Because it’s a Friday, or maybe because it’s a bit windy today, Utopia Music has a new CEO. In what’s becoming a monthly tradition for the beleaguered Swiss music company, they’ve rolled the dice, shuffled the deck, spun the wheel, and flipped a coin.
The result: the CEO the company appointed a couple of months ago is now deputy CEO, a second deputy CEO has been appointed, the former CEO is also CCO, and there’s a new COO. The CTO and CPO stay the same, and there might be a new CFO. But there’s definitely a new CEO who is not only CEO but Group CEO. For those of you at the back, that’s three CEOs, two of whom are deputies, and one of whom is also CCO.
All clear? Good. Let’s continue.
The lucky man who’s clambered atop the Utopia horse this week is one Michael Stebler, described in a memo to shareholders as coming from “the high end” of the “international banking industry”. Stebler has most recently been Managing Director of Investment Advisors Zug AG, a strategy firm that says of itself: “We carefully and meticulously select companies for investment with the aim of multiplying potential. We collaborate with global, market leading companies with the clear aim of unlocking potential and driving growth”.
His strength, says his IAZ biog, “lies in global restructuring, wealth management, asset management and investment banking”. CMU understands that the shareholder syndicate led by Stebler, which executed the EGM in December, now controls the majority of the shares of the company, and has committed - alongside previous money invested - a significant part of the current financing round to keep the company afloat.
Alain Couttolenc - appointed CEO on 19 Oct 2023 - is shifting sideways to become Chief Commercial Officer and Deputy CEO, while Pedro Lima, formerly SVP Strategy, Corporate Development & Business Transformation at NielsenIQ, joins as Chief Operating Officer.
Dedicated followers of the Utopia soap opera may recall that the company held an Extraordinary General Meeting a few days before Christmas. At that meeting - in what was described to CMU as a “well orchestrated coup” - a syndicate of investors in Utopia took control of the board, appointing a new interim Chair, Australian John Mitchell, CEO of Mitchell Asset Management. At the same time, sources told CMU that another former Nielsen exec, Fredrik Hedlund, was also joining the business - with the expectation that he may step into a CFO role, having previously held similar positions within the Nielsen portofolio.
With Mitchell - a former Merill Lynch banker - heading up the board, a clutch of Nielsen execs running the actual business and an experienced finance leader in Stebler heading things up as (Group) CEO it finally feels like Utopia might have the adults in the room it needs to be able to execute its strategy.
What exactly that strategy is, however, remains somewhat fuzzy. In a board memo to shareholders seen by CMU, the board and CEO say that they “see tremendous potential” in Utopia. Stebler, says the memo, “represents the Investor Group that initiated the C-round and will lead Utopia through our transition, giving the shareholder group further operational authority.” No coincidence, perhaps, that the letter C in this instance may also stand for ‘Coup’.
Stebler will, continues the memo, ensure that the company “focuses on targeted sales, structural enhancements and transparency, ensuring the company’s alignment with its goals”. It is Couttolenc who will be ensuring those goals are met, “driving top-line growth” as a “sales lead with vast experience in selling IP products, who knows our clients, to realise our commercial roadmap”.
Riding high on a wave of blockchain hype, Utopia has at times positioned itself as a blockchain solution for the music industry, a data intermediary, and more recently an AI company.
Quite what the IP products Couttolenc will be selling is unclear - with documents shown to CMU talking about developing “IP to cater to royalty collection organisations and CEOs, CROs, PROs”.
CMU sources who have first hand experience of some of Utopia’s previous IP products have highlighted a number of possible barriers to adoption - or certainly adoption at the scale necessary to bring Utopia to the point it can break even, rather than losing money.
Also in the shareholder memo is the revelation that the C-round is still open - with investors being offered shares in Utopia at €1.30 per share.
Utopia’s most recent corporate filings with the official company registry in the Swiss Canton of Zug showed 33,780,326 registered shares in the company, meaning that €1.30 per share would equate to a total value of just under €44 million - which at today’s money is around £38 million or $48 million. Having boasted privately to various music business media of being a “unicorn” with a potential $2.5 billion valuation - which was apparently based on taking hefty commissions on the entire revenues of the music industry on this planet and a couple of others - the company’s current valuation is a far cry from that apparent peak.
In reality, this represents a huge markdown in the valuation of Utopia, and quite possibly values the company at a discount to the jewels in its crown - Proper Distribution and Utopia Distribution Services. As solid companies with a client roster that includes pretty much every significant label out there, the Proper and UDS divisions offer huge value to Utopia.
That value has been recognised with the appointment of Drew Hill, Managing Director of Proper and UDS, as Utopia’s second Deputy CEO. Hill is, of course, a hugely well respected music executive who has successfully navigated the relocation of UDS to a new purpose-fitted warehouse in Bicester, while delivering growth against a background of challenging circumstances.
Alongside the finance and operational credibility Utopia desperately needed, Hill is one of the most trusted faces in the music business, looking after a critical part of the supply chain, and working hard to reassure customers and stakeholders of the security of that supply chain while Utopia was going through its most chaotic period.
Will Utopia be able to prove greater value than its distribution businesses in the long term? Only time will tell. For the first time it feels like the company may now have the leadership team in place that it needs to at least be able to try. But - just in case - check back next week…
