News July 29, 2019

Billie Eilish & Ariana Grande help push towards Universal Music sale

Billie Eilish & Ariana Grande help push towards Universal Music sale

The strong sales of Billie Eilish and Ariana Grande in the first six months of 2019 have strengthened French media conglomerate ’s plans to spin off a half-stake in .

A report in Variety on the weekend cast doubts of the sale going ahead.

Vivendi has not responded to the Variety story, but it earlier said when it released the report on Friday (Australian time) that things were on track.

Vivendi’s half-year financials have shown Universal Music generated record music revenues hit €2.596 billion (A$.18 billion) in the six months to end of June – a record achievement.

This marked a growth of 22.4%, or 16.9% at constant currency while in comparison, results from Vivendi’s film and TV divisions were disappointing.

Others also putting in strong performances in the period were Queen compilations, the A Star Is Born soundtrack and King & Prince from Japan.

Universal Music Group’s total figures, including publishing, merchandise and others, also put in a record performance, of €3.26 billion ($5.25 billion) which represented growth of 24.0% year-on-year, and 18.6% at constant currency.

Streaming fuelled most of the growth, up 32.1% to €1.567 billion ($2.36 billion) and earning US$10 million a day and now making up 60.4% of its total revenue.

Physical sales (CD, vinyl and cassette) are now 16.9% of the share, and in fact, grew 18.8% (or 15.0% at constant currency) to €438 million ($705 million).

Downloads continued their decline, down a further 19.7% this year.

On the Spotify Global Chart, Universal Music Group had eight of the top 10 songs and maintained the #1 song spot for the entire six months.

In the US, according to Nielsen, its acts occupied the entire Top 5, with additional input from Drake and Post Malone.

Music publishing revenues expanded by 10.5% at constant currency, also driven by increased subscription and streaming revenues.

The merchandising side was particularly strong with an 82.3% jump (at constant), partly because of increased touring activity and also because its Bravado merchandising firm’s buy-out of Los Angeles-based Epic Rights is kicking in.

Such dynamic figures could embolden Vivendi’s move forward with plans to sell UMG to strategic partners, with a reported value of up to US$50 million.

Vivendi has one condition to suitors: we sell the half stake but retain 100% artistic or corporate decision making.

A Bloomberg report in May suggested a hiccup in the process, with “some private equity investors balk at the high price and slow pace of the deal.”

Vivendi CEO Arnaud de Puyfontaine stressed in the report that the sale was on track.

“When we announced this, we said that it could be completed within the next 18 months,” he said.

“It is progressing in line with the original timeline.

“We are working on creating the best conditions for an efficient sale process.

“There is no need to rush, we must take this step by step.

“This is especially true for such an important transaction”

He said that the lawsuits filed by some artists over the Universal masters fire “hasn’t affected the commercial availability of music stored in the vaults.”

Variety’s latest report was based on sources that “much of the effort could be for show, with the real motive of seeking out a valuation — will it near $40 billion, or tread closer to $30 billion? — and an artificial floor on share price.

“Indeed, Vivendi has nothing to lose by feeling out the market and kicking the tires.

“If nothing else, Vivendi chairman Yannick Bollore is sending a message to potential bidders and bankers.

“Still, the pool of investors who can afford — or would want — to pay that much for a passive stake is small.”

Vivendi has announced the names of the banks to do the sale, and said discussions have begun with partners.

Speculation has it they include China’s Ten Cent’s parent and Apple.

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