but also maintain that full price base at those higher price points and implement rate increases over time,” said Witz.

Some U.S. stock indexes reached all-time highs this week. The S&P 500 hit a record 5,375.08 Friday, although it closed at 5,346.99, down 0.1%. The tech-heavy Nasdaq composite reached a new high of 17,235.73 on Thursday and ended Friday at 17,133.12, up 2.4% from the prior week. In the United Kingdom, the FTSE 100 declined 0.4% to 8,245.37. South Korea’s KOSPI composite index rose 3.3% to 2,722.67. China’s Shanghai Composite Index lost 1.2% to 3,051.28. 

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