BMG revenue topped $450m in 2016, with a 23% profit margin

Bertelsmann-owned BMG increased its annual revenue by 12.2% in calendar 2016, up to €416m ($460m).

In 2015, says the company, it recorded revenues of €371m.

BMG generated an operating EBITDA (earnings before interest, taxes, depreciation and amortization) of €95m ($105m) in 2016.

That was up 13.1% on the previous year (€84m) – a rise it particularly put down to ‘development in the United Kingdom and the United States’.

“Having concluded more than 100 acquisitions over the past eight years, we have achieved the initial scale we require and our focus is now more on organic growth.”

Its EBITDA represented an impressive profit margin of 22.8%, up slightly from 22.6% in the prior year.

BMG’s headcount grew 20% last year to 600 people.

In a note to shareholders, it said: ‘Having concluded more than 100 acquisitions over the past eight years, we have achieved the initial scale we require and our focus is now more on organic growth.’

It added: ‘Our view is that the best growth opportunities are in recordings, hence our recent acquisition of Nashville company Broken Bow Music Group.’

The rise in revenues was ‘driven by the publishing business in the United Kingdom, Australia and continental Europe; a strong recorded music business in continental Europe, the United States and the United Kingdom; and the worldwide increase in revenue from streaming offerings’.


BMG’s standout moments in 2016 included its launches in Brazil and Australia – where it acquired indie Alberts Music.

In addition, it acquired a majority stake in the ARC Music publishing catalogue (which includes Chuck Berry and most of the tracks on The Rolling Stones’ Blue & Lonesome), inked a global distribution deal with Warner’s ADA and signed one of the biggest publishing deals of the year with Roger Waters (pictured).

On the recorded music side, the business scored No.1 records with Rick Astley (UK), Blink-182 (US & UK) and LP – whose Lost On You single topped charts in France, Turkey and elsewhere.

In a note to the financial community, BMG claimed that it is ‘creating new jobs in a business which generally is still contracting’.

Let’s see how its 2016 performance compares to the biggest players in music…


Revenue
  • Universal Music Group posted total calendar 2016 revenue of €5.267bn ($5.83bn) – up 3.1% year-on-year. Although its revenue was more than 10X that of BMG, the Bertelsmann company’s annual growth rate (12.2%) was four times bigger;
  • Sony’s music operation (including its publishing activities) posted 620.55bn Yen ($5.7bn) in external sales revenue in calendar 2016. That was up 6% on the 585.35bn Yen ($5.4bn) posted in calendar 2015. (Sony’s music results also include its ‘visual media and platform’ sub-category, which includes mobile games and other non recorded music/publishing applications);
  • Warner Music Group posted $3.31bn in calendar 2016 across publishing and records. That was up 11% on the $2.99bn it recorded in 2015.

Profitability

(Important to note that all profit measures below, as reported by individual companies, are slightly different. UMG’s EBITA adjustment takes into account depreciation, while Sony reports an ‘operating income’ number which appears to include depreciation and amortization. Warner’s OIBDA is similar to BMG’s EBITDA. Again, Sony’s figures include its ‘visual media and platform’ business in addition to recorded music and publishing operations.)

  • Universal Music Group posted an annual EBITA figure of €644m ($712m) for calendar 2016, up 8.4% year-on-year. Compared with its total revenues, that represented a profit margin of 12.2%. In terms of basic operating income, UMG posted €687m in 2016 – representing a 13% margin;
  • Sony’s music division posted an annual operating income figure of 73.69bn Yen ($679m) for calendar 2016. Compared with total revenues (including internal sales), that represented a profit margin of 11.5%;
  • Warner Music Group posted an annual OIBDA (operating income before depreciation and amortization) figure of $527m in calendar 2016, up 11.9% year-on-year. Compared with total revenues, it represented a profit margin of 15.9%.

(All currency exchanges made at 2016 annual average rates.)Music Business Worldwide

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