Warner Music Group Names Brian Roberts CFO, Effective January
Warner Music Group Names Brian Roberts CFO, Effective January

Warner Music Group on Thursday posted a rise in revenue and narrower losses for its September quarter. The company also reported a rise in both its physical and digital recorded music.

"We had a very productive year," said CEO Stephen Cooper. "Warner Music Group performed well and is positioned to capitalize on the industry's more stable recent trends. Among our important achievements, we grew global digital and physical Recorded Music sales on an aggregate basis, for the quarter and the fiscal year."

Warner Music Group Reports Mixed Financials in Third Quarter

Quarterly revenue of $731 million rose 2 percent over the year-ago period. WMG's loss narrowed to $18 million, or $10 million when adjusted for several items are included, from $103 million, or $42 million. For the full fiscal year ended Sept. 30, revenue of $2.78 billion was down from $2.87 billion a year earlier. WMG's loss of $112 million narrowed from $205 million a year earlier.

For the fiscal year, "growth in digital revenue more than offset physical revenue declines in the company's recorded music business," the statement said. "However, this net growth was more than offset by declines in artist services and expanded rights revenue, recording music licensing revenue and music publishing revenue."

Total digital revenue for the year grew 12.8 percent and represented 33.3 percent of total revenue, compared to 28.6 percent in the prior year.

Warner Music Group Realigns Structure; Cameron Strang Gets Big Boost

Looking at revenue by the company' s operating arms, recorded music revenue rose nearly 4% to $605 million for the year ended Sept. 30, versus $582 million in the corresponding quarter in the prior year. Meanwhile, that segment produced $77 million in operating income before depreciation and amortization, versus $54 million in the corresponding period of the prior year.

For the full 12 months, the recorded music operation produced $283 million in OIBDA on sales of $2.275 billion, which was down from the $290 million in OIBDA on $2.34 billion in revenue in the prior fiscal year. While digital recorded music revenue grew 12.5% to $864 million from $768 million, that growth was offset by declines in Artist Services and Expanded Rights revenue from tours in the company's European concert promotion business and declines Recorded Music licensing revenue.

Meanwhile, Warner/Chappell produced $54 million in OIBDA on revenues of $133 million, which was down from $57 million in OIBDA on revenues of $141 million for the three-month period ended Sept. 30.

Within publishing, digital revenue grew 29.4% while mechanical revenue declined 3.2%; synchronization revenue declined 10.7%, reflecting lower video game revenue; and performance revenue declined 13.1%, partially due to an industry-wide reduction in U.S. radio license fees as mentioned last quarter.

For the full year, Warner/Chappell generated $152 million in OIBDA on revenues of $524 million. For OIBDA that represented a 3% improvement from the $147 million in OIBDA, but revenue was down 4% from the $544 million the company produced for the fiscal year ending Sept. 30, 2011.

When looking at annual revenue by segment for recorded music, physical sales totaled $966 million, or 34.7% of the company's total revenue, which was down from $1.032 million, or 36% in the prior year; digital sales totaled $864 million, or 31.1%, up from $768 million, or 26.8%; artist services and expanded rights were $244 million, or 8.8%, down from $310 million, or 10.8%; and licensing accounted for $201 million or 7.2%, down from $232 million or 8.1%.

Meanwhile, in publishing, performance revenue totaled $202 million, or 7.3%, down from $214 million or 7.5%; mechanical revenue was $129 million or 4.6%, a decline from $142 million, or nearly 5%; synchronization produced $112 million, or 4%, down a tick from $113 million or 3.9%; digital was $67 million or 2.4%, up from $60 million or 2.1%; and other was $14 million, or 0.5%, almost the same as last year when it was $15 million or 0.52%. (Percentages don't add up to 100% due to 19 million in intersegment eliminations from revenue, which are not broken out by revenue category.)

Looking at revenue by territory, domestic Recorded Music digital revenue amounted to $489 million, or 53.8% of total domestic Recorded Music revenue, marking the first time digital revenue represented more than half of domestic Recorded Music revenue for the fiscal year, the company reported.

The company's major sellers for the quarter included Kobukuro, Tatsuro Yamashita, Green Day, Superfly and Muse, the company said.