Is Flat the New Up? Universal Music Group Revenue 'Grew' in First Quarter of 2011

With flat being the new up, Universal Music Group's first quarter revenue is somewhat of a success story. Revenue for the world's largest music company was down 0.9% to €881 million (US $1.15 billion) compared to the prior-year quarter. Revenue was down 5% at constant currency, which removes the impact of exchange rate fluctuations. Earnings before interest, taxes and amortization dropped 32.4% to €46 million (US $65).

Go back two or more years and Universal's change in revenue was not even close to flat, however. First quarter revenue was down 14.1%, 14.7% and 14.2% from the first quarters of 2009, 2008 and 2007, respectively. First quarter EBITA was down 58.2%, 58.6% and 19.3% from the first quarters of 2009, 2008 and 2007, respectively.

Growth in some areas helped make for losses in other areas. Recorded music sales were down 2.7% in the first quarter but were partially offset by increases in merchandising (although Vivendi did not give the specific year-over-year change in merchandising revenue). Digital revenue increased 17.6% from the prior-year quarter.

Nearly breaking even has been a trend in the last couple weeks. Warner Music Group posted a 2% gain in revenue in the first quarter ended March 31. And as Billboard reported last week, U.S. music sales were up 1.6% through May 8 (the year-over-year gain was less at the end of the first quarter, however). Sony Corp. will announce its latest earnings on May 26.

Vivendi's total revenue increased 3.8% to €7.18 billion ($10.12 billion) and EBITA increased 7.2% to $1.71 billion ($2.4 billion). Fueled by strong performances from the games "Call of Duty" and "World of Warcraft," Vivendi's Activision Blizzard division grew revenues 12.3% to €1.06 billion (US $1.49 billion) and EBITA 33.2% to €502 million (US $708 million).