Just minutes ago, the entire staff of Utopia Music AG - recently renamed as Proper Group AG - gathered in a all-hands 'townhall' to be told that the Switzerland-based company will shutter most of its non-UK operations, as part a radical downsizing that effectively spells the end of the Utopian misadventure. With its new name comes a “new era”. And, of course, in best Utopian traditions there’s a transition at the top as current CEO Michael Stebler - orchestrator of the investor-led 'Christmas Coup' - steps aside, having spent the past few months undertaking a radical restructuring and recapitalisation of the business in an attempt to get it back on track.

The announcement to employees this afternoon covered a series of wide-ranging cuts and “rightsizing” initiatives. As a result, 75 employees and contractors at Proper Group’s Swedish subsidiary will lose their jobs, with further job losses across a number of other European subsidiaries. CMU understands this will affect some staff who were part of Musimap - one of the businesses that was acquired by Utopia at the peak of its aggressive acquisition-led expansion.

Following unprecedented access and insight, including wide ranging conversations with key executives and investors in Proper Group as well as detailed information about key metrics and financials, CMU understands that today's announcement - while obviously devastating for staff who will lose their jobs - represents the only realistic forward path for the company. Core to this decision seems to have been Proper Group’s mission to protect its distribution businesses in the UK - Proper Music Distribution, and Utopia Distribution Services, formerly Cinram Novum - the loss of which could have had catastrophic consequences for the physical music ecosystem. 

Following the announcement to staff Proper Group CEO Michael Stebler said, “I want to express my sincere sorrow that part of our journey involves parting ways with some of our valued colleagues. These are not decisions that we take lightly, and I am deeply thankful for the hard work and contribution of those who are affected”.

Deputy CEO Drew Hill added, “It’s tremendously difficult to part ways with colleagues who have contributed so much to our journey. It is one of the hardest decisions we face as leaders”.

Last July Utopia undertook what many saw as a botched winding-down of its UK R&D office, with a liquidator being appointed on the day staff were due to receive their salaries. Back then the UK staff, many of whom had seen wages delayed, and other irregularities, were told to pursue the appointed liquidators for outstanding wages and holiday pay. 

Proper Group has told CMU that this time the process will be better managed - though that is in no small part due to the protections in Swedish employment law. A spokesperson for the company said, “The handling of any unpaid salaries is made through the receiver appointed who also will give the employees affected notice. The state fund for insolvency payments for salaries covers the unpaid parts and the notice period according to law - however this is capped at a total of approx €20,000 gross per individual”.

The announcement marks what is hopefully nearly the final step in an attempt to get the company back on track. This comes after a chaotic journey that has saw the beleaguered "anything tech" company, in its Utopia incarnation, burn through hundreds of million of euros in an ill-advised rampage across the UK, Europe and the US. It snapped up a number of businesses in rapid succession - before almost as rapidly divesting itself of most of them. 

Today’s announcement means that Utopia - as conceptualised - is effectively dead. In its place - in name, and in deed - stands Proper Group AG, with the new focus of the business built around the valuable distribution businesses that Utopia acquired - and effectively the only significant businesses that it neither divested itself of and where it did not - give or take - botch the acquisition. 

The company will now consolidate operations around four core businesses - Distribution, Payments, Royalty Processing, and Music Data. Drew Hill - formerly Managing Director of Proper Music in the UK, recently appointed deputy CEO of Utopia - will become CEO of Proper Distribution and that division’s related payment services. An exact date for that transaction - and Stebler’s exit - has not yet been finalised. However, the company is keen to stress that his appointment as CEO was only ever intended to be a transitional measure, to help drive new governance demanded by key shareholders in the business.

Since taking over at Utopia earlier this year, Stebler - an experienced investor and private equity expert - has made significant attempts to transform Utopia by putting new corporate governance in place, identifying cost reductions, and driving initiatives to increase revenue growth. While there are still significant challenges for Proper Group on its route to break-even - which the company has previously said it hopes to achieve in the financial year 2025 - the renewed focus, strategy and alignment of the business are a clear indication of the company’s reconnection with reality. 

The business is “strategically repositioning itself to better serve its partners and capitalise on emerging market trends and demands”, says a press release from Proper Group, going on to add that “Proper Group looks forward to entering a new era focused on delivering exceptional service to clients, becoming better partners to the creative sector, meeting growing demand and expanding its capabilities”.

Proper Distribution will continue its “business as usual” physical and distribution services in the UK, with plans to continue its expansion into home video, as well as a return to gaming - a sector in which the former Cinram business had market share. 

The payments, processing and music data businesses will offer a suite of services for rightsholders, CMOs, financial institutions and others, including matching and processing of data related to music royalties, as well as AI-driven analytics and insights.

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