Vivendi has just revealed it may sell up to half of Universal Music Group to one or more partners.
Ahead of its upcoming sale of up to 50% Universal Music Group (UMG), parent company Vivendi has posted strong financials for the first quarter of 2019.
The French conglomerate – controlled by billionaire Vincent Bollore – has beaten investor expectations.
UMG’s Q1 2019 revenue totaled €1.5 billion ($1.7 billion), up 18.8% at constant currency over the same period last year.
Driven by higher subscription and streaming revenue, recorded music revenue for the major label jumped 19.2% to €1.2 billion ($1.4 billion). UMG brought in €737 million ($833 million) in paid subscription and freemium streaming revenue, up 28.1% year-over-year. Download revenue plummeted 18.2% to €102 million ($115 million). The major label continues to post healthy physical sales, rising 20.8% to €193 million ($218 million). Licensing and other revenue rose 15.3% to €174 million ($197 million).
In addition, the major music group’s publishing revenue increased 4.7% to €225 million ($254 million). Merchandising and other revenue skyrocketed 72.7% to €72 million ($81 million).
Vivendi’s total revenue increased 5.7% to €3.5 billion ($4 billion). The French conglomerate attributed the growth to the success of its subsidiary, UMG. Its weakest point proved to be Canal Group. Vivendi’s TV division’s revenue fell 3.3% to €1.3 billion ($1.4 billion). In addition, the French conglomerate acquired book publisher Editis.
In-Front Data for Reuters had forecast Vivendi’s revenue would total €3.4 billion ($3.8 billion).
Speaking about the sale of its subsidiary, the company explained it has closely collaborated with UMG’s management teams to sell up to 50% of the major music group’s share capital to one or more partners. This, explained Vivendi, will accelerate UMG’s development and increase its overall value.
In addition, the French conglomerate will soon complete the process of selecting potential partnering banks and advisors. PricewaterhouseCoopers (PwC) has been engaged to conduct the ongoing Vendor Due Diligence, an in-depth report of UMG’s financial health. PwC will complete the report and send it to selected banks.
Maintaining a ‘Buy’ rating on Vivendi’s shares, analysts at Liberum wrote,
“Organic revenue growth at 5.7 percent was very strong, driven by over 18.8% organic growth at its Universal Music Group division, with recorded music up over 19% year-on-year organically.
“This should bode well for profit growth, given it is driven by streaming, which should have a high (40%) drop through rate to profits.”