BumaStemra has drawn up the budget for 2022. This has been discussed with the Council of Rights Owners and approved by the Supervisory Board. We are pleased to share the key figures with our members and affiliates in this financial portal. Below we first outline the developments in 2021 on which the expectations for 2022 are based.
Developments in 2021
The great uncertainty regarding developments in 2021 prompted us last year to work out several possible scenarios in addition to the moderately optimistic budget, including a scenario in which there would be no recovery in 2021.
At the time of preparing the 2022 budget, it is clear that recovery in the live performances market segment has not yet taken place and that less was invoiced to work & sales spaces and restaurants and bars due to the forced lockdown in the first half of 2021. Due to COVID-19, collection of royalties from these market segments is by about € 18 million lower than budgeted. However, this impact is more than offset by positive developments in other market segments. Fees collected from online streaming and video on demand grew faster than expected, partly due to improved contract arrangements. In the RTV segment, the advertising market recovered faster than expected, resulting in positive final settlements for 2020 and higher advances in 2021. In addition, royalties from Audio-visual Commercials are higher than budgeted due to the large number of well watched (sports) events in 2022. In total, BumaStemra expects to collect more in 2021 than the budgeted € 193.8 million, which means that the decrease compared to 2020 will be smaller than previously expected.
The distribution in 2021 will be well over the budgeted € 172.8 million, partly due to the mentioned positive developments in collection, higher surcharges and payment of Stemra’s continuity reserve. Including the extra distribution of older Home Copy fees, the distribution in 2021 will exceed the level of 2020.
As a result of cost-cutting measures, management costs in 2021 will remain well below the budgeted € 31.2 million. In addition, based on the provisional realisation, the investment results are expected to be more positive than the budgeted standard return of € 2.8 million.
The actual 2021 figures could deviate from these expectations* and will be communicated after an audit, via the annual reports, in the runup to the General Members’ Meeting of May/June 2022.
Expectations and plans for 2022*
The increase in online royalties is expected to continue and BumaStemra is committed to strengthening its position in this market segment. The 2022 budget does not assume a long-term, full lockdown and forced closure of work & sales spaces and restaurants and bars. For live performances, it is estimated that in 2022 there will be a recovery to 70% of the pre-COVID-19 level. The latter represents the greatest uncertainty in the total budgeted royalties of € 223.1 million, which would surpass the record level of 2019.
The lower royalties in 2020 and 2021 will affect the amounts available for distribution in 2022. Regular distribution is unlikely to return to pre-COVID-19 levels before 2024. As in 2020 and 2021, BumaStemra is committed to keeping the total distribution as high as possible. For example, based on the amended distribution rules, in 2022 a larger proportion of previously non-distributable fees can be paid out. In addition, after the 2021 financial statements have been drawn up, an assessment will be made as to whether an additional amount can be made available from existing buffers for payment to rights owners.
The 2022 budget contains a number of management cost items that were already budgeted for in 2021, but which were temporarily postponed due to cost savings. Any longer postponement of change and improvement plans does not seem feasible without consequences for the achievement of strategic goals and staff well-being. Partly for this reason, the budgeted management costs for 2022 are higher than those for 2021. The 2022 management costs include € 2.1 million of incidental costs for the replacement of our obsolete IT system. The phased implementation of the new system is expected to yield the first cost savings by the end of 2022. From 2023 onwards, BumaStemra will increasingly benefit from this investment.
The cost percentages, including the ratio of management costs to collected royalties, are lower than in the 2021 budget. For BumaStemra the cost percentage for 2022 is expected to be a total of 14.8% of budgeted royalties. After 2022, once the incidental high costs of replacing the obsolete IT system normalise and the results of the implementation of the strategy become visible, the cost percentages are expected to decrease.
In 2022, the same fixed withholding rates for administration fees per section as in 2021 will be applied. The temporarily higher administrative expenses are not fully included in this, which results in a budgeted funding shortfall of € 1.8 million for BumaStemra jointly. An eventual deficit for 2022 will be covered by existing buffers. The deduction for social and cultural purposes has also been kept the same as the current practice in Budget 2022.
The BumaStemra team looks forward to taking up the envisaged improvements in 2022 and to creating momentum: To the Beat of the Drum!
Hoofddorp, December 2021
Bernard Kobes, CEO
Marleen Kloppers, CFO
* Realisation may deviate from expectations, for example because assumed events do not occur as expected and the influence this has may be significant.