Bloomberg<\/em> reports<\/a> that UMG\u2019s recorded music division, Universal’s largest division, \u2018will be hit the hardest\u2019.<\/p>\n A UMG spokesperson told MBW on Friday: \u201cWe continue to position UMG to accelerate its leadership in music\u2019s most promising growth areas and drive its transformation to capitalize on them.”<\/p>\n They added: “Over the past several years, we have been investing in future growth \u2014 building our ecommerce and D2C operations, expanding geographically, and leveraging new technologies.<\/p>\n “While we maintain our industry-leading investments in A&R and artist development, we are creating efficiencies in other areas of the business so we can remain nimble and responsive to the dynamic market, while realizing the benefits of our scale.\u201d<\/p>\n Universal Music Group had a global headcount of 9,992\u00a0employees at the close of 2022 (December 31), up by\u00a0487\u00a0people year-on-year.<\/p>\n Universal\u2019s\u00a09,992\u00a0employees at this time were made up of\u00a09,286\u00a0permanent employees and\u00a0706\u00a0temporary employees.<\/p>\n UMG\u2019s\u00a0FY 2022 annual report for investors<\/a>\u00a0breaks down the\u00a09,992\u00a0employees by gender, with\u00a051%\u00a0(5,079) named as women and\u00a049%\u00a0(4,913) named as men.<\/p>\n The biggest headcount in a single region was in Europe, where UMG employed\u00a04,161\u00a0people in 2022 \u2013\u00a042%\u00a0of its global workforce.<\/p>\n The firm\u2019s second biggest employment territory was North America, where UMG employed\u00a03,951\u00a0people in 2022 \u2013\u00a039%\u00a0of its global headcount.<\/p>\n This means over four-fifths (81%) of UMG\u2019s global headcount in 2022 were located in either North America or Europe.<\/p>\n As noted by MBW in November, some of music\u2019s largest rightsholders appear to be moving into a new era \u2013 one encompassing\u00a0judicious hiring policies, tweaked allocation of resources, and, at least in the short-term,\u00a0trimming costs.<\/p>\n This has been seen recently with\u00a0layoffs\u00a0(in the single percentage digits vs. total staff) at both\u00a0Warner Music Group\u00a0and\u00a0BMG<\/a>.<\/p>\n And it could also be seen by\u00a0Universal Music Group\u2019s confirmation, on its Q3 2023 earnings call on October 27, that it will be \u201ccutting to grow\u201d\u00a0in 2024.<\/p>\n UMG\u2019s\u00a0upcoming cost-savings plan was introduced by\u00a0Boyd Muir, the company\u2019s EVP and CFO, on\u00a0Universal\u2019s Q3 2023 call.<\/p>\n Said Muir: \u201c[We] are currently conducting a\u00a0careful review of our cost base, which we will complete over the coming months, and we will update you when appropriate about an\u00a0anticipated cost savings program\u00a0to commence in 2024.\u201d<\/p>\n Added Muir: \u201cWe remain focused and optimistic as we continue to\u00a0execute on the growth prospects\u00a0that lie ahead for UMG We see enormous opportunity for value creation, both for our artists and for the company, as we advance our\u00a0artist-centric initiatives\u00a0and work to further capture the value of the engagement being driven by our unparalleled roster of artists and songwriters.\u201d<\/p>\n Later on that earnings call, UMG execs were quizzed by analysts including\u00a0Lisa Yang<\/a>\u00a0of\u00a0Goldman Sachs<\/a>\u00a0and\u00a0Julien Roch\u00a0of Barclays about how this planned cost-cutting might affect margins, and particularly how it might play into\u00a0UMG\u2019s\u00a0goal of hitting a\u00a0mid-20-percent EBITDA margin\u00a0in the next few years.<\/p>\n Muir\u00a0confirmed that the planned 2024 cost cuts were expected to improve\u00a0UMG\u2019s EBITDA\u00a0margin once completed. Yet he also noted that the 2024 program will aim to better \u201ccapture opportunities we see in the marketplace\u201d.<\/p>\n Muir said that UMG intended to dedicate\u00a0\u201cthe right level of resources to execute and benefit from all of the opportunities that we see ahead\u201d, while simultaneously reviewing resources currently dedicated to Universal\u2019s\u00a0\u201clegacy business\u201d.<\/p>\n Universal Music Group Chairman and CEO,\u00a0Sir Lucian Grainge<\/a>, had a snappy phrase to sum up this balancing act:\u00a0\u201cCut to grow.\u201d<\/p>\n The key objective of 2024\u2019s program, Grainge reiterated, was to\u00a0\u201ccut overheads in order to grow elsewhere\u201d.<\/p>\n UMG\u00a0generated revenues<\/a> of\u00a0EUR \u20ac2.752 billion (USD $2.995bn) during Q3 2023 across all of its divisions (including recorded music, publishing and more). That Q3 revenue figure was up\u00a09.9%\u00a0YoY\u00a0at constant currency.<\/p>\n Universal\u2019s overall recorded<\/em> music revenues for\u00a0Q3 2023\u00a0(including streaming plus physical etc.) were\u00a0\u20ac2.037 billion ($2.21bn)\u00a0up\u00a05.2% YoY at constant currency.<\/p>\n The company\u2019s subscription<\/em>\u00a0streaming revenues specifically grew\u00a013% YoY\u00a0at constant currency to\u00a0\u20ac1.057 billion ($1.15bn)\u00a0and was driven, according to UMG, \u201cprimarily by the growth in global subscribers\u201d.<\/p>\n In March 2023, Warner Music Group<\/strong>\u00a0announced<\/a>\u00a0it was laying off around\u00a04%<\/strong>\u00a0of its global workforce \u2013 approximately\u00a0270<\/strong>\u00a0global staff.<\/p>\n
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