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This is Business Live from BBC News
with Rachel Horne and Sally Bundock.
Cue the big money.
Music streaming giant Spotify heads
for the New York Stock Exchange.
But will it find a place
on Wall Street's playlist?
Live from London, that's our top
story on Thursday 1st March.
Could Spotify really
be worth $23 billion?
The Swedish music streaming giant
is listing in New York
in an unconventional way.
We'll tell you all you need to know.
Plus how to get ahead
in the world of Google and Facebook.
Why the giants of the industry
could be losing their gloss.
Asia and the US were down and Europe
is following the trend.
We'll keep you updated
with the figures.
Also in the programme: The world's
biggest advertising agency WPP said
2017 wasn't pretty. I was talking to
this man, Sir Martin Sorrell, the
boss, and you can hear that
interview saying that social media
is an opportunity rather than a
threat. As Spotify prepares a market
flotation, we are asking if
streaming is good or bad for the
music industry. Does it help newer
artists or stop them getting paid?
Has it changed the way you discover
music? Tell us your streaming
experiences using the hashtag.
Welcome to the programme.
We start on Wall Street
where Spotify could soon be joining
the ranks of multi-billion-dollar
Music streaming service Spotify has
revealed plans to list its shares
on the New York Stock Exchange.
Spotify is the market leader
in streaming music to mobile
devices and computers
with some 160 million users.
Its revenues jumped well
over a third last year
to almost $5 billion.
Some believe the company
could be valued at as much
as $23 billion.
But although it is growing fast it
has yet to make a profit.
Joining us is Sonja Laud,
head of equity at
It is always good to see you. There
has been a lot of anticipation and
rumour that Spotify would come to
market and it has finally made that
announcement. It is doing it in an
unusual way. Talk us through the way
it is coming to market.
Yes, it has
opted to use a rather direct way,
allowing private shareholders to
list their shares on the New York
Stock Exchange. You have got to put
this in context. This is a company
that is very well known and as such
probably assumes that it can avoid
using the road show, the classic
techniques on how to come to market.
Does this also mean it is more of a
level playing field for those who
want to get a bit of Spotify when it
lists? The investment banks won't
have such a hold on the shares when
it comes to market.
Yes. The way the
price discovery mechanism works is
that it literally depends on the buy
and sell orders that come in on the
day, which is very interesting. The
only caveat I would put in is if you
look at the ranges of valuations
that have been put out there, they
are actually quite broad. You
mentioned 23 billion but it starts
from 6.5 billion and that is based
on prices that have been paid for
their private shares in the private
exchange of shares. That is a
question, particularly if you are a
private investor and you can't use
the expertise of somebody looking
into the business model to determine
what the valuation should be. I
would be quite mindful that there
could be huge fluctuations on day
one based on this.
Let's talk about
the figures. We talked about Spotify
joining the ranks of the big tech
companies that floated. Snap,
Facebook, Twitter. The difference
with Spotify is they have got paying
customers. But they have not yet
made a profit.
Exactly. This is
where the important part is. The
business model is well understood, I
think. This is why they assume they
can go straight to market because it
is a very transparent business
model. They have paying users and
they are widely recognised around
the world. But as you quite rightly
point out they have not yet made a
profit. This is the crux to find out
the trajectory. When do they seem to
break even and when to make money?
Is this in terms of expansion and
the Catholics plan? There may be
good reasons but there could be
warning signs will stop why don't
they make a profit?
I remember when
Facebook came to market they were
not making a profit and there was
euphoria around the listing and not
long after that, the shares started
to fall quite a bit because people
are trying to read between the lines
about how it would make money. Now
that company is making a lot of
Absolutely. It is all about
having a good feel for what you
think the trajectory will be. You
have got to keep faith that what you
think it will be is going to
materialise. You are buying into a
loss-making company, so you have got
to understand what needs to happen
for this company to be profitable
For now, thank you. You
will return later and you will add
more value to some of the stories
out there in business news today.
