Universal Music Group spent $459 million on catalog acquisitions last year… less than half of what it spent in 2020
MBW’s Stat Of The Week is a series in which we highlight a single data point that deserves the attention of the global music industry. Stat Of the Week is backed by Cinq Music Group, a technology-driven record label, distribution and rights management company.
Last year, Universal Music Group went public.
The really good news about this for music industry muckrakers like MBW? In theory, we should get more transparency on UMG’s tax numbers than we ever saw when it was owned by Vivendi.
And it proves it today (March 3), with Universal not only revealing the amount of money it spent on “content investment” last year, but further breaking that number down into what it spent on: (a) catalog acquisitions; and (b) royalty advances to signed artists and songwriters.
The most intriguing category of these two, of course, is catalog investments.
And thanks to UMG’s aforementioned tax transparency, we now know not only what Universal spent on catalog buybacks in 2021, but also in 2020.
We also know that – according to a new investor presentation given by UMG EVP/CFO Boyd Muir – Universal does not consider participation in the catalog buyout gold rush to be “required” to satisfy its principals. future business goals.
In 2020, Universal took the lead in the global music industry by spending what is thought to be close to 400 million US dollars to buy Bob Dylan’s song catalog.
This acquisition, it turns out, was part of €929 million (US$1.06 billion) Universal’s total annual spend on music catalogs that year.
In 2021, however, the year of UMG’s listing on Euronext Amsterdam, UMG’s spending on catalog buyouts has slowed significantly.
In fact it was down 58% YoY… less than half the size of the previous year.
According to this investor presentation delivered to shareholders today (March 3), Universal spent €388 million ($459 million) on catalog rights last year.
Obviously, the best part of half a billion dollars is, you know, still a princely sum. But it’s also a lot smaller figure that some other actors have splashed on music catalogs in 2021.
For example, KKR spent $1.1 billion to buy a portfolio of rights from Kobalt Music Group in October last year.
Sony Music Group then spent around $550 million (with a little help from Eldridge Industries) on the Bruce Springsteen edition. and catalogs of music recorded during the same 12 months.
Sony also spent over $150 million on Bob Dylan recordings catalog in 2021, and he bought the publishing rights from Paul Simon in a deal rumored to be worth more than $200 million.
Not to be outdone, Warner Music Group has spent $250 million on David Bowie‘s catalog of songs, as well as over $100 million on David Guetta recordings.
That being said, Universal has already been noticeably more active in the blockbuster catalog buyout space in 2022 than it was in 2021.
In the past month alone, UMG has announced its acquisition of Sting’s song catalog – in a deal that would have cost north of $300 million – as well as the purchase of Sting’s song catalog and master recordings. Neil Diamond.
In Boyd Muir’s presentation to Universal investors today (see slide above), UMG notes that it sees itself as a “highly selective strategic acquirer of assets that we can control and [for which we can] improve monetization”.
He adds that he is not keen on buying “passive rights” – meaning music revenue streams over which he has no control – and takes a “financially disciplined ROI”. [return on investment]approach based on catalog acquisitions.
Note for context: UMG has announced to its investors its goal of achieving EBITDA margin in the “mid-20s” as part of its medium-term outlook.
On an adjusted basis, this figure reached 21.0% in 2021.
Interestingly, UMG suggests in its new investor presentation that its investments in advances to active songwriters and artists are, unlike catalog acquisitions, “necessary/essential to our business.”
UMG further notes that it is currently spending heavily on “advances” to “secure long-term, broader and multifaceted rights” for artists.
The presentation reveals that UMG spent 364 million euros ($430 million) on talent royalty advances during 2021, down 38% year-over-year.
According to MBW’s calculations based on UMG’s recently announced annual results for 2021, the leading music company surpassed $10 billion in annual revenue last year, with an annual adjusted EBITDA above $2 billion.
Note: EUR-USD currency conversions in this story are based on annual average exchange rates published by the IRS.
Five Music Group’s repertoire has won Grammy Awards, dozens of RIAA Gold and Platinum certifications, and numerous No. 1 positions on a variety of Billboard charts. His repertoire includes heavy hitters like Bad Bunny, Janet Jackson, Daddy Yankee, TI, Sean Kingston, Anuel and hundreds more.The music industry around the world