Warner Music Revenues Rise 16.7 Percent to $963 Million as Digital Keeps Driving

Bruno Mars
Kevin Winter/Getty Images for NARAS

Bruno Mars performs onstage during The 59th Grammy Awards at Staples Center on Feb. 12, 2017 in Los Angeles.

Warner Music Group has reported a $1 million net income loss on revenues of $963 million, versus $20 million in net income in the prior year quarter when sales were $825 million. Overall, net revenue grew 16.73 percent during the quarter, ended March 31, 2018.

"We showed strong revenue and OIBDA growth in our second quarter," said Eric Levin, WMG's executive vice president and CFO. "This is our eleventh consecutive quarter of year-over-year revenue growth and we're proud of our ability to deliver robust results on a consistent basis."

Major sellers during the quarter included Ed Sheeran, The Greatest Showman soundtrack album, Bruno Mars, WANIMA and Dua Lipa, according to the company.

While operating income grew to $83 million, a 10.3 percent increase from the $78 million in operating income the company had in the year earlier period, it would have been bigger except for $22 million -- most of it in the recorded music operation in realigning the company away from physical music -- in charges taken to pay for a staff restructuring and $6 million in costs related to the company's Los Angeles office consolidation, as well as the relocation of its shared service center in Nashville. Overall, after a $23 million loss for the extinguishment of debt, and $36 million in interest expense and an increase in taxes to $19 million versus $3 million in the prior quarter, that resulted in the $1 million loss.

Within total revenue, recorded music posted $80 million in operating income on revenue of $791 million for the second quarter, as compared with $69 million in operating income on revenue of $686 million. That represents a 15.9 percent increase in operating income and 15.3 percent increase in revenue. 

Meanwhile, music publishing generated $174 million in revenue, an increase of 20 percent from the $145 million garnered in the second quarter of the prior year.

For the six month period, WMG reported $4 million in net income on revenues of $2.008 billion, versus $44 million in net income on $1.742 million in revenue. Overall, revenue grew 15.3 percent.

Of the total revenue, $1.695 billion was generated by the recorded music group, a 14.3 percent increase over the $1.483 billion tallied in the first half of the prior year; while music publishing totaled $37 million, or up 17.8 percent from the $269 million garnered in the first half of fiscal 2017.

Breaking out recorded music, digital totaled $972 million, a 21.2 percent increase from the $802 million recorded in the first half of the prior year; physical grew a tick to $370 million, up from $369 million; while artist services and expanded rights grew 4 percent to $179 million from $171 million; and licensing and other revenue was up 23.4 percent to $174 million from $141 million.

By percentage of revenue, digital accounted for 57.3 percent, physical 21.8 percent, artist services and expanded rights 10.6 percent; and licensing and other revenue 10.3 percent. In the corresponding six month earlier period, those percentages, respectively, were digital 54.1 percent, physical 24.9 percent, artist services and expanded rights 11.5 percent, and licensing and other 9.5 percent.

As for publishing, performance revenue grew 17.2 percent to $102 million from $87 million in the earlier six-month period; digital was up 27.9 percent to 110 million from $86 million; mechanical increased 15.2 percent to $38 million from $33 million; while synchronization was up