Vivendi’s supervisory board approved a proposal from management board on Thursday (May 17) that to move forward with a necessary steps to examine a a potential change in the Universal Music Group’s shareholding structure. This could include an IPO, partial IPO or sale of a stake to a third party.
The news coincided with the company’s quarterly earnings report, which UMG revenues at €1.222 billion ($1.442 billion at current exchange rate) for January, February and March 2018 — a 4.5 percent increase at constant currency since that same period last year.
Adding April to the report, over the first four months of the year, revenues were at €1.657 billion ($1,955 billion) — up 7.2 percent at constant currency and perimeter year-over-year.
The gains are mostly owed to streaming, which makes up 57 percent of the label’s revenue and grew 31.5 percent YOY, offsetting losses of 26.2 percent and 25.6 percent in physical and download sales, respectively. Overall, UMG’s recorded music revenues were up 5.9 percent at constant currency and perimeter.
The report accounted for the dip in UMG’s physical sales blaming particularly strong sales in the first quarter of 2017 (thanks to soundtrack releases from La La Land, Fifty Shades Darker and Moana) and timing of releases, with slippage into the second quarter in some markets such as Japan.
Still, UMG had cause to celebrate, lauding the top No. 1 album and No. 1 single in the U.S. over Q1, according to Nielsen, with Migos‘ Culture II album and Drake‘s “God’s Plan.” As well, UMG songs occupied the top spot on the Spotify Global Chart for 12 out of 13 weeks in the first quarter of 2018.
Additionally, UMG’s publishing revenues grew by 3.9 percent, while merchandising and other revenues declined by 18.7 percent — both at constant currency and perimeter.
During a Q&A following Thursday’s shareholder earnings call, Vivendi CEO Arnaud de Puyfontaine briefly discussed UMG’s plans to hold onto its roughly 5 percent stake in Spotify, while the other major labels have sold off shares.
“As a strategic partner [of Spotify], it is very important to walk the talk,” he said. “We have no intention at this stage other than to remain a Spotify shareholder.”
De Puyfontaine also said he believes UMG’s potential valuation — should it pursue an IPO — would be higher than Spotify’s. “The valuation of Spotify is interesting,” he said, “and we believe the valuation of UMG is above that.”