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PARIS/BEIJING (Reuters) – China’s Tencent Holdings Ltd is in talks to buy up to 20% of Universal Music Group (UMG) from Vivendi SA, valuing the music label of Lady Gaga, Ariana Grande and the Beatles at around 30 billion euros ($34 billion), as both firms look to expand in a recovering global music market.

While at a preliminary stage, the discussions highlight Tencent’s role as gatekeeper to China’s growing but tightly controlled music market and its interest in global expansion. It also highlights Universal’s ambition in new markets and embrace of online streaming.

Global music-streaming retail sales are expected to more than double to $45.3 billion by 2026 from $19.6 billion in 2018, UK-based media analysis firm Midea predicts.

French media group Vivendi, controlled by billionaire Vincent Bollore, said on Tuesday that Tencent would first buy 10% of Universal, the world’s biggest music label ahead of Sony Music Entertainment and Warner Music and home to artists also including Taylor Swift, Drake and Kendrick Lamar.

Tencent, which already holds stakes in the world’s most popular music streaming service, Sweden’s Spotify, India’s Gaana, Tencent Music Entertainment Group, and owns Asian streaming app Joox, would also have an option to buy a further 10% of Universal.

Vivendi shares closed 4% higher at 24.93 euros as analysts welcomed progress on the sale of a stake in Universal.

“The valuation looks good, and the progress made on the UMG deal is also positive,” said Gregory Moore, fund manager at Keren Finance, which owns Vivendi shares. Both groups are also “considering areas of strategic commercial cooperation,” Vivendi said, raising questions among analysts over the scope of the talks.

Universal rivals Sony Music and Warner Music also have investments in Tencent Music Entertainment Group.

Jerry Dellis, an analyst at Jefferies, also said in a note to clients that U.S. political opposition to Chinese investment in what could be considered a strategic asset could obstruct a deal.

CHINA PAYWALL

A deal with Tencent could boost Universal’s presence and build on a partnership struck two years ago, under which Tencent can license Universal’s music for distribution over its streaming platforms.

Tencent’s music unit also owns exclusive rights to sub-license Universal’s content to other content providers in China. They worked together to build Abbey Road Studios, China, a recording studio named after the Beatles’ studio in London.

Tencent appears to be responding in part to slowing growth at home, wrote MIDiA analyst Mark Mulligan, who added that a deal would give Tencent investments in both music distribution and music rights holding, “backing both horses” in the music industry’s financial race.

Tencent also faces stiff competition from China’s privately held ByteDance, whose popular social media, video sharing and music sites include Toutiao and TikTok.

Universal still generates the bulk of its revenue out of the North America and Europe, which together represented more than three-quarters of the division’s recorded music sales in the first half, while Asia produced only 14%.

Recorded music revenue, however, grew twice as fast in Asia at 35% as in Europe at 15% over the period and TME boasted 654 million monthly active users on its platforms at the end of the first quarter.

Spotify’s monthly active users, which include its ad-supported free version, amounted to 232 million at end of June.

After a cash-burning competition among companies to snap up music rights, China’s content regulator last year demanded music streaming sites share 99% of their rights reserve with each other.

Unlike Western players such as Sweden’s Spotify, Tencent Music generates only a fraction of revenue from music subscription packages, and instead relies heavily on services popular in China such as online karaoke and live streaming.

Universal and Tencent both hold shares in Spotify, the world’s biggest music streaming platform which has a market capitalisation of about $27 billion, while the Swedish firm is a stakeholder in Tencent Music.

Tencent said at the time of its last earnings that it was adding more music behind a paywall, including popular Taiwanese singer Jay Chou, to raise revenue. But it said it might take time before Chinese users adapt to this relatively new approach.

Music streaming brought in $7.4 billion in last year, making up 75% of the music industry’s total $9.8 billion. Streaming services have become the driving forces behind much of the changing industry landscape, forcing both labels and artists to change how they operate in order to keep up. This has made some things easier for unsigned, independent artists, and Yahoo Finance’s Katie Krzaczek explains at what cost.

Kieran Trippier is nearing a move to Atletico Madrid

Kieran Trippier has passed a medical with Atletico Madrid ahead of his move from Tottenham, Sky Sports News understands.

The Spanish club have agreed a £21.7m (€24m) fee for the England international, with the deal set to be announced on Wednesday evening.

Spurs were offered the chance to sign striker Angel Correa during negotiations but have instead opted for a straight cash deal.

Angel Correa was offered to Tottenham

Sky Sports News revealed last week Trippier was also on Bayern Munich’s shortlist, while Spurs’ other right-back, Serge Aurier, is available for transfer this summer.

Marseille’s Hiroki Sakai is the type of player Tottenham want to bring in to replace Trippier and Aurier, Sky Sports News understands.

