A number of Norwegian and Swedish companies received a letter from Tidal’s American holding company, Project Panther Bidco, during the Easter week.
Read the full story in Norwegian here.
At the same time that Tidal owner Jay Z is celebrating three million paying subscribers on the streaming service, after a year as its main owner, his lawyers are preparing a compensation claim against the former owners in Norway and Sweden.
Jay Z’s opinion is that he received something other than what he paid for when he bought Tidal last year.
Schibsted the largest seller
The main claims in the letter are that the number of subscribers were significantly lower than the 503.000 subscribers that was stated in January 2015, when Aspiro/Wimp was sold to Project Panther Bidco, and that the company in reality was in poorer economic shape than what was envisioned to the buyers.
The letter was sent to the former board executives and leaders in Aspiro. The Norwegian media company Schibsted, together with Platekompaniet and the fund Verdane Capital VIII owned around 76 percent of the shares in Aspiro through «Streaming Media», where Schibsted was the dominant owner with approximately 75 percent of the shares.
After what Dagens Næringsliv has learned, the number of how many fewer subscribers the new owners thinks the streaming service had in reality, is not specified, but they do believe that there are large deviations.
In the letter, Jay Z’s Swedish lawyers notify that there will be a claim when Tidal has finished its internal investigations. The number of subscribers was a deciding component in the valuation of Aspiro to 464 million Swedish krona. After what DN has learned, the claim from Project Panther Bidco will be in eight figures (USD).
Four out of five «bonus subscribers»
A large amount of Wimp’s subscribers ahead of the sale to Jay Z, received their subscription as a bonus after other purchases at Norwegian companies like the cable tv provider Canal Digital or the telecom company Telenor, as well as the Polish telecom company Play, says Aspiro’s annual report in 2014.
These «bonus subscriptions» had a setup and way of being reported that differed from the others. But DN has not been able to confirm if is this is where the core of the conflict is to be found.
When Jay Z got control over Aspiro, he swiftly threw away the Wimp name. Before that, the streaming service had three subscriptions: Wimp, Wimp Hi-Fi and Tidal. Even if Wimp said it had 503.000 subscribers when the company was sold, the company’s own public number only said that 112.000 subscribers were direct subscribers, while 391.000 – about 4 out of 5 – was subscribers through it’s partners, who threw in the subscription on top of their own offers.
Due diligence
Anders Rikter, director of communications in Schibsted Media Group, confirms that the company has received the letter.
In an email to DN, Rikter writes that Schibsted are puzzled by and do not agree with the letter or any eventual claim. He adds that Aspiro was listed on the stock exchange, and that the company had to have transparency in its financial reporting.
- The buyer also did a due diligence of the company. We would also like to point out that this is over a year ago. Other than that, we have no comments, Rikter writes.
ABG Sundal Collier in Stockholm was hired to assess the bid on Aspiro, and was as of that not involved in the actual sales process.
- I can confirm that we have received a letter, but it was extremely general, and was sent to a lot of counterparts, so we will wait to see if anything more comes of this, says leader for ABG Sundal Collier in Sweden, Karl Berglund.
Taina Malén is the CMO of the computer games company Star Stable Entertainment, and was elected as an external board member of Aspiro a year or so before the sale to Project Panther Bidco.
- I’m familiar with the letter, and have seen the document. But I don’t understand it. The only thing I can say is that the buyer did a due diligence. This was a listed company, so the financial structure of the company was transparent. As former board member of Aspiro, I can’t comment any further, says Taina Malén.
Dagens Næringsliv has asked for a comment from Jay Z’s press contacts, but the company has refused to comment on this article.
The Stockholm law firm MAQS, who represent Project Panther Bidco, did not respond to DN's request on Wednesday.
Update:
In a press release Thursday, Tidal confirms the legal action.
“We are excited that one year after TIDAL launched, we have surpassed 3 million subscribers globally. The growth in our subscriber numbers has been even more phenomenal than we’ve previously shared. It became clear after taking control of TIDAL and conducting our own audit that the total number of subscribers was actually well below the 540,000 reported to us by the prior owners. As a result, we have now served legal notice to parties involved in the sale. While we cannot share further comment during active legal proceedings, we’re proud of our success and remain focused on delivering the best experience for artists and fans», Tidal writes in the statement.(Vilkår)Copyright Dagens Næringsliv AS og/eller våre leverandører. Vi vil gjerne at du deler våre saker ved bruk av lenke, som leder direkte til våre sider. Kopiering eller annen form for bruk av hele eller deler av innholdet, kan kun skje etter skriftlig tillatelse eller som tillatt ved lov. For ytterligere vilkår se her.