Sun. Apr 11th, 2021

Common Music Group rode out 2020 with a mild, if important, income uplift: complete annual gross sales throughout all of its divisions (together with publishing and recorded music) rose 4.7% YoY.

However the actual standout story for UMG final yr – maybe music to the ears of these hoping it can hit a ginormous valuation within the coming months – was its revenue efficiency.

In 2020, UMG posted complete revenues of €7.43bn ($8.40bn), with an EBITDA of €1.49bn ($1.68bn). That represented a formidable annual EBITDA margin of 20%.

Consequently, Common was almost $250m (€220m) extra worthwhile on an EBITDA foundation in 2020 than it was in 2019.

Nevertheless, UMG’s annual Money Move From Operations was considerably down YoY in 2020 at €50m ($57m).

Why? Vivendi’s newest outcomes reveal that UMG spent €1.52bn ($1.71bn) on a mixture of catalog acquisitions and “advances to artists web of recoupment” final yr.

The latter descriptor refers back to the complete sum of money spent by UMG on artist advances within the yr, minus the cash it recouped within the interval on these payouts.

The $1.71bn determine was greater than thrice greater than UMG’s equal expenditure quantity (“advances to artists web of recoupment” plus catalog acquisitions) from 2019 (€465m/$522m).

“Within the yr earlier than it goes public in Amsterdam, Common splashed an entire lot of cash locking in new offers with superstars, and shopping for up music catalogs.”

This all suggests one thing very clearly: Within the yr earlier than it goes public in Amsterdam, Common splashed an entire lot of cash locking in new offers with superstars, and shopping for up music catalogs.

A kind of music catalogs, in fact, was Bob Dylan’s music assortment – which UMG acquired in late 2020 for a value regarded as between $300m and $400m.

(A helpful additional little bit of context: Within the two-and-a-bit years main as much as September 2020, the aggressively acquisitive Hipgnosis Songs Fund spent £1.18bn – round $1.70bn – shopping for music property.)

Common’s newest fiscal numbers arrived from UMG mother or father Vivendi right this moment (March 3) in its outcomes for This autumn 2020.

These outcomes present that Common’s recorded music division generated annual revenues of €5.97bn ($6.74bn) in 2020, up 6.7% YoY.

The primary driver of these recorded music revenues was streaming, which contributed €3.83bn ($4.33bn) to UMG’s coffers, up 16.2% YoY. (All YoY proportion numbers on this story mirror rises/falls on an natural foundation.)

Common’s music publishing division, Common Music Publishing Group, posted annual revenues of €1.19bn ($1.34bn), up 14.4% YoY.

UMG’s most clearly pandemic-hit division was its ‘Merchandising & Different’ class of revenues – housing Bravado – which noticed annual gross sales fall 39.6% in 2020.

Vivendi’s most popular revenue metric – EBITA (Earnings Earlier than Curiosity, Taxes, and Amortization) – weighed in at €1.33bn ($1.5bn) in 2020, up 20.1% YoY.

The corporate famous that this 17.9% annual EBITA margin has grown significantly prior to now 4 years, up from 12.2% in 2016.

In This autumn particularly (the three months to finish of December), Common noticed total YoY firm income development of 5.4%, and development in its recorded music enterprise of seven.9%.

In 2020, UMG claimed 4 of the High 5 artists of the yr on Spotify globally (Drake, J Balvin, Juice WRLD, The Weeknd), in addition to the No. 1 music of the yr (The Weeknd’s Blinding Lights).

And in accordance with Nielsen Music/MRC knowledge, Common claimed your entire High 6 albums of the yr within the US with efforts from Lil Child, Taylor Swift, Pop Smoke, The Weeknd, Juice WRLD, and Publish Malone.

Right now’s information comes simply over two weeks after Vivendi confirmed its administration was exploring a proposal to spin out 60% of UMG onto the inventory alternate in Amsterdam sooner or later in 2021.

A consortium led by Tencent Holdings closed the acquisition of a second 10% chunk of UMG fairness in January, taking its complete holding within the music firm to twenty%.

That acquisition gave Common Music Group an enterprise valuation of €30 billion (at present value round $36 billion).

With the spin-out, it’s understood that Vivendi would maintain on to twenty% of UMG, with the Tencent consortium additionally sustaining a 20% stake – with the rest of the music firm turning into publicly traded.

* All EUR to USD foreign money conversions on this story have been made on the related common annual charges as offered by VivendiMusic Enterprise Worldwide

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