UMG CFO: Downtown Will Add 15 to 20 Million Euros to Virgin Music Group Revenue in the Coming Years

Virgin Music, physical distribution and publishing are currently growing at faster rates than the much larger recorded music division, Matt Ellis said.

Entertainment May 18, 2026 0 1 Add to Reading List

UMG CFO: Downtown Will Add 15 to 20 Million Euros to Virgin Music Group Revenue in the Coming Years

Universal Music Group (UMG) expects the newly acquired Downtown Music Group to add 15 to 20 million euros in revenue in the coming years, further bolstering Virgin Music Group’s growth, which is outpacing UMG’s recorded music division overall, UMG CFO Matt Ellis said on Monday (May 18).

“In terms of the return, we’re driving 15 to 20 million euros of synergies over the next couple of years … a mid-teens [internal rate of return] for that investment,” Ellis said at a conference hosted by JPMorgan.

Ellis made the remarks during a wide-ranging discussion about factors that are pressuring UMG’s margins and how growth in lower-margin businesses like Downtown’s is impacting the complexion of its overall growth.

“Virgin is certainly growing faster, especially with the addition of Downtown,” Ellis said. “So we will continue to focus on driving revenue and EBITDA more so than just worried about the short-term margin impact.”

The discussion comes a little over a month since billionaire investor Bill Ackman criticized UMG’s investor communications and disclosures as “suboptimal” in his company Pershing Square’s offer to move UMG to the United States through a merger transaction. UMG has since taken steps toward providing more information to investors, including breaking out Downtown and Virgin Music Group’s financials in its recent first-quarter results, the company’s first since UMG closed its $775-million acquisition of Downtown.

Addressing questions about UMG’s overall flat margins in 2025, Ellis said the company’s strength is the overall operating leverage gained from its individual businesses, three of which — Virgin Music Group, physical distribution and publishing — are currently growing at faster rates than the recorded music division overall.

While they’re growing faster than recorded music, Ellis said those comparatively lower profit-margin businesses are having “a mixed effect on the gross margin line.”

Ellis declined to provide an update on when UMG may proceed with listing on a U.S. stock exchange, saying the board continues to review market conditions for such a move. Ellis similarly declined to say how UMG’s contractual agreements with BMG and Concord, which recently announced plans to merge and contract with UMG for certain services, would change post-merger.

Artist advances totaled more than 400 million euros in 2025, and Ellis said that line item has grown by 8% over the past six years. He called these advances a “working capital investment” that the company can recover from future sales of an artist’s work and revenue generated by an artist’s back catalog.

“As the total using industry has grown, it’s not surprising that advances have grown as well,” Ellis said, pointing to UMG’s 11% total revenue growth and nearly 14% adjusted earnings before income, tax, depreciation and amortization (EBITDA) over the same six-year period. “The fact that they’re growing is a reflection of the health of the music business, and we continue to look to deepen the relationship with our artists and the success that they’ve delivered.”

Ellis said he expects streaming revenue to rise in the coming year now that three higher-priced deals that UMG struck with streaming platforms in 2025 are going into effect, but he did not disclose specific guidance.

Asked about UMG’s merchandise acting as a drag on company margins over the past year, Ellis said he is optimistic about the top-line growth and demand from fans and artists alike for specialty T-shirts, jackets and other merchandise, but added they need to address operational issues that will result in higher margins.