The sale of a minority stake in Universal Music Group is continuing “step by step”.
That was the message from Arnaud de Puyfontaine, CEO of parent company Vivendi as it announced half-year results for 2019.
Vivendi first announced the plan for a strategic partner a year ago. But during the earnings call, de Puyfontaine stressed that everything is 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.”
Vivendi said it has established several contacts with (unnamed) potential strategic partners in Universal Music Group. The major’s management teams are participating in the process to sell a stake of up to 50%.
Vivendi has selected the advisory banks as part of the plan to open up the UMG share capital. A due diligence report has been presented to the supervisory board and will be updated by PwC with the 2019 half year results.
“We are working on creating the best conditions for an efficient sale process,” said de Puyfontaine. “There is no need to rush, we must take this step by step. This is especially true for such an important transaction.
There is no need to rush, we must take this step by step
Arnaud de Puyfontaine
In its half-year results, the major’s parent company revealed that UMG revenues were up 18.6% at constant currency to €3.26 billion (£2.9bn).
Recorded music revenues grew by 16.9% year-on-year to €2.596bn (£2.32bn) at constant currency. Streaming revenues increased 25.5% to €1.567bn (£1.4bn), a performance described as “very dynamic” by CFO Herve Philippe.
Streaming now accounts for 60.36% of recorded music revenues at UMG.
Asked about licensing renewals, Philippe said: “We are very confident to conclude the negotiations with them, especially with Spotify. Universal Music is in a very good position in terms of negotiations with the platforms.”
Physical sales were up 15% to €438 million (£391.9m).
Asked about reports of the scale of the UMG archive fire that affected master recordings, de Puyfontaine noted the “transparency” promised by CEO/chairman Sir Lucian Grainge. Artists have filed a lawsuit against the major.
“It’s important to note that the fire hasn’t affected the commercial availability of music stored in the vaults,” said de Puyfontaine.
“We believe the lawsuit is without merit and we do not expect any material impact on the business.”
Recorded music best sellers for the half year included new releases from Ariana Grande, Billie Eilish and the Japanese bands King & Prince, who were responsible for the physical boost alongside continuing sales of A Star Is Born and the Queen catalogue.
“While physical results can be release driven, the trend is still downward as the industry continues to transition to streaming,” noted de Puyfontaine.
According to OCC data, UMG had six of the top 10 singles of the first half of 2019 and six of the top 10 albums. Lewis Capaldi put in a strong performance on both charts.
Publishing revenues at UMG increased by 10.5% to €467m (£417.9m).
Merchandising and other revenues were up 82.3%, as a result of increased touring activity and D2C revenues.
EBITA amounted to €481m (£430.4m), up 43.6% at constant currency.