News March 9, 2021

Universal Music had a profitable 2020, paving the way for a successful IPO

Universal Music had a profitable 2020, paving the way for a successful IPO

Taylor Swift (from Facebook)

Despite the worldwide slowdown in 2020, Universal Music Group still managed a 4.7% growth in revenue to €7.432 billion (A$11.48 billion) and a rise in profit by €220 million ($340 million) from the previous year.

These sort of strong numbers pave the way for a successful IPO in Amsterdam later in the year.

Figures released by its parent Vivendi showed a 16.2% leap in streaming revenue to €3.83 billion ($5.91 billion) contributed to a 6.7% expansion in recorded music revenues.

Streaming’s growth more than balanced out the 6% decline in physical sales year on year (YoY) to €945 million ($1.46 billion) and the 19% decline in download sales to €413 million ($638.3 million).

Digital makes up 71.2% of Universal Music’s revenue share (streaming 64.2% and downloads 6.9%), physical at 15.8% and licensing and other at 13%.

Vivendi attributed new releases from Tayor Swift, The Weeknd, Lil Baby, BTS, King & Prince, Juice Wrld, Pop Smoke and Justin Bieber, as well as continued sales from Billie Eilish and Post Malone, for driving revenue in 2020.

Universal Music had all top six albums of the year in the US, four of the Top 5 artists of the year on Spotify globally and the #1 song of the year with The Weeknd’s ‘Blinding Lights’.

The strong performance is expected to continue with the major’s 2021 slate including releases from Swift, Bieber, Lana Del Ray, Selena Gomes, Juanes, Booba, Eddy de Pretto, Samra and the Coming 2 America soundtrack.

Music publishing increased 14.4% to €1.19 billion ($1.83 billion) due mostly to the impact of healthy subscription and streaming.

However for all that the major’s cashflow was down to €50 million ($77.2 million) because in 2020 it was setting up for the IPO by spending up big on new sweetheart deals with superstars and acquiring catalogues to impress would-be investors.

It spent €1.52 billion ($2.34 billion) through the year, which was three times that of the €465 million ($718.8 million) splashed out in 2019.

Its biggest was the acquisition in December of the Bob Dylan catalogue. It reportedly paid between US$300 million and $400 million for 600 copyrights that had been recorded more than 6,000 times and prime targets for syncs.

Merchandising & other dropped 39.6% to €292 million ($451.4 million), proving the company wasn’t totally pandemic-proof.

In terms of global breakdown, North America remains the biggest market for Universal Music, making up 49.3% of the revenue pie.

Europe followed with 30%, Asia at 13.4% and Latin America at 3%.

“The rest of the world” of which Australia is part of, is 4.3%.

With the IPO, Vivendi will hold on to 20% of Universal Music Group, and Tencent its 20%.

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