Categories: Media Moves

Coverage: Sprint buys a third of Jay Z’s Tidal for $200 million

Jay Z is selling one-third of his Tidal streaming service to Sprint for $200 million, making the service available to Sprint’s 45 million customers.

Zack O’Malley Greenburg of Forbes had the news:

As part of the deal, Tidal will become available to Sprint’s 45 million customers; the telecom giant’s CEO Marcelo Claure will join Tidal’s board of directors. Jay Z and his squad of artist-investors will retain stakes in the company; the agreement also calls for a $75 million fund dedicated to musicians’ exclusive releases.

“Jay saw not only a business need, but a cultural one, and put his heart and grit into building Tidal into a world-class music streaming platform that is unrivaled in quality and content,” said Claure in a statement. Added Jay Z: “Marcelo understood our goal right away and together we are excited to bring Sprint’s 45 million customers an unmatched entertainment experience.”

The news comes on the heels of a story released Friday by Norwegian business newspaper Dagens Naeringsliv reporting that Oslo-based Tidal had been inflating subscriber numbers. Tidal has placed the number at 3 million, while the report said the number was likely closer to 1 million.

In that story, I was quoted as saying that despite the bad optics of the news, Jay Z has a way of “extracting value from seemingly impossible situations.” It looks like he’s done exactly that already.

Brian Fung of The Washington Post noted Jay Z purchased Tidal in 2015 for $56 million:

The $9.99-a-month music service, which was purchased by Jay-Z in 2015 for $56 million, seeks to compete with the likes of Spotify and iTunes for dominance over a growing market for streaming media. It offers high-definition music videos and, for an extra fee, high-definition sound quality.

The partnership gives Sprint greater access to media at a time when many other companies in its position are doing the same.

“This seems to be the direction the wireless industry is heading in,” said Jeff Kagan, an independent telecom analyst. “Combining different industries to increase value to both.”

AT&T, Verizon and other network operators have sought to buy up vast troves of content in an effort to persuade consumers to switch to their platforms. They also hope to sell advertising against that media, and to use the behavioral data generated by that consumption for marketing purposes, as well.

But whereas its larger rivals have tried to swallow entire media companies outright — AOL in the case of Verizon and Time Warner in the case of AT&T — Sprint is merely going for a slice of Tidal.

Ben Sisario of The New York Times reports that the deal injects some much-needed cash in Tidal:

But Jay Z, whose real name is Shawn Carter, found a lifeline through a deal announced on Monday in which Sprint will buy a one-third stake in the service for an undisclosed amount. The arrangement injects some needed investment in Tidal and allows it, at least for now, to remain an underdog in a streaming market that has become dominated by giants.

“Tidal has struggled to make a dent in the streaming market and has shallower pockets than Spotify, Apple or Amazon,” said Mark Mulligan, an analyst at Midia Research, a market research company. “The Sprint deal gives it access to a big customer base, free marketing and a war chest to take on the streaming incumbents.”

As part of the deal, Jay Z and the group of artist owners who helped introduce Tidal, including Beyoncé, Madonna, Kanye West and Alicia Keys, will continue to run the service, and Marcelo Claure, the chief executive of Sprint, will join Tidal’s board, the companies said.

“Sprint shares our view of revolutionizing the creative industry to allow artists to connect directly with their fans and reach their fullest, shared potential,” Jay Z said in a statement. “Marcelo understood our goal right away, and together we are excited to bring Sprint’s 45 million customers an unmatched entertainment experience.”

Chris Roush

Chris Roush was the dean of the School of Communications at Quinnipiac University in Hamden, Connecticut. He was previously Walter E. Hussman Sr. Distinguished Professor in business journalism at UNC-Chapel Hill. He is a former business journalist for Bloomberg News, Businessweek, The Atlanta Journal-Constitution, The Tampa Tribune and the Sarasota Herald-Tribune. He is the author of the leading business reporting textbook "Show me the Money: Writing Business and Economics Stories for Mass Communication" and "Thinking Things Over," a biography of former Wall Street Journal editor Vermont Royster.

Recent Posts

WSJ’s Eisen to write book about the mortgage market

Wall Street Journal reporter Ben Eisen has signed a contract with Norton to write a book about…

13 mins ago

Reuters hires Krishnakutty as a news producer

Reuters has hired Pia Krishnakutty as a news producer. She has been at The Print as a…

18 mins ago

Indianapolis Biz Journal seeks a news editor

The Indianapolis Business Journal is looking for our next news editor, a role that focuses…

15 hours ago

Axios hires Berkowitz as ME for media and markets coverage

Axios has chosen Ben Berkowitz to be its next managing editor of business and markets.…

20 hours ago

Business Insider hires Ortega as director of newsroom operations

Business Insider editor in chief Jamie Heller sent out the following on Monday: I'm thrilled…

20 hours ago

Rest of World promotes Chandran to deputy editor

Rest of World editor in chief Anup Kaphle sent out the following on Monday: We are excited…

21 hours ago