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Universal Music Group aims to save money through its “organizational redesign” strategy. The Dutch–American music company revealed this plan when it reported its financial results for the fourth quarter this week.
Step By Step Action to Achieve the Goal
However, its plan to attain millions of savings will unfortunately include job cuts. According to Reuters, Universal Music Group said the layoffs will save €250 million or about $270 million annually by the end of 2026.
UMG said there will be phases to achieve the target savings, and the first phase will take effect immediately. In this initial stage, the company will aim for €125 million in savings by 2025, including the €75 million target for this year.
Workforce Reduction After Failed Renewal of TikTok Licensing Deal
The impending job cuts were announced shortly after Universal Music failed to renew its deal with TikTok. Their licensing contract officially ended on Jan. 31, which means the company will lose some funds since one percent of its annual revenue was generated from the partnership with the Bytedance-owned video hosting service platform.
In any case, the layoffs are part of UMG’s strategic organizational redesign move. “The strategic organizational redesign will generate €250 million in annual run-rate savings by 2026, all of which is accretive to EBITDA, through a combination of headcount reduction and other operational efficiencies,” the company said in a press release for its Q4 financial results on Wednesday, Feb. 28. “Plan is designed to achieve efficiencies in targeted cost areas while strengthening labels capabilities to deepen artist and fan connections.”
Meanwhile, Universal Music Group did not say how many employees are set to be terminated. Billboard tried to get more details about the layoffs, but the representative for the company declined to comment.
Photo by: Universal Music Group Press Release
