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Tencent Music shares hit high note, then fade after US market debut

Tencent Music Entertainment Group saw its shares pop and then fizzle during the Chinese music streaming service's first days of trading in the week ended Dec. 14. Meanwhile, CBS Corp. shares slipped as internal concerns surfaced regarding the sexual misconduct investigation into former CEO Les Moonves.

Tencent Music, the music arm of Chinese tech giant Tencent Holdings Ltd., made its U.S. public debut on the New York Stock Exchange on Dec. 12, trading slightly above the firm's initial public offering price of US$13. The company had priced its public offering at the low end of an expected range of US$13 to US$15 per American depositary share. The offering, which raised about US$1.07 billion before the exercise of the underwriters' overallotment option, ranks as the largest IPO in the music services and publishing industry since 2000. The highest sector IPO of the current millennium to date is Warner Music Group Corp.'s US$554.2 million offering in 2005, according to data compiled by S&P Global Market Intelligence.

Tencent Music had planned to go public in October, but postponed due to a sell-off in global markets fueled by trade tensions with China and concerns around worldwide economic growth.

Shares in rival Spotify AB parent-company Spotify Technology SA fell in response to Tencent Music's market debut. The streaming giant made its first public market appearance earlier this year via a direct listing, raising over US$900 million while bypassing the traditional IPO listing structure and pricing without the assistance of bank underwriters.

In a blog post from Lipper Alpha Insight, a news site that provides financial advice and insights to professionals, the group said Tencent Music offers drastically different services compared to Spotify, and the company's decision to go public could lead to harsher competition in the streaming service sector.

"The two companies are dramatically different. Tencent Music is profitable, for one. The Chinese firm makes its money not just from subscriptions, as Spotify does, but from ephemeral things like virtual gifts," the post said. "Tencent Music and rival Spotify are now officially engaged in a duet, or maybe a duel."

As of midday Dec. 14, Tencent Music shares were trading at $12.58, down 3.23% from the close of the company's first trading day. Spotify shares were trading down 6.68% for the week to $126.27 apiece.

CBS shares tumbled following the company's board meeting Dec. 10, during which some concerns allegedly surfaced regarding the ongoing sexual misconduct investigation into Moonves, the company's former chairman, CEO and president.

According to a report from The Wall Street Journal, some CBS directors expressed frustrations at the meeting that details of the investigation have been made public through recent articles from The New York Times. A handful of directors increased pressure on the law firms handling the case and others called for a forensic investigation into the leaks, according to the Journal, citing people familiar with the situation.

A Dec. 4 article from the Times cited a 59-page draft report produced by lawyers for CBS' board that concluded Moonves destroyed evidence and lied to investigators about his behavior. The report allegedly concluded that such findings indicate that the board now has the grounds to refuse Moonves $120 million in severance pay.

CBS' board said in July it would investigate allegations of sexual misconduct by Moonves, noting that the allegations were recently reported but involve incidents "that go back several decades."

As of midday Dec. 14, CBS shares were trading at $48.01, down 6.05% from their Dec. 7 close.

Turning to technology, Google LLC-parent Alphabet Inc.'s stock inched up during a week when Google CEO Sundar Pichai defended his company's business practices before a group of U.S. lawmakers.

Speaking during a House Judiciary Committee hearing Dec. 11, Pichai said that his company operates "without political bias," and he agreed to work with Congress in crafting federal privacy legislation aimed at governing how internet giants collect user data. Lawmakers from both political parties pressed the tech executive on the company's plans for China, its user privacy safeguards and concerns about political bias.

Pichai said Google has no plans to launch a censored search engine in China and strongly denied allegations that his company has incorporated an anti-conservative bias into its search algorithm.

Alphabet shares were trading at $1,060.73 as of midday Dec. 14, up 1.35% from their Dec. 7 close.

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