Jay Z is preparing a lawsuit against Tidal's former owners, accusing them of overvaluing the company by using inflated subscriber numbers, according to a report from Dagens Næringsliv. Project Panther Bidco, Jay Z's holding company that owns Tidal, sent letters to former board members and investors in Sweden and Norway notifying them that Tidal would file a claim against them after it finished its internal investigation.
In a statement to The Verge, Tidal says that after conducting an internal audit, it found that its subscriber base was much lower than it was stated by the previous owners. "The growth in our subscriber numbers has been even more phenomenal than we’ve previously shared. It became clear after taking control of TIDAL and conducting our own audit that the total number of subscribers was actually well below the 540,000 reported to us by the prior owners. As a result, we have now served legal notice to parties involved in the sale."
The letter states that Tidal's actual subscriber count was far lower than the 540,000 its parent company Aspiro reported back in January 2015 before the deal was finalized. The valuation of Aspiro was largely based on its subscriber totals, and an inflation of those numbers would have a direct effect on the sale price.
"We have now served legal notice to parties involved in the sale."
The discrepancies could be tied to a series of bonus subscription deals Aspiro had with cable and telecom providers in Norway and Poland. Aspiro's parters, including Canal Digital and Telenor, threw in Tidal and WiMP (the former sister service to Tidal) subscriptions along with cable subscriptions and cell phone purchases, which amounted for 391,000 of Aspiro's 503,000 subscribers in 2014, according to Dagens Næringsliv.
Schibsted, the Norwegian media company which held a majority stake in Aspiro received the letter and told Bloomberg that it did not agree with Project Panther's assessment of the situation. "We disagree with the accusations in the letter and any potential claims," Anders Rikter, a spokesman for Schibsted told Bloomberg. "We would like to point out that the company was listed on the stock exchange with everything that entails regarding transparent financial reporting."