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Universal Music Group NV (OTC:UMGNF) announced a "strategic organizational redesign" during its fourth-quarter earnings call, aiming for "efficiencies in targeted cost areas while strengthening labels' capabilities to deepen artist and fan connections," as stated in a press release.
UMG announced cuts would yield savings of 250 million euros ($271 million) by the end of 2026, although the precise number of individuals impacted was not disclosed, Billboard reported.
Chairman/CEO Lucian Grainge said: "To put it simply, we're creating the blueprint to the music company and the labels of the future," promising "even greater flexibility and speed" for supporting artists.
Grainge underscored the preservation of core strengths, stating: "The redesign carefully preserves what we're best at: creative A&R, marketing independence, unique label brand identities," and ensuring "an entrepreneurial and competitive spirit.
He elaborated on the efficiencies, noting the company would "generate more impactful support for promotion, distribution, audience monetization, D2C, e-commerce and other areas."
Regarding fiscal performance, UMG reported a net profit of 1.26 billion euros ($1.37 billion) on revenues of 11.11 billion euros ($12 billion) in fiscal year 2023.
The looming layoffs were acknowledged following Grainge's indication of needing to "cut to grow" during a third-quarter earnings call last October.
Grainge's internal memo detailed a restructuring of label operations, with executives assuming broader responsibilities. Despite UMG's success, Grainge emphasized the necessity of streamlining operations to remain nimble and responsive to market opportunities.
The first phase of the restructuring is set to begin immediately. Sources told Variety that most layoffs, estimated in the hundreds, are concentrated on the West Coast, impacting roles within Interscope and Capitol groups, with similar actions occurring on the East Coast, particularly affecting Def Jam and Island labels under Republic.
Departments such as promotion, publicity, and catalog divisions are heavily affected, with ongoing impacts expected.
This initiative reflects broader trends within the music and media industry, with other major players like Warner Bros. Discovery Inc's (NASDAQ:WBD) Warner Music Group also announcing layoffs to optimize resources for long-term success.
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Image credits: Michael Vi on Shutterstock.
