Warner Music Quarterly Revenue Falls 14%
Despite successes with Kid Rock and Bruno Mars releases, the company’s financials decline amid continued physical sales decreases, leading the stock to drop sharply.
NEW YORK – Warner Music Group on Tuesday reported a slighter higher fiscal first-quarter loss as revenue declined and the company took higher severance charges.
The company's stock dropped sharply. It was down 9.8 percent as of 12:05pm ET at $5.62.
The music giant posted a $18 million loss, compared to a loss of $17 million in the same period a year earlier. Operating profit fell from $47 million to $27 million.
Quarterly revenue decreased 14 percent to $789 million, or 12 percent when assuming constant currencies. WMG cited continued weakness in physical sales, which once again weren’t offset by digital gains, as well as competition from other holiday season releases as key drivers of the decline.
WMG’s top sellers in the quarter included Josh Groban, Michael Buble, James Blunt, Kid Rock and Bruno Mars.
Digital revenue of $187 million rose 2 percent from the year-ago period and made up 24 percent of the company’s total revenue. But digital revenue declined 5 percent from the preceding quarter.
“While industry pressures and a highly competitive release schedule limited our results in the first quarter, we’re confident that our disciplined A&R investments, successful revenue diversification and innovative digital strategies will drive WMG's long-term growth,” said chairman and CEO Edgar Bronfman Jr.
On his earnings conference call, Bronfman didn't shed any new light on possible strategic alternatives for WMG after recent reports that it has hired bankers to evaluate a potential sale of part or all of the company.
Also, amid ever-popular and recently renewed talk that WMG could at the same time look for a deal with EMI, which is now controlled by Citi, Bronfman declined to comment on the regulatory outlook for possible deals.
On the artists' front, the CEO lauded Mars for having continued to build momentum. And he predicted that Mars and other WMG performers will see their careers mature in the coming years, which will also benefit the company further.
Asked if a collaboration with streaming service Spotify in Europe could soon come to the U.S., Bronfman declined to comment beyond saying that services like it are "ever-more" meaningful to WMG's results.