Universal Music to cut ‘hundreds’ of jobs in Q1, with majority of layoffs in recorded music division (report)
Universal Music Group is reportedly planning to make ‘hundreds’ of layoffs this quarter (Q1 2024).
That’s according to Bloomberg, which reported the news on Friday (January 12), citing ‘people with knowledge of the matter’.
Bloomberg reports that UMG’s recorded music division, Universal’s largest division, ‘will be hit the hardest’.
A UMG spokesperson told MBW on Friday: “We continue to position UMG to accelerate its leadership in music’s most promising growth areas and drive its transformation to capitalize on them.
“Over the past several years, we have been investing in future growth — building our ecommerce and D2C operations, expanding geographically, and leveraging new technologies.
“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.”
Universal Music Group had a global headcount of 9,992 employees at the close of 2022 (December 31), up by 487 people year-on-year.
Universal’s 9,992 employees at this time were made up of 9,286 permanent employees and 706 temporary employees.
UMG’s FY 2022 annual report for investors breaks down the 9,992 employees by gender, with 51% (5,079) named as women and 49% (4,913) named as men.
The biggest headcount in a single region was in Europe, where UMG employed 4,161 people in 2022 – 42% of its global workforce.
The firm’s second biggest employment territory was North America, where UMG employed 3,951 people in 2022 – 39% of its global headcount.
This means over four-fifths (81%) of UMG’s global headcount in 2022 were located in either North America or Europe.
As noted by MBW in November, some of music’s largest rightsholders appear to be moving into a new era – one encompassing judicious hiring policies, tweaked allocation of resources, and, at least in the short-term, trimming costs.
This has been seen recently with layoffs (in the single percentage digits vs. total staff) at both Warner Music Group and BMG.
And it could also be seen by Universal Music Group’s confirmation, on its Q3 2023 earnings call on October 27, that it will be “cutting to grow” in 2024.
UMG’s upcoming cost-savings plan was introduced by Boyd Muir, the company’s EVP and CFO, on Universal’s Q3 2023 call.
Said Muir: “[We] are currently conducting a careful review of our cost base, which we will complete over the coming months, and we will update you when appropriate about an anticipated cost savings program to commence in 2024.”
Added Muir: “We remain focused and optimistic as we continue to execute on the growth prospects that lie ahead for UMG We see enormous opportunity for value creation, both for our artists and for the company, as we advance our artist-centric initiatives and work to further capture the value of the engagement being driven by our unparalleled roster of artists and songwriters.”
Later on that earnings call, UMG execs were quizzed by analysts including Lisa Yang of Goldman Sachs and Julien Roch of Barclays about how this planned cost-cutting might affect margins, and particularly how it might play into UMG’s goal of hitting a mid-20-percent EBITDA margin in the next few years.
Muir confirmed that the planned 2024 cost cuts were expected to improve UMG’s EBITDA margin once completed. Yet he also noted that the 2024 program will aim to better “capture opportunities we see in the marketplace”.
Muir said that UMG intended to dedicate “the right level of resources to execute and benefit from all of the opportunities that we see ahead”, while simultaneously reviewing resources currently dedicated to Universal’s “legacy business”.
Universal Music Group Chairman and CEO, Sir Lucian Grainge, had a snappy phrase to sum up this balancing act: “Cut to grow.”
The key objective of 2024’s program, Grainge reiterated, was to “cut overheads in order to grow elsewhere”.
UMG generated revenues of EUR €2.752 billion (USD $2.995bn) during Q3 2023 across all of its divisions (including recorded music, publishing and more). That Q3 revenue figure was up 9.9% YoY at constant currency.
Universal’s overall recorded music revenues for Q3 2023 (including streaming plus physical etc.) were €2.037 billion ($2.21bn) up 5.2% YoY at constant currency.
The company’s subscription streaming revenues specifically grew 13% YoY at constant currency to €1.057 billion ($1.15bn) and was driven, according to UMG, “primarily by the growth in global subscribers”.
In March 2023, Warner Music Group announced it was laying off around 4% of its global workforce – approximately 270 global staff.
At the time, WMG CEO, Robert Kyncl, noted that the decision lay in WMG wanting to better “take advantage of the opportunities ahead of us”.
WMG would do this, noted Kyncl, by “reallocating resources towards new skills for artist and songwriter development and new tech initiatives“.
In other words, WMG would cut headcount/expenditure from areas of its business that, in Kyncl’s view, didn’t best serve modern artist and songwriter development and/or fuel tech programs that could “take advantage of the opportunities ahead of us”.Music Business Worldwide
