Universal Music Group didn’t just buy part of a movie company. It bought a system that creates music. Excel Entertainment makes movies and shows, and each of those movies has songs. Every future original soundtrack will now flow through UMG’s system. On January 5th, UMG announced a deal to acquire 30% of Excel, with Excel valued at about $290 million. Reports of how much was paid differ, as the Los Angeles Times reported $80 million, while The Wall Street Journal reported $90.4 million. 

The deal includes global distribution for all future original soundtracks from Excel projects, meaning UMG will now have more ways to earn money whenever future Excel songs are used anywhere. India’s music market is growing very quickly globally, with around 175 million listeners. According to MarkNtel Advisors, India’s media and entertainment market was valued at $29.4 billion in 2024, but is projected to reach $48 billion by 2030, growing at a compound annual growth rate of 9.8%. Although this sounds like a great market at first, there is a large issue. Only 10.5 million listeners, 6% of the total, pay for the music. There is a huge demand for Indian music but not much money per person. UMG is entering a market with lots of attention, but not necessarily large profits. Instead of attempting to charge these relatively few users more, UMG is trying to make Excel’s music more valuable through global distribution, publishing and licensing. Other firms in the industry understand this too. Some of UMG’s competitors are making similar moves. Warner expanded its distribution relationship with Tips Industries. Sony partnered with Maddock Films and launched Tiger Baby Records. Saregama invested about $40.8 million in Bhansali Productions for an initial stake and exclusive future music rights. Serene Productions bought 50% of Dharma Productions for about $125.5 million. 

I believe this acquisition is a smart move, but it does not have a large margin for error. UMG is paying for three main things with the purchase of Excel. First, UMG is getting a steady supply of soundtracks from Excel’s movies and shows. Second, UMG can use that music and distribute it throughout the world using their own system. Most importantly, UMG gets exclusive publishing rights, meaning it can make money not only when the song is streamed, but also when it is used in any other ways. They also make money when the song is performed, played publicly, used in an ad or show, or reproduced anywhere else. 

On paper, this deal sounds great, however owning rights does not always turn into profit. Spotify’s India is priced at ₹1,999 per year ($21.30), YouTube Premium Lite is priced at ₹89 per month ($0.95) and JioSaavn announced a Pro plan at ₹399 per year ($4.25). Will these rights be valuable enough in a market where music prices are still low? Did UMG buy something that could really grow or did it just buy a big piece of the market, where people do not pay much? UMG cannot win by just getting more streams from India. That is not enough. They need a few Excel songs to do well outside of India. UMG will try to spread these songs worldwide through YouTube, TikTok, Instagram and Spotify playlists. If UMG fails to globalize some of Excel’s songs, the deal may not pay off.

Another potential threat is control of Excel. UMG now owns 30% of the company, but the founders Ritesh Sidhwani and Farhan Akhtar still decide what kind of movies or shows are created, and what projects move forward. The CEO of Excel, Vishal Ramchandani, remains in place. Devraj Sanyal, the CEO of UMG for India and South Asia, joins the board, but Excel remains in control of the creative decisions. UMG cannot come in and say things like “put more songs in each film” or “change the style to make it more commercial.” Without control of the thing that creates the music, or potential revenue in the first place, UMG is taking a risk. The return depends not just on the music’s monetization, but also on the quality of Excel’s future output.

Over the next 1 to 3 years, the first signs of success will be operational, not in the financial statements. UMG needs to set up a new label for Excel, which will handle the soundtrack releases. UMG also needs to align A&R, which includes the people who are in charge of music strategy along with the people in charge of business and the legal side of songs. In addition, UMG has to plan release timing well, so that the music and film can promote one another at the same time. For example, if a film is coming out, the soundtrack to it should be released and advertised so that the movie can gain attention, while the movie also brings viewers back to the soundtrack. 

If this goes well, and even one or two Excel soundtracks gain meaningful popularity globally, not just in India, the deal would look like a win. In this best-case scenario, revenue would significantly increase, validating UMG’s purchase. Another possibility is that Excel keeps producing soundtracks and UMG would help get them more attention outside of India, but not enough to blow up a song. Growth would be slow because India would still have two basic problems: not many listeners pay for music and prices remain low. In this case, profits would rise gradually. In the worst-case scenario, Excel could release a weak batch of movies or shows. This would likely lead to songs not doing well commercially and less demand. If no songs become popular outside of India, UMG would lose a large portion of the value they were hoping for, and the return could become very small or even negative. 

It is likely that UMG will succeed with this deal. Although making a song into a global hit is difficult, UMG’s global distribution, along with reach on social media, gives it a better chance. If by 2029, Excel has not produced at least one song with meaningful international traction, the deal would look like a defensive move to protect UMG’s position in India, rather than a strong investment.