TIVP039: UNIVERSAL MUSIC GROUP (UMG): OWNING THE WORLD’S MUSIC CATALOG

W/ SHAWN O’MALLEY & DANIEL MAHNCKE

TIVP039: UNIVERSAL MUSIC GROUP (UMG): OWNING THE WORLD’S MUSIC CATALOG W/ SHAWN O’MALLEY & DANIEL MAHNCKE

28 September 2025

Shawn O’Malley and Daniel Mahncke break down Universal Music Group (ticker: UMG), a company that controls a royalty stream on roughly ⅓ of the world’s music in an oligopolistic industry also dominated by Sony and Warner Music Group. Universal has incredibly high-quality earnings, with a very stable business and excess returns on capital — a recipe that is very appealing to investors at the right price.

In this episode, you’ll learn about the economics of the music industry, how Universal creates value for artists, what the company is doing in response to AI, the mutually dependent relationship between labels and music streaming platforms, and whether Universal Music Group’s stock is attractively priced, plus so much more!

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IN THIS EPISODE, YOU’LL LEARN:

  • Why royalties from the music industry are so stable
  • How Universal Music Group makes money and supports artists
  • How Universal operates as an oligopoly alongside Sony and Warner Music Group
  • The economics of digital streaming
  • Why Universal’s leading market share position reinforces its advantages
  • About UMG’s unique business model as a serial acquirer of music catalogs
  • How to think about modeling UMG’s intrinsic value
  • Whether Shawn and Daniel add UMG to their Intrinsic Value Portfolio

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Shawn O’Malley: People worldwide listen to 21 hours of music per week on average. That is over 18% of their waking hours spent just listening to music. And 71% of people say music is important to their mental health. No surprise there. That engagement transcends geography and demographics too. Everyone everywhere loves music and we have the chance to own a business with a claim on one third of the world’s entire music catalog in Universal Music Group.

[00:00:27] Daniel Mahncke: That’s one of the strongest moats we’ve seen so far, and we covered a lot of companies. It’s like being the Disney of the music world without all the capital intensity of running theme parks and cruises.

[00:00:43] Intro: You are listening to the Intrinsic Value Podcast by the Investors Podcast Network since 2014, with over 180 million downloads, we’ve learned directly from the world’s best investors. Now we are applying those lessons to analyze businesses and investment opportunities every week, helping you uncover intrinsic value. And now here are your hosts, Shawn O’Malley and Daniel Mahncke.

[00:01:15] Daniel Mahncke: Welcome back to the Intrinsic Value Podcast, where each week Shawn and I explore, analyze, and value, a different publicly traded company, and we debate whether it deserves a spot in our shared portfolio. If you’re new here, this is the part of the show where I hand things off to my co-host, Shawn, since it is his time to bring today’s pitch.

[00:01:35] Daniel Mahncke: Today’s company is one that every listener here has almost certainly interacted with. Whether you stream music, grew up with CDs, blasted cassettes in your first car, even just hummed along to a song on TikTok, you’ve definitely helped this company earn a royalty. I might exaggerate, but based on my music consumption, I’m afraid I might be responsible for half of their overall business.

[00:01:58] Daniel Mahncke: So Shawn, what’s on deck for today? What can you tell us about today’s company?

[00:02:03] Shawn O’Malley: Yeah, I’m glad we’re finally doing this one. Today we’re talking about Universal Music Group, ticker UMG, and it’s listed on the Euronext Amsterdam Exchange. And in short, it is the world’s largest music rights company and to really cut to the chase.

[00:02:17] Shawn O’Malley: This is a company I own in my personal portfolio, and I started that position in July 2024 after having covered it on our podcast at the time, the Millennial Investing Podcast. So I’m about a year into watching this company closely and I’m excited to look at it here with you today, Daniel and see whether.

[00:02:35] Shawn O’Malley: It’s a good fit for our intrinsic value portfolio at current prices because on the one hand I think this is one of the most structurally advantaged businesses I have ever studied. But on the other, this is not some deep value play trading at a distressed or even attractive multiple. The valuation is fair, arguably fool.

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