Not to single out one company, but after 15-odd rough years for the music business, it is a welcome change of pace to see an earnings report that says a giant company like Vivendi’s “revenues increased by 4.9%, primarily driven by Universal Music Group’s growth.” That sentence alone could drive up Goldman Sachs’ extremely enthusiastic valuation of the Lucian Grainge-helmed company, which was $23.5 billion in August.
It was indeed a strong year for UMG, whose revenues were up 10% to $6.8 billion year-over-year at constant currency and perimeter.
By that same standard, its recorded-music revenues grew by 11.3% to $5.5 billion while growth in subscription and streaming revenues — which were up some 35% — more than offset the decline in both download and physical sales. Music publishing revenues grew by 9.6%, also thanks to the boost in subscription and streaming revenues, as well as growth in synchronization and performance revenues.
Merchandising and other revenues were down 7%, due to lower touring activity.
The report singled out new releases from Taylor Swift, Kendrick Lamar and Drake along with carryover sales from The Weeknd, the “Despacito” single from Luis Fonsi and the 50th Anniversary edition of the Beatles’ “Sgt. Pepper’s Lonely Hearts Club Band,” as well as soundtrack albums from the movies “Moana” and “La La Land” as primary drivers of the year’s growth. It also pointed to agreements with Tencent, Spotify, YouTube and Facebook, as well as its existing partnerships with Amazon and Apple, as “fostering an increasingly competitive and dynamic market for music among the biggest tech platforms and music services in the world.”
UMG’s income from operations amounted to €798 million, up 18.5% at constant currency and perimeter year over year as a result of higher revenues, with EBITA at €761 million, up 20.6% year over year as a result of higher revenues and “lower restructuring charges.”