Universal Music’s revenue soars, with the help of BTS and Olivia Rodrigo

Universal Music Group reported higher second-quarter revenue and profit on Wednesday amid growth in its business, including its recorded music unit, which benefited from releases from BTS and Olivia Rodrigo.

Leading musician Lucian Grange, chairman and chief executive, was fired by French telecoms and media conglomerate Vivendi, which retained about 10 percent last year.

Given concerns about high inflation and an economic slowdown, management was asked about the macroeconomic challenges during the quarterly earnings call and whether it plans to take any steps to control costs. “Music has proven to be extremely resilient in economic downturns,” replied Grange. “I went through about four of them.”

The CEO added: “This team that we have here has overcome these challenges many times in the past. Music is a low-cost form of entertainment that we believe has incredible consumer value, and we are monetizing content from more sources than ever before. Graing noted that the company’s executive team across its businesses and regions is “constantly monitoring our fixed and variable costs,” as demonstrated during the COVID-19 pandemic. “Keeping a shop is in our blood.”

Its second quarter earnings before interest, taxes, depreciation and amortization (EBITDA), a key profitability metric, increased by 18.7 percent, or 8.8 percent in constant currency, to 507 million euros (512 million dollars).

Quarterly revenue rose 25.4 percent to 2.54 billion euros ($2.57 billion), or 17.3 percent at constant exchange rates. Recorded music, music publishing and company merchandising and other segments contributed to the improvement.

Quarterly revenue from UMG’s recorded music unit increased 16.2%, or 9.0% in constant currency, to 1.92 billion euros ($1.94 billion). Subscription and streaming revenue increased 7.0% on a constant currency basis, while physical revenue increased 17.4% on a like-for-like basis, “driven primarily by strong sales from BTS and King & Prince”. But downloads and other digital revenue dropped 12.4% as download sales declined across the industry.

According to the company, the top sellers in the last quarter were BTS, King & Prince, Rammstein, Olivia Rodrigo and INI, while the top sellers in the previous year’s quarter were BTS, Justin Bieber, Olivia Rodrigo, The Weeknd and Morgan Wallen. . .

Music publishing revenue totaled €476 million ($481 million) in the second quarter, an increase of 62.5%, or 50.6% at constant currency. The growth drivers were accounting changes, “healthy streaming and subscription growth, expanded monetization of music publishing rights, continued growth in physical sales, as well as early contributions from catalog acquisitions in previous years,” the company said. In February, UMG announced a deal to acquire Sting’s entire catalog of music, which includes rock classics from The Police frontman such as “Roxanne”, “Every Breath You Take” and “Message in a Bottle”. Financial terms were not disclosed.

UMG’s “marketing and other” revenue performed strongly in the second quarter, up 78.5%, or 67.6% in constant currency, to 141 million euros (US$143 million). “Tour-related merchandising revenue increased over the prior year period following a COVID-related slowdown in live touring,” the company explained.

“Our strong performance across diverse revenue streams is fueled by the successful partnerships we’ve formed with our artists, new and established, in markets around the world,” said Grange. “The scale of growth we are delivering at UMG demonstrates that our strategy is on the right track, underscoring the strength and resilience of our business and our ability to deliver to both our artists and our shareholders.”

Boyd Muir, Executive Vice President, Chief Financial Officer and President of Operations, added: “We are driving incremental revenue and EBITDA through compelling monetization opportunities, which in turn allow us to carefully reinvest in the long-term growth of the business.”