Warner Music IPO Cut Back, Still a Bad Deal?

Today an institutional investor apparently revealed to CNBC that tonight's pricing of WMG IPO shares will be reduced in both cost and number of shares. The anonymous source revealed that shares held by current owners would be eliminated from the offering resulting in a drop from 32.6 million to 27.2 million shares to be offered tomorrow. The price range of the shares will be set at $19 to $20 a share rather than $22 to $24 a share.

This move reduces both the overall valuation of the company, which had been widely criticized as too high, and the already bloated payoff for the investors who had recouped most if not all of their investment and were using the IPO to pay off the debt incurred during that process while also cashing out.

Although some have dismissed Linkin Park's attacks on Warner Music Group's current state of affairs as a ploy for contract negotiation, whatever the band's reasoning, Linkin Park's widely covered statements were an extremely negative pr blow well-timed to f*ck the IPO.

Even without the Linkin Park fracas, publications like Forbes were telling folks to stay away from the IPO for a variety of well-considered reasons. Interestingly enough, folks at a recent IPO roadshow had no questions about Linkin Park's statements but were quite excited by the presence of P. Diddy who, from the NY Daily News photo, appears to be wearing quite a severe suit, looking somewhat like Malcolm X. However, analysts at the event were negative about both the pricing of the IPO and the future prospects of Warner Music Group.

I'm just looking forward to all those SEC filings and getting some visibility into what folks like P. Diddy are up to. Bring on the 10ks, baby!