Led Zeppelin guitarist Jimmy Page entertained the New York Stock Exchange with the band’s “Whole Lotta Love” at the opening bell Wednesday, but little of that love extended to Warner Music Group Corp.’s stock, which fell in its first day of trading.
Shares of Warner Music, trading under the symbol WMG, fell 60 cents to $16.40 after its initial public offering priced at $17 per share late Tuesday. The company, heavily criticized in the media and by its biggest musical act for its initial public offering plans, had to reduce its offering price from $22 to $24 after a negative reception from investors.
WMG’s IPO plans came under intense scrutiny. The Wall Street Journal this week criticized its share price as overvalued and The New York Times last month wrote a long examination of the company that questioned whether it would be able to regain its former luster.
Then, its biggest-selling act, the rock-rap group Linkin Park, last week demanded its release from the company’s Warner Bros. label, partly because of the IPO. The group criticized cutbacks within the company — which included the layoffs of 1,000 employees, folding the Elektra label into its Alantic Records label, and shedding some artists— and questioned whether it was committed to spending the money necessary to promote Linkin Park’s future albums. The group owes Warner Bros. four more discs.
Linkin Park also harshly criticized the IPO plans: “The new owners of the Warner Music Group will be reaping a windfall of $1.4 billion from their $2.6 billion purchase a mere 18 months ago if their planned IPO moves forward,” the band said in a statement. “Linkin Park, their biggest act, will get nothing.”
Warner Bros. dismissed the group’s criticisms, saying their figures were fictional, and defended its promotion of the band.
Warner Music Group sold 32.6 million shares to the public on Wednesday, bringing in $554.2 million, though the company plans to set aside just $7 million for general corporate purposes. The rest will go to paying down debts related to an investor group’s purchase of the company from Time Warner Inc. last year, according to the company’s filings with the Securities and Exchange Commission.
The private investors, led by Edgar Bronfman Jr., purchased the music publisher last year for $2.6 billion. Besides Linkin Park, the label’s artists include Green Day, Kid Rock, Rob Thomas, Missy Elliott and Madonna. Led Zeppelin is under contract to Atlantic.
The company has had some bright moments of late. Thomas’s “Something to Be” debuted at the top of the album charts last month and is a strong seller, and Green Day’s Grammy-winning “American Idiot” has sold 3.4 million copies. In addition, rap acts like Mike Jones and T.I. continue to be strong sellers.
WMG tried to generate excitement for the IPO by having Page play for the suit-and-tie stock traders and guests as the opening bell rang at the NYSE.