Aug 16 - Tencent Music Entertainment Group said on Monday that China's copyright rules were unlikely to have a big impact on its online subscriptions, and its chief executive believes regulators want to promote healthy development of the music industry.
Tencent Music's second-quarter revenue beat Wall Street expectations on Monday, as its advertising business rebounded and more people subscribed to its music streaming platform.
Paid subscribers for the company's online music service increased 41% to 66.2 million, a record-high, boosted by investments in long-form audio and a refreshed music library boosted through licensing deals with Universal Music Group, Sony Music and other labels.
Shares at Tencent Music rose 3.1% in extended trading after its earnings release, paring back losses that saw it fall 9% earlier on Monday.
The shares have lost half of their market value this year due to Beijing's tough action on its tech giants and a ruling that barred the company's parent, Tencent Holdings Ltd, from exclusive music copyright agreements.
Tencent Music CEO Liang Zhu told analysts that they believed Chinese regulators ultimately hoped to promote the healthy development of the music industry and the firm fully accepted the government's policies.
The company expects the decision on copyright agreements to have some impact on its operations, Liang said in its report with no particular number. However, Liang said they did not think it would have a big impact on its online subscriptions
Frank Zhao, a Beijing-based independent music industry analyst, said Tencent Music made most of its income from social entertainment such as online Karaoke and livestreaming business.
Tencent Music is now focusing on content creation and user experience improvement, Zhao said. They are on the right road as the fight over copyright is over.
Tencent Music's social entertainment business, which includes karaoke platforms where users can live stream concerts, recorded a 7.4% increase in revenue to 5.06 billion yuan in the quarter and accounted for most of its revenue.
Total revenue increased by 15.5% to 8.01 billion yuan, but missed a Refinitive IBES estimate of 8.13 billion yuan.
The company generated 0.66 yuan per American depository share on an adjusted basis, more than estimates of 0.62 yuan.