Let's take a look at some of
the other stories making the news.
Malaysian airline AirAsia has sold
off its aircraft leasing
business for $1.2 billion.
The deal is part of its
efforts to sell non-core
parts of the business,
allowing it to cut debt
and offload the financial
commitment of owning planes.
Recently it has also
sold its training business
and ground handling operations.
AirAsia will now lease
back dozens of planes
from the new owner of the aircraft.
Exxon Mobil says it is
abandoning joint ventures
with Russia's Rosneft,
signed while Secretary
of State Rex Tillerson
was running the oil giant,
citing US and European
It's a major turnaround
for the company which had long
argued against the sanctions imposed
in 2014 over Russia's
invasion of Crimea.
Food delivery firm Deliveroo said it
will take comprehensive action
to reduce the amount of plastic
packaging used in its meals.
Plastic cutlery will become
an opt-in on its app,
while the firm has launched
a new line of eco-packaging, with 50
new products to help restaurants
offer sustainable packaging.
Deliveroo boss Will Shu said:
"We want people to enjoy meals
that are sustainably
delivered and packaged."
Do you know what I think? Fingers.
Use your hands.
Use the cutlery in
your house if food is being
delivered to your house?
your hands and then wash them. They
do that all round the world.
British tech company Dyson has
reported bumper profits today
with underlying earnings up 27% last
year to £801 million.
And it's mainly thanks to Asian
consumers who accounted for three
quarters of its sales last year.
Sarah Toms is in Singapore
to tell us more.
Hello. Yes, as you said, Dyson
products are proving to be a huge
hit with Asian consumers. Dyson
hoovered up 41% rise in profits last
year, and as you said, almost 75% of
the company's growth last year came
from Asia. So why is such a huge
spending boom in the region? There
is a rapidly growing middle class,
especially in China. With that comes
the growing demand for technology
and consumer products. That is why
the blameless fan hairdryers proved
to be so popular and also air
purifiers because air pollution is a
problem in cities like Shanghai and
Beijing. And this is good news will
Dyson, in the middle of an ambitious
expansion. Last year they said they
had been working on building an
electric car for three years. The
British company has not yet decided
where to build the factory. England
and Asia, after these results,
looking like strong possibilities.
Thank you. Let's take a look at how
the markets have been getting on. In
Asia shares overnight were mostly up
but in Europe and the US they were
mostly down. Wall Street showed its
worst monthly performance in two
years for February.
It was still reacting to comments
from new Federal Reserve chair
Jerome Powell which suggested
interest rates could rise
faster than expected.
Remember, it was the hint
of faster rate rises
just a month ago which sparked those
huge global sell offs.
Jerome Powell will be speaking again
in the US today. And in Europe, the
markets have been trading in the UK
for just over 40 minutes, and the
FTSE is down almost one third. Keep
an eye on sterling which fell to its
lowest levels since mid-January
yesterday after Theresa May, the UK
Prime Minister, said she couldn't
accept the EU's draft withdrawal
Now the details about what's ahead
on Wall Street Today.
There is a lot of economic data
for the market to absorb
The weekly measure of how many
have made their first
claim for unemployment benefits
and it is expected to show
the continuing strength
of the US labour market
with a very low number.
There's also monthly figures
for how many cars were sold
in the US in Fabbri,
they will be released
The total is expected to show
a slight decline in the numbers
being sold since this
time last year.
Jerome Powell gives his second day
of testimony to Congress
about monetary policies
which will doubtless
attract a lot of attention.
And the site from economics
investors will also have a lot
of corporate news to mull over
including earnings from retailers
Gap, Coles and Nordstrom.
Still to come: We hear from the boss
of the world's biggest advertsing
firm WPP, Sir Martin Sorrell,
on how social media is changing
the world of advertising.
You're with Business
Live from BBC News.
A report on the UK car industry
after Brexit suggests a no deal
scenario would mean the loss
of thousands of jobs and
millions in investment.
