There are two ways to look at this, and frankly, only one of them involves long-term survival. The better version is that digital is finally starting to replace physical on the global stage, and heralding a freshly-laid bottom for recordings. The other version - espoused by analysts like Mark Mulligan - is that downloads in the post-iPod smartphone era aren't growing aggressively enough. Couple that with tanking physical and penny-producing streaming platforms, and the second version is far less rosy.
So which version do you subscribe to?
A look at the latest financials for Universal Music Group suggests some bottoming out, for a number of reasons. The earnings picture was rocky during the last quarter, with the EBITDA (a complicated earnings calculation) slipping nearly 27 percent to 82 million euros ($102 million).
In fairness, that's still a profit (if you believe Vivendi's limited accounting disclosures), and during the first nine months of this year, EBITDA dropped a milder 5 percent to 238 million euros ($303 million).
The revenue picture is better: on the year, the company has raked in 2.9 billion euros, or $3.7 billion, a manageable 3.4 percent decline at constant currencies. This is the last quarter before UMG's financials get melded with those of EMI, and it looks like a managed collapse.
The question is what the next status quo looks like. At present, major labels still have the ability to blow up superstars on a global stage. They can still turn acts like Rihanna and Black Eyed Peas into a worldwide asset, and they still have a lock on powerful, traditional radio. They can even spend $1.4 million to break an artist, and still get a return... at least for now.
Visitor Wednesday, November 14, 2012
wow, only down 7.3% Year To Year... Hip, Hip, Hooyay!
Frank Wednesday, November 14, 2012
Hopefully Vivendi's "Waste Management" division shakes down some more $ -- to make up for their stagnant music racket.
I can really see why so many people want to be on a major label. They all keep such wonderful company!
EBIT D'OH Wednesday, November 14, 2012
On the chart, it's EBTDA, not EBITA. What's the source of this chart?
paul Wednesday, November 14, 2012
Hmm.. Not sure if that's a typo or if "EBITA" is an actual calculation (never heard of it). That's taken directly from Vivendi's quarterly report.
you say potato, i say potahto Wednesday, November 14, 2012
EBITA is a real calculation (Earnings Before Interest, Tax, and Amortization). Similar to EBITDA, except an EBITDA calculation also excludes Depreciation from the earnings caculation. Basically, whether its EBITA, EBITDA, or EBTDA all depends on what you exclude from the earnings calculation...
Opie Wednesday, November 14, 2012
Anybody want to get into the towing business?