Universal Music Group spent close to $40m on restructuring in the first six months of 2016, as it morphed into a US-led global hierarchy.
During this period, the major completed the shuttering of Universal Music Group International (UMGi) – a symbol of a now-discarded bifurcated US/ex-US setup in which all territories outside the States reported into an ‘international’ department in London.
According to parent Vivendi, Universal incurred €34m ($38m) in restructuring charges as part of this H1 2016 reorganisation, up 26% on the €27m spent in the same period of the year before.
This money was spent on a lot of top-level changes at UMG this year, including comings (and goings) at the helm of its offices in France, Norway, South Africa, Austria and Brazil, in addition to key hires in Santa Monica such as CTO Ty Roberts and Human Resources boss Gautam Srivastava.
In the first quarter of this year (three months to end of March), Universal accounted for the majority of Vivendi’s total €21m ($23m) restructuring charge.
It’s therefore a fair guess that UMG splashed around €17m ($19m) per quarter on restructuring in the first half of 2016.
For comparison’s sake, Sony Music Entertainment spent just 77m Yen ($746,000) on restructuring in the three months to end of June, according to financial documents – but spent 2.1bn Yen ($20m) in the 12 months to end of March 2016.
Vivendi CEO Arnaud de Puyfontaine told investors last month that Vivendi expected UMG’s restructuring charges to lessen in the second half of 2016.
“The restructuring is really based on a structure of a market which used to be based on ‘U.S.’ and ‘rest of the world’,” he said, in reference to the shift away from UMGi.
“Keeping in mind 75% of UMG revenues were achieved in just five countries in 2015 and just 3% in BRIC countries, we are pretty optimistic.”
Arnaud De Puyfontaine, Vivendi
“I think that the trend of the music industry is… more and more alignment between what’s happening in the U.S. and what’s happening in other territories.”
Universal turned over €1.83bn ($2.07bn) in recorded music revenue in the six months to end of June.
According to Vivendi, streaming contributed 36% of this money – compared to a 17% of recorded revenues in H1 2014 (two years prior).
Arnaud De Puyfontaine (pictured, main) was very upbeat about the company’s potential for growth in the future, particularly when it comes to emerging ‘BRIC’ (Brazil, Russia, India and China) markets.
“Keeping in mind 75% of our revenues were achieved in just five countries in 2015 and just 3% in BRIC countries, we are pretty optimistic about UMG’s developments for the coming years,” he said.
“UMG has already shown its capacity to generate substantial revenues from streaming and subscription based streaming more specifically.”
He added: “Streaming allows UMG to move into new markets, particularly in fast-growing markets where a sustainable business model is emerging after years of piracy.
“In China, UMG is benefiting from a more favorable landscape in copyright protection. Content is now available on local legal platforms.
“In Russia, UMG recently signed an agreement with Mail.Ru Group to license its contents for use on Mail.Ru online platforms.
“To take advantage of these opportunities, UMG is continuously investing in A&R, artists and repertoire.”
Back in the U.S., UMG released four of the top five most streamed albums in H1 2016, including all of the top three; Drake, Rihanna, and Justin Bieber.
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