UMG Stands Resilient Through Pandemic as Revenues Up 3.5% Halfway Through 2020
Universal Music Group
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Universal Music Group’s revenues for the first half of 2020 have increased 3.5% at constant currency and perimeter over the first half of 2019, to €3.46 billion ($4.09 billion).
The increase has occurred even as its quarterly revenue dipped slightly (down 4.7%) from Q1 2020 in the face of the COVID-19 pandemic which compelled lockdowns across the world.
For the first half of the year, recorded-music revenue reached €2.77 billion ($3.27 billion, up 3.7%), boosted once again primarily by a rise in streaming revenue (€1.81 billion/$2.14 billion, up 12.4%).
The growth in digital consumption offset the decline in physical sales which plummeted 22.4%. Digital downloads also suffered a similar decrease of 23.1%. F
Factors in Revenue Growth
UMG attributes the growth over the first half of the year to the success of new releases from artists like The Weeknd, Eminem, Justin Bieber and Lil Baby. In addition, the continued success of 2019 releases from Post Malone and Billie Eilish are driving factors.
The company’s music publishing has also achieved substantial growth as it has increased 21.2% in constant currency for the first half of 2020 over the same period last year, reaching €573 million in revenue ($678 million).
Subscriptions are the major factor in this substantial increase, as well as new signings like Taylor Swift, Kenny Chesney and Surfaces.
Other Areas of Business Faced Decrease in Revenues
Not surprisingly, in areas such as merchandising and other revenues, there was a precipitous drop of 41.4% over the first half of 2019 to €121 million ($143 million).
UMG chalked those figures up to the near-total elimination of touring amid the pandemic, as well as other coronavirus related declines in retail activity.
There was also a growth in EBITA margin at €567 million ($671 million), was up 16.6%.
Quarterly, revenues dropped slightly from Q1 to Q2. That’s a significant figure to analyze as it is the first period that occurred entirely within the pandemic’s grasp.
Total UMG revenues hit €1.69 billion ($2 billion) in Q2, down 4.7% from €1.77 billion ($2.09 billion) in Q1, with recorded-music seeing a 4.5% decline due to slower subscription/streaming growth (up 8.5% for the quarter) and a 39% drop in physical sales revenue.
Publishing revenues however, grew significantly, up 24.5% to €302 million ($357 million), even as merchandising and other revenue fell off a relative cliff, down 61.8% to €51 million ($60 million).
Outlook for 2020 and Beyond
The company pointed to UMG’s new deal with Spotify, as well as expansion in its international operations, as reasons for an optimistic outlook. The planned IPO for UMG is still set for early 2023 at the latest.
UMG and its sister company Canal+ in France have aided in offsetting parent company Vivendi’s other losses. Vivendi’s revenues have reached €7.58 billion ($8.97 billion) for the first half of 2020. This is just a nominal 2% decrease year over year in constant currency and perimeter.
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