Warner Music Losses Narrow: 60% Of Artists Have 360 Deals, Spotify ‘Traction Is Ecouraging’
In its first earnings call since acquisition by Access Industries, Warner Music Group reported narrowing losses of $46 million for the fiscal third quarter, compared to a $55 million loss a year ago. Revenue declined 1% on a constant currency basis.
During the call, CEO Edgar Bronfman said 50% of revenue came from "areas of the business that did not exist in 2004". 60% of currently signed WMG artists are signed to 360 or expanded rights deals, according to Bronfman.
DIGITAL REVENUE, SPOTIFY & LIMEWIRE:
Total digital revenue was $203 million up 13% from the prior-year quarter, and up 9% on a constant-currency basis. U.S. digital music revenue grew to $108 million, or 47.6% of total domestic recorded music revenue, up from 40.9%. On Spotify's U.S. launch "early traction is encouraging," according to Bronfman, as is European conversion to paid subscribers.
Thanks to WMG's share of the Limewire settlement, operating income before depreciation and amortization of $77 million was up 20% from the prior-year quarter. Operating income before depreciation and amortization (OIBDA) of $77 million was up 20% from the prior-year quarter. LimeWire settlement had a positive $.08 per share impact in the quarter, but were not enough to offset a net loss of $.30 per share.
WMG will continue to hold earnings even though it is now a private company because some bond debt is still held publicly. The company which was purchased for $3.3 billion last month, has more than $2.27 billion in debt.
So they lose money quarter after quarter and he is still glorifying their business practices? Makes no sense.
Pretty amazing turnaround for Warner Bros.
Top line revenue is really holding up. They need to get expenses under control, though.
Too bad no artists will never make money off the streaming deals.
Too bad artists will never make money of those 360/expanded rights deals.
I assume Access probably bought WMG with the plan of taking it public in a few years and cashing out that way, otherwise I really do not understand the case for buying the company. Any MBAs or others that want to analyze the numbers and make a case for, I’d appreciate. WMG’s financials are on Edgar from when a public company.
The market share has remained pretty much constant among the majors, so there is little chance of stealing market share (we’ll ignore the fact that they are not exactly selling the same products(artists)) and prices are falling, not rising. So how do they increase sales and thus the bottom line and become profitable. If they really sharpened the pencil, I am sure they can cut 50 million in expenses, but you want to be able to rely on more than that.
@J Feldman, I agree, artists are not making any money off of streaming. Access and the cloud are are DOA for artists too IMHO. Luckily sale of are up a whooping 1.6% this year for purchased product…
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