The Good Morning Transfers verdict

Trippier’s impending move was discussed on Sky Sports News‘ weekday morning show, Good Morning Transfers – with the panel of the opinion that the move would be good for player, club and even England.

“It’s great business for Tottenham,” said Sky Sports‘ Mark McAdam. “He’s been a loyal servant to the club. It takes a lot of character to go abroad, learn a different language, put yourself in a different environment. What an opportunity to work under Diego Simeone, too.”

3:08

The Good Morning Transfers panel discuss Kieran Trippier’s potential move to Atletico Madrid after a £21.7m fee was agreed for his services

Follow the Summer Transfer Window on Sky Sports

Sky Sports News is home to three new shows dedicated to bringing you the very latest news from this summer’s transfer market.

Start your day with Good Morning Transfers at 9am as our team of reporters and pundits bring you the latest news and insight. Transfer Talk then follows at midday, delivering the biggest stories that matter to you. And join us at 7pm for the definitive round-up of the day’s news with The Transfer Show.

And as well as tuning into Sky Sports News, don’t miss a thing with our dedicated Transfer Centre blog.

There’s also the Transfer Talk Podcast, the daily UK, Regional and European Paper Talk, plus features across skysports.com and the Sky Sports app.

Harry Maguire has played in a World Cup semifinal and become one of the most highly rated defenders in the Premier League, but even his most ardent supporters would struggle to argue that he is the very best at his position.

Yet if Leicester get their way and force Manchester United to pay in excess of £80 million, the 26-year-old will become the most expensive defender in the world. That would eclipse the £75m that Liverpool paid for Virgil van Dijk — not only the world’s best defender but the favourite to win the Ballon d’Or this year.

All this for a player Leicester signed from relegated Hull City for an initial £12m just two years ago.

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Sources have told ESPN FC that, while United manager Ole Gunnar Solskjaer is determined to sign Maguire as quickly as possible to reinforce his porous defence at Old Trafford, the two clubs are still some distance apart in terms of their valuation.

United, who initially offered £40m for Maguire last month, are now prepared to pay closer to £70m to get their man, but Leicester’s starting point is £80m and some reports suggest they are even ready to hold out for £90m.

Yet for all of Maguire’s ability as a commanding centre-back, a player with an aerial threat in both boxes and one who can play the long and short game, it would signal a new, eye-watering benchmark in an already over-heated transfer market.

Leicester are smart operators when it comes to selling players. They banked £60m when selling Riyad Mahrez to Manchester City 12 months ago and also forced Chelsea to hand over £35m for midfielder Danny Drinkwater in 2017. The Foxes hierarchy know that United, having seemingly missed out on Ajax captain Matthijs de Ligt, are short on alternative options for a proven, commanding defender, so they are quite rightly putting the squeeze on the club’s executive vice-chairman Ed Woodward.

Woodward, an investment banker with JP Morgan prior to working for United, knows all about market forces and it is unfortunate for him and his club that they are now on the wrong end of the spike in transfer fees. But City were also forced to pay over the odds when they paid £50m to sign Kyle Walker from Tottenham two years ago, making him the world’s most expensive full-back at the time, while Liverpool’s wisdom was questioned when they paid £75m for Southampton’s Van Dijk 18 months ago.

City and Liverpool would now both argue that they were justified in breaking transfer records to sign Walker and Van Dijk, and United must now decide whether Maguire is likely to prove as smart a long-term investment as those two, even if the costs seem alarmingly high.

United’s history, certainly since Sir Alex Ferguson’s time in charge, is littered with examples of expensive signings which ultimately proved to be sound investments.

Gary Pallister (£2.3m), Roy Keane (£3.75m), Ruud van Nistelrooy (£19m) and Rio Ferdinand (£30m) all became British record signings when they moved to United, while Wayne Rooney was the world’s most expensive teenager when he completed a £27m move from Everton in 2004.

All of the above left Old Trafford having more than justified their huge transfer fees, with each of them proving that the initial outlay was excellent value in the long term.

However, United’s sense of value has deserted them since Ferguson retired in 2013, with those in charge too often knowing the price of something rather than the value.

Which is why they are now in a difficult position with Maguire. Is it another case of having to pay vastly over the odds for a player who will never live up to the pricetag? Or is Maguire a modern-day version of Pallister or Ferdinand, two defenders whose fees were questioned at the time, but who ultimately made the cost of the transfers look cheap?

One thing for certain is that Maguire is not the best defender in the world. True, Van Dijk wasn’t either when he traded Southampton for Liverpool, but the Dutchman now has few rivals for that title after a sensational 18 months at Anfield. His £75m fee now looks to be a bargain and Liverpool could double it right now if they were foolish enough to consider selling.

It would be naive for United to expect Maguire to follow the same path so quickly. But he is better than what they have and would improve United, so the price is the price and they have to accept that market forces have left them having to break the world-record transfer fee for a defender.