UMG’s venues up throughout 2020
Vivendi, the parent company of Universal Music Group (UMG), is planning to launch an IPO in 2022. The company announced the news during its third quarter earnings report on Tuesday (Oct 20th).
Vivendi successfully completed the first phase of the opening of UMG’s share capital. On March 31st, the group finalized the sale of 10% of the share capital of UMG to a Tencent-led consortium based on an enterprise value of $38 billion for 100% of UMG.
The consortium, which is led by Tencent and includes Tencent Music Entertainment and other financial co-investors, has the option to acquire, on the same valuation basis, up to an additional 10% of the share capital of UMG until January 15, 2021. This transaction is complemented by a separate agreement allowing Tencent Music Entertainment to acquire a minority stake in the capital of the UMG subsidiary owning its Greater China operations.
Following the success of this significant strategic transaction, Vivendi is pursuing its plan to sell additional minority interests in UMG with the assistance of several mandated banks. The cash generated by these transactions may be used by Vivendi to reduce its financial debt and to finance a significant share buyback program and acquisitions.
For the first nine months of 2020, UMG’s revenues were $6.875 million, up 4.4% at constant currency and perimeter compared to the first nine months of 2019 (+5.1% on an actual basis). For the first nine months of 2020, recorded music revenues grew by 6.2% at constant currency and perimeter thanks to the growth in subscription and streaming revenues (+15.8%) and the receipt of a digital royalty claim in the first quarter of 2020. Physical sales were down 10.2% compared to the first nine months of 2019, while download sales declined by 20.1%.
Recorded music best sellers for the first nine months of 2020 included new releases from The Weeknd, King & Prince, BTS, Justin Bieber and Lil Baby, as well as continued sales from Billie Eilish and Post Malone. For the week of August 21st to August 27th, UMG set a new record by having nine of the Top 10 albums in the United States on the Billboard 200 for only the fourth time in the chart’s 64-year history. UMG has been responsible for all four of those instances. UMG also ranked No. 1 on the Billboard 200 album charts for 15 consecutive weeks, the most weeks at No. 1 for any company since UMG held the spot for 16 straight weeks in 2014. In the United Kingdom, UMG had nine of the Top 10 releases on the official album charts for the week ending September 10, 2020.
Music publishing revenues grew by 15.6% at constant currency and perimeter compared to the first nine months of 2019, driven by increased subscription and streaming revenues, as well as the receipt of a digital royalty claim in the second quarter of 2020.
Merchandising and other revenues were down 42.6% at constant currency and perimeter compared to the first nine months of 2019, due to the impact of the COVID-19 pandemic on both touring and retail activity.
In August 2020, UMG announced two key partnerships in China, a multi-year extension of its licensing agreement with Tencent Music Entertainment Group and a new multi-year licensing agreement with NetEase Cloud Music.