What’s new: Tencent Music Entertainment Group (TME), the operator of China’s largest online music platform, has reported a year-on-year drop in profit and revenue as the authorities toughened oversight on monopolies and entertainers evading tax.
Quarterly net profit attributable to shareholders plunged 55.3% from the same period in 2020 to 536 million yuan ($84 million) in the fourth quarter, a deeper contraction than the 34.5% drop recorded in the third quarter, according to Monday’s financial statement.
Revenue decreased 8.7% year-on-year to 7.6 billion yuan, a reversal from a 3% rise in the previous three months. Executive Chairman Cussion Pang blamed the revenue decline on “increasing competition and (a) changing macro environment.”
The context: China launched a regulatory crackdown targeting the tech sector last year, tightening rules on various areas including monopolies, tax, and data security.
TME saw monthly active users and paying users of its social entertainment services — mainly livestreaming — shrink year-on-year and quarter-on-quarter as a crackdown on entertainers evading tax forced some popular livestreamers off its platform.
In July, Beijing ordered Tencent to relinquish all its exclusive global music licensing deals, citing anti-monopoly rules. This had a negative impact on the company’s copyright distribution revenue, Chief Strategy Officer Tony Yip said in a webcast discussing the earnings report.
Related: Tencent Music’s Earnings Fall for Second Quarter Running as Antitrust Crackdown Bites
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)
Get our weekly free Must-Read newsletter.
