Universal Music Group Earnings Climb 7 Percent in First Half of Year

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Signage of Universal Music Publishing Group hangs outside the company headquarters in Santa Monica, California.

Recorded music revenue from streaming and subscription services grew 34 percent, while parent comapny Vivendi saw more modest gains.

Led by gains at streaming services, Universal Music Group's revenues rose 3.1 percent, to €2.3 billion, in the first half of the year. Without taking into account changes in foreign currency exchange, revenues were up 15.4 percent.

Through June 30, UMG's income from operations was €179 million, up 8.5 percent at constant currency and up 12.5 percent on an actual basis. Earnings before interest, taxes and amortization (EBITA) was €171, up 6.7 percent at constant currency and up 11.9 percent on an actual basis.

Recorded music revenues grew 3.6 percent at constant currency and perimeter with the help of the recognition of an undisclosed amount of settlement income. The settlement income is a portion of UMG's share of the $210 million settlement won by record labels from SiriusXM Radio regarding performances of pre-1972 recordings, according to a UMG source.

The recorded music division posted a 34 percent gain in revenues from subscription and streaming services in the first half of the year. Digital download sales declined 5 percent.

Driven by gains in streaming and subscription revenues, Universal's music publishing revenues grew 2.7 percent at constant currency and perimeter. Merchandising and other revenues grew by 3.2 percent.

UMG had a mixed second quarter, however. Revenues increased 4.3 percent at constant currency to €1.2 billion, while EBITA fell 11.5 percent at constant currency to €89. Its competitors had similar results. In the second quarter, Warner Music Group's revenue was down 1 percent and Sony Music's revenue declined 3 percent at constant currency.

Vivendi's revenue rose 8.3 percent to €5.1 billion but just 2.4 percent at constant currency and perimeter. Income from operations declined 1.4 percent, or 3.1 percent at constant currency and perimeter. Earnings before interest, taxes and amortization (EBITDA) increased 13.4 percent, or 11.2 percent at constant currency and perimeter.

UMG's parent company wants to become a pure-play media company focused around UMG and the Canal+ Group, the French film and television studio and distributor. Vivendi is also making a harder push into digital and new markets. It acquired a 90 percent stake in YouTube competitor Dailymotion and operates a group of entrepreneurial companies under the Vivendi Village umbrella.

At the same time, Vivendi is getting out of the telecommunications business. Earlier this year the company sold Brazilian telecom GVT and divested its remaining 20 percent stake in French telecoms group Numericable-SFR. Last year it sold its controlling share in Morocco-based Maroc Telecom. With the cash raised from those sales, Vivendi hopes to buy the controlling share in the Canal+ Group from SECP.