SIR LUCIAN SPELLS OUT UMG'S APPROACH TO CATALOGS

Sir Lucian Grainge addressed the current catalog-buying frenzy in remarks to stock analysts Thursday, distinguishing between the Universal Music approach and those of other investors.

“When we evaluate catalogs, we are looking for the truly special ones: valuable, special collections of great works of art with which we would have the unrestricted ability to strategically make the most of the opportunities that they contain,” he said, noting the company's history with Elton John and Abba and its recent significant purchases, the works of Neil Diamond and Sting.

Not all catalogs are created equal, he said, whether with respect to their geographical appeal or their future growth potential.

He broke down the four types of copyright portfolios coming into the market: full suites of rights that provide control over the marketing and monetization of the catalog; a bundle of rights that are limited because approvals are required for their use; portions of an artist's catalog; and royalty streams that are “nothing more than passive, low-return investments with limited upside and zero control.”

Grainge said the company has no interest in buying individual royalty revenue streams or assets in which UMG will have no ability to make the most of those rights.

Being the industry leader means UMG’s labels and UMPG are often the first stop for artists, estates and others interested in selling music rights, he said. “We see almost everything.”

“I can't give you a precise figure of what we expect to spend over the coming years on artist rights,” he said. “We're not a financial player. We're not a financial investor, nor are we a new-to-the-market fund on the hook to do deals of a set schedule. Further, unlike a fund, we will never sell or divest these rights.

“We are building our business and creating shareholder value for the long run. And we have the luxury, the wisdom and the capacity to do deals that make sense when they become available.”