Acquisition of Utopia Distribution Services
Utopia Distribution Services’ (UDS) warehouse in Bicester, UK, has been acquired by landlord DP World through pre-packaging management.
UDS was jointly launched in August 2023 by The Right Group the financially troubled company formerly known as Utopia Music, in partnership with DP World. The warehouse serves major brands, including Universal Music Group, Sony Music, A Group of Beggars, and Domino.
Financial Challenges and Management Changes
On Friday (December 13), UDS submitted documents with London High Court revealing its appointment as an administrator. DP World, the lessor of UDS, confirmed that it will purchase all services for the Bicester site formerly owned by UDS.
“DP World is pleased to expand its entertainment services through the acquisition of Utopia Distribution Services Ltd. We are committed to partnering with you to provide exceptional and reliable services in the future,” DP World stated in a message to customers obtained by MBW.
“Proper distribution of music will no longer be associated with UDS or the Bicester warehouse,” the company stated, adding that “the proper distribution of music is not dependent on the administration, and business will continue as usual from the Bicester warehouse.”
DP World also mentioned that it is “working hard to integrate Bicester’s services into our wider network. Although this complex and rapid transition represents some challenges, we are committed to minimizing disruption and ensuring smooth operations.”
In 2023, UDS concluded a deal worth £100 million ($126 million) with DP World to provide warehousing and logistics services for physical music formats in the UK.
At the time of the warehouse launch, both parties indicated that the Bicester site, covering 25,000 square meters, would handle 70% of physical music and 35% of home entertainment products sold in the UK annually, with a daily throughput exceeding 100,000 units, which could rise to more than 250,000 during peak periods.
Concerns Over Financial Viability
However, UDS entered administration as financial issues at Proper Group escalated. BIE understands that DP World has now taken over the services. Previous plans to merge Proper with Bicester, intended to cut costs for major and independent labels, have been abandoned.
Drew Hill, Managing Director of Proper Group, who led the Proper Distribution division created earlier this year, is expected to return to Proper, where he will continue to operate separately.
“Following the bankruptcy of the Swiss company, I hoped to keep UDS and Proper Music Group together,” Hill stated in a message to BIE.
“While it is unfortunate to see the companies split, UDS clients and customers can be assured that DP World is committed to continuing operations at the Bicester site. Meanwhile, Proper Music Distribution will keep functioning as usual and maintain its high standards of service over Christmas and the New Year as I evaluate future opportunities.”
The collapse of Utopia Distribution Services highlights financial troubles within the parent company, Proper Group. In September, a Swiss court filed bankruptcy proceedings against the company due to an unpaid legal bill.
John Mitchell, General Manager of Utopia Switzerland, admitted to Complete Music Update (CMU) that UDS has been “losing money every month” since it was acquired from pre-pack by Proper Group in September 2022.
“The business will lose money every month. We weren’t prepared to continue shelling out £1.5 million a month to subsidize the business.”
John Mitchell, Utopia Switzerland
Mitchell noted that the company’s shareholders had subsidized the business by about £20 million ($25 million), hoping for profits that never arrived. He added that the company was losing approximately £1.5 million ($1.9 million) each month, rendering it unsustainable.
When the Swiss parent company UDS faced bankruptcy last month due to an outstanding invoice of only CHF 23,000 ($25,800), UDS’s financial support was cut off, according to CMU.
Under its original name, Utopia, the company made headlines with acquisitions such as Quincy Jones-backed Musimap, UK warehousing firm Cinram Novum, publisher Music Group Centrik, Absolute Label Services, Absolute Rights Management, and The Right Music Group, the British company after which Utopia renamed itself.
“It is business as usual for Proper Music Distribution and will continue to provide its usual high standards of service over the Christmas and New Year period while I consider future opportunities.”
Drew Hill, Proper Group
Unfortunately, financial troubles soon followed. By the end of 2022, the company began a series of mass layoffs and sold significant assets like Centric, Absolute, and ROSTR.
One indication of Proper Group’s financial struggles emerged earlier this year when the company informed shareholders in April that it needed to raise £6 million ($7.6 million) from them.
“In a telephone conversation, we stated that we are raising funds in several directions, and from you, the shareholders, we need to raise 6 million euros,” the company conveyed in a letter.
