Taylor Swift helps UMG hit high notes
Universal Music Group said on Tuesday it expects annual core profit growth of more than 10 percent through 2028 on higher subscription revenue, expanded partnerships, and boosted by the superfans of its artists such as Taylor Swift, BTS and Drake. At its first Capital Markets Day, held at London's Abbey Road Studios, the world's biggest music label spelled out its plans to revive slowing subscriber and streaming growth. CEO Lucien Grainge said streaming was entering a new era that would rely on monetising superfandom, focusing not only on subscriber growth, but also on average revenue per user (ARPU). "Valuable as streaming is, it has also levelled the playing field... the deeply passionate listener pays the same price for the same access as the casual one," Grainge told investors. He said the company was targeting superfans through physical collectibles, premium merchandise as well as live and digital experiences. Grainge added that subscription penetration was still under 50 percent in the group's most established markets, while high potential markets such as India and China were still in early stages of subscription adoption. The Amsterdam-listed group, which announced its financial targets through 2028 ahead of the event, also said it expects compound annual revenue growth of 7 percent in the period. The forecast was better than the consensus outlook for 6.1 percent annual revenue growth and 8.8 percent annual adjusted EBITDA growth, according to ING. UMG's second-quarter results had triggered a 30 percent slump in its stock in late July, after subscription revenue growth slowed to 6.9 percent from 12.5 percent in the same quarter a year earlier, missing the 11.1 percent estimate in a company-compiled consensus cited by Barclays. "We expect periods of acceleration and deceleration", said finance chief Boyd Muir at the Capital Markets Day, urging investors "not to overreact to modest period-to-period fluctuations", as the group implements its multi-year strategy. In Tuesday's outlook, UMG said it sees annual subscription revenue growth of 8-10 percent through 2028, higher than the consensus of 6.6 percent, as quoted by ING. (Reuters)