The select committee report suggests
the UK must closely align itself
to the EU's trading model to give
car manufacturing a realistic
chance of survival.
David Bailey, professor of industry
at Aston University,
gave evidence to the committee.
David, tell us a little bit more
about this scenario that is being
The report is very hard
hitting. The MPs on the committee
have done a great job of spelling
out the issues facing the car
industry in the wake of Brexit, and
they make the point that there is no
benefit from Brexit for UK car
industry. There are only costs and
this is about damage limitation. In
particular they make the point that
no deal would be the worst outcome.
It would mean WTO
tariffs of up to 10% on Karzai 4% on
components, which would have a huge
impact on the industry here. It
would probably see plant closures
and considerable job losses.
Avoiding a no deal is critical.
only heard from Toyota yesterday
continuing to invest in the UK car
industry. And I spoke to the boss of
Nissan, who was saying that actually
he is still optimistic about the
situation in the UK. He is keeping a
close eye on negotiations but
clearly some of the big global
players in the car industry are not
That is drug. These are
Japanese investors who do want to be
here for the long-term. -- that is
right. The Toyota decision was taken
some time ago and it would be
difficult for them to unwind that.
Nissan have they will build the new
Qashqai from 2021 in the UK but they
will review that in the wake of the
decision on Brexit. They want as
much access to the single market as
possible. 50% of car exports go to
the European Union and Japanese
producers in particular came to the
UK to use that as a launch pad into
the single market. They want to be
as closely aligned as possible with
the single market. If we lose that
and we see barriers to trade, we
will see a reduction in investment
here, I think.
David, thank you for
your time. And it is not just snow
affecting the UK. It has shut down
Geneva airport. They might be more
used to snow in Switzerland compared
to the UK but that airport in Geneva
is closed. The statement advertises
passengers not to arrive.
You're watching Business Live.
Our top story:
Is Spotify really worth $23 billion?
The world's biggest music streaming
service is going public and doing so
in New York. Let's look at the
market so far today. Markets in
Europe are down, with big losses
over the last month across global
markets and we are starting March on
the back foot. All trading in the
Let's talk about the
advertising business now
because the world's biggest ad firm,
WPP, has just reported
its results for 2017.
It has seen a fall in
the amount it bills clients.
But it denies, as some
that this is a sign of a broader
decline in the industry
as the likes of Google and Facebook
take an ever bigger share
of global advertising spending.
Let's show you a few
of the highlights.
says its net sales were down almost
1% on the previous year,
the worst performance
since the 2008 financial crisis.
In a statement, WPP said 2017
was not a pretty year
and warned there wouldn't be
any growth this year.
And it warned
the industry continues to undergo
As I've been hearing from the boss
of the firm, Sir Martin Sorrell.
It has not been an easy year. Not a
pretty year, as we put.
Just elaborate, why in your opinion
has it been a tough year for your
A couple of things, from a long-term
point of view, technological
disruption, whether in production,
media or distribution, with Amazon
for example. Which is changing the
dynamics. There are short-term
pressures, activists put pressure,
but to be fair some call for
increased investment in branding and
innovation. And Private Equity
models looking on cost in the short
term. Whatever it is, we have two
adapt the way we go about our
You are extremely spread out, you
are getting bigger. Every time I
meet a company in ad space, they say
apart is owned by WPP. Is too much
going on when you are challenged by
Google and Facebook?
They are the first and second
largest destination for media
investment. Our media book is about
£55 billion billings. That, about 7
billion goes to Google and Facebook.
In my view it would be, while others
disagree, wrong to Google and
Facebook... In our presentation
later today we will give you a quote
from a senior executive at Google
who says the opposite. We are
increasing, we have described them
vividly as frenemies. That they have
become much more partners. That is
not the issue. It might be a comma
and issued that traditional media
with focus on.
Why then is the likes
of Procter and Gamble saying we
won't spend as much this time?
Again, that is not what they have
said. They did not say they are
spending less, but as I interpret
it, they would spend less if Google
and Facebook did not step up to the
response proceeds that the BBC have
in relation to the material on their
They have to take responsibility.
They have to take social
responsibility and political
responsibility for consumer brand
safety on those media. But Keith was
saying in effect they are media just
like you and have to be responsible.
To be fair, Google and Facebook are
hiring 30,000 people to make sure
that they don't have the issues that
arise with content being placed on
controversial or unacceptable
websites or for the political
shenanigans that may or may not have
happened around elections.
of WPP. I had to interrupt to get my
With me is Thomas Singlehurst,
analyst at investment
You were listening to that, there is
a lot of discussion about the
advertising industry and how it has
been changed, for better or worse,
because of Facebook and Google.
What is your take?
There is no doubt
there has been disruption. The move
to digital makes advertising more
efficient and budgets potentially
overtime move down which is a big
adjustment for a company like WPP
breaches exposed to traditional
buying. Can it adapt to these new
activities in terms of areas like
business transformation, building
Explain the people who are not
familiar with the industry what is
the interplay between a company like
WPP and Google or Facebook?
As he mentions, they are media
companies taking advertising. The
only difference between those and
traditional media companies is that
buying is increasingly automated. Do
you need an individually like WPP?
That is the debate about whether WPP
has a role to play.
His argument is they still have a
And the role has to change, whether
he likes it or not. He is completely
open to that, they made
announcements today that they had to
change the way they do things
because their forecast for profits
is flat again.
Ultimately the group has 43% of
revenues from these traditional
advertising related areas. In
fairness, if you did below that, you
-- if you did below, you will find
the Aries people are most worried
about are performing OK -- the
areas. The challenging areas are the
traditional creative functions.
Share price, WPP is down 13.5% on
The reality is all the way through
last year the group consistently
downgraded revenue guidance. And
running into the fourth quarter, the
market was expecting slight growth.
They came in with -1.3%.
don't like surprises. Will that
impact on his remuneration? As the
highest paid FTSE 100 boss in the
Remuneration is a key focus for
investors. You are right. He is a
big shareholder as well with the
Like you for your analysis, really
interesting discussion about the
future of advertising.
In a moment we'll take a look
through the business pages but first
here's a quick reminder of how
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Stay up-to-date with the news as it
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What you need to know, when you need
to know it.
You have been getting in touch about
the streaming industry, the music
Let us chat through some of those. A
tweak here think streaming is great
for the music industry allowed
artists to reach more than their
original target audience and
consumers can experience a massive
variety of music.
And another, without streaming I
wouldn't have a connection, I don't
have a radio and I don't go
clubbing, the only way I discovered
Is the message here, saying, if it
wasn't the streaming I wouldn't pay
anything for my music. I listen and
I pay again.
Some say they still have cassette
tapes and CDs and vinyl. Quite a few
from that end of the scale. They are
the early risers watching!
Maybe we have the streamers at this
One story here about credit card
debt in the United States.
The headline focuses on the fact we
have had rising arrears in credit
card debt and music -- mortgage
payments the people are falling
behind. There is another article
with Bill Gates and an interesting
forecast that the world will face
another global financial crisis, not
the same when it will happen but at
the centre of his concern is the
issue debt has not been reduced
since the crisis and although it
might seem like a microcosm must --
it is the fact we have seen stagnant
real standards of living and real
incomes have been falling. A theme
in the UK as well. We are hitting
the lower income brackets above
Who are borrowing just to get by.
Not a good sign. And a story also
linked, problems with UK retail, a
major headline saying up to 200000
More High St store jobs tipped to be
axed by 2020.
It is the same topic. Particularly
in the UK, real income falling, high
inflation which means you hit those
income brackets even more. It will
hit the retail space, a natural
chain of events.
Thank you for joining us this
morning giving us your expertise.
A busy programme. Thank you for your
comments today on streaming. We will
see you again tomorrow, goodbye.