Universal Music streams profits to parent Vivendi
Revenues from streaming help offset customer losses at Canal Plus for media group
Vivendi-owned Universal Music Group, the world’s largest record label, made nearly €1.5bn from streaming and subscriptions last year, the latest sign that listening on platforms such as Spotify is propelling music companies to a digital future.
The company’s revenues from streaming grew 58 per cent in 2016, offsetting steep declines in album and download sales, which dropped by 15 and 29 per cent, respectively. UMG grew operating income by 10 per cent to €687m for the year, with the company pointing to the popularity of albums from artists such as Drake and Rihanna.
“I remember when I took the job two and a half years ago, the first question was about music and what was going to happen,” said Arnaud de Puyfontaine, chief executive of Vivendi. “We’ve kept saying we thought this . . . could open a new growth era for the industry,” he said, adding he was “cautiously optimistic” that streaming momentum would continue in 2017.
However, growth in its music business was not enough to offset losses for the parent company. The media group controlled by billionaire Vincent Bolloré said its core operating profit fell 23 per cent to €724m last year, weighed down by customer losses at Canal Plus, the French television channel, which had its weakest revenues in five years.
Paris-based Vivendi has been trying to turn around its business by building out media content across France, Italy and Spain — beefing up its stakes in Telecom Italia and Italian broadcaster Mediaset. Vivendi said it expected operating profit to grow 25 per cent this year, as its ambitions to build a southern European media empire gained traction.
Universal Music has been a bright spot for Vivendi in the past few years, with the music business heralding a renaissance through streaming. More people are paying a monthly fee to companies such as Spotify for access to more than 30m songs, earning royalty payments for the big three record labels that own licensing rights to most of the world’s popular music.
Earlier this month, rival Warner Music said it made $1bn from streaming in 2016, powering the number three music company to its highest full-year revenues in eight years.