By Dagmarah Mackos
(Reuters) -Universal Music Group will cut jobs and streamline operations to save 250 million euros ($271.03 million) by 2026, the company said on Wednesday, a month after a lucrative licensing deal with social media platform TikTok expired.
The first phase of the plan, in effect immediately, targets savings of 125 million euros by 2025, including 75 million euros in 2024, the company said.
The deal with TikTok, which expired on Jan. 31, generated about 1% of UMG's total group annual revenue, it said. The license failed to be renewed over disagreement about artist and songwriter compensations, among other issues.
UMG is the parent of Universal Music (AS:UMG) Publishing Group which represents an expansive roster of artists such as Taylor Swift, Jon Batiste, boygenius and Ariana Grande.
Asked about the dispute with TikTok, UMG Chairman and CEO Lucian Grainge said the group hopes to be able to find solutions.
"We're friendly people that like win-win situations. My phone is open ... 24 hours a day," Grainge added.
UMG said for now it sees no "discernible negative impact" from the non-renewal and is focusing on partnerships with YouTube, Meta (NASDAQ:META), Snap, and other social video platforms as they achieve much greater monetization.
"If consumption shifts from TikTok to other short video platforms like Reels or YouTube shorts, we believe that we can recapture some lost revenue," Executive Vice President and Chief Digital Officer Michael Nash said on a call after UMG released quarterly earnings.
UMG posted a 9.2% year-on-year increase in adjusted core profit (EBITDA), to 677 million euros in the fourth quarter, as revenue rose 9.0% to 3.21 billion euros.
It proposed a year-end dividend of 0.27 euros per share, bringing total dividend payout in 2023 to 0.51 euros per share.
($1 = 0.9224 euros)