MBW’s Stat Of The Week is a series where we highlight a single data point that deserves the attention of the global music industry. Stat of the week is powered by Cinq music groupa technology-focused record label, distribution and rights management company.
The really good news for music industry muckrakers like MBW? In theory, we should get more transparency on UMG’s financials than we ever saw when it was owned by Vivendi.
And so it proves itself today (March 3), with Universal not only disclosing the amount of money it spent on “content investments” last year, but further breaking that number down into what it spent on: (a) catalog acquisitions; and (b) advance royalties to signed artists and songwriters.
Of course, the most intriguing category of these two is catalog investments.
And thanks to UMG’s aforementioned tax transparency, we now know not only what Universal spent on catalog purchases in 2021, but also in 2020.
We also know that — according to a new investor presentation by UMG’s EVP/CFO Boyd Muir — Universal doesn’t view participating in the catalog buyout gold rush as “required” to achieve its core future business goals.
In 2020, Universal turned the head of the global music business by dumping spending believed to be close $400 million to Buy Bob Dylan song catalog.
As it turns out, this acquisition was part of it 929 million euros ($1.06 billion) Universal’s complete editions of music catalogs this year.
However, in 2021 – the year UMG went public on Amsterdam’s Euronext – UMG’s spending on catalog purchases slowed significantly.
In fact, it was over at the bottom 58% YoY…less than half the size of last year.
According to the investor presentation given to shareholders today (March 3), Universal has issued 388 million euros ($459 million) on catalog rights in the past year.
Obviously the best part of half a billion dollars is still a princely sum. But it’s also a significant one smaller Number when certain other players splashed into music catalogs in 2021.
That said, Universal was already significantly more active in blockbuster catalog purchases in 2022 than it was in 2021.
In Boyd Muir’s presentation to Universal investors today (see slide above), UMG notes that it views itself as a “very selective, strategic acquirer of assets that we control and can control [for which we can] improve monetization”.
It adds that it’s not interested in buying “passive rights” — aka music revenue streams over which it has no control — and is aiming for a “financially disciplined ROI.” [return on investment]-based approach” to cataloging acquisitions.
Worth noting for context: UMG has informed its investors that it is targeting an EBITDA margin in the “mid-20’s” as part of its mid-term outlook.
On an adjusted basis, this number hit 21.0% in 2021.
Interestingly, in its new investor presentation, UMG hints that its investments in upfront payments to active songwriters and artists, as opposed to catalog acquisitions, are “necessary/core to our business.”
UMG goes on to note that it is currently spending heavily on “advance payments” to secure “long-term, broader and multi-faceted rights” from artists.
The presentation reveals that UMG spent €364 million ($430 million) on royalties to talent during 2021, down 38% year over year.
According to calculations by MBW based on the newly announced annual results of UMG for 2021, the large music company Annual sales in excess of $10 billion last year with annual Adjusted EBITDA in excess of $2 billion.
Note: EUR-USD currency conversions in this story are based on the published IRS annual average exchange rates.
Cinq Music Group’s repertoire has won Grammy Awards, dozens of Gold and Platinum RIAA certifications, and numerous #1 spots on a variety of Billboard charts. His repertoire includes heavyweights like Bad Bunny, Janet Jackson, Daddy Yankee, TI, Sean Kingston, Anuel and hundreds more.music business worldwide
https://www.musicbusinessworldwide.com/universal-music-group-spent-459m-on-catalog-acquisitions-last-year-less-than-half-what-it-spent-in-2020/ Universal Music Group spent $459 million on catalog purchases last year — less than half what it spent in 2020