This 119-year old Indian music label is riding the Facebook wave – shares are up 56% since the deal with the social media giant

• Saregama, India’s oldest music label, signed a deal with Facebook on June 3.
• For the fourth quarter of FY20, profits for the company fell from ₹165 million in Q4FY19 to ₹148 million this year.
• However, even after the profit fell, the shares of the company were up by 10%.

Saregama, India’s oldest music label, has signed a global licensing deal with Facebook and Instagram and now, the market is dancing to its tune.

Ever since the deal has been signed on June 3 morning, the share price is up by 56%. The share price surged 10% on Friday despite a 10% fall in quarterly profit to ₹16.5 crore. The company, which takes the credit for India’s first recorded song in 1902 ⁠— it was called Gramophone company of India then and was later known as HMV ⁠— saw its music revenue drop by 19% in Jan-March 2020 compared to the same time last year.

Saregama has over 100,000 songs across genres including film songs, devotional music, ghazals & indipop in more than 25 languages. And now, these songs can be accessed by Facebook and Instagram users. “Millions of Facebook users will be able to add music from our vast catalogue to stories and videos they create and share,” said Vikram Mehra, Managing Director of Saregama India in a statement.

Social media is the future, TV is the current driver

The revenue from its television and films division jumped 39% year-on-year. “This was a good year for the film division, Yoodlee, which licensed 6 movies during this year. Three of these were delivered to Hotstar as Hotstar Originals and the other three to Netflix. One of the Yoodlee films, Hamid, won two National Film Awards while another film, Kanpuriye, won the Talentrack award,” said the company.

The company has said that the next quarter revenue could be hit because of no new production since March due to stop in shooting during lockdown.

And that could be the reason why the Kolkata-based music label is betting on its digital push. Since the beginning of FY21, it has signed deals with Spotify, Facebook and Instagram.

One of its flagship products – Carvaan radio saw its sales fall to an all time low in the past six quarters with just 74,000 units sold in Q4FY20. The company said that the reason for this was corporate buying went to zero, electronic chains and big distributors reduced buying from Feb onwards, retail network was in lockdown since March and the month of March typically contributes 50% of Q4 sales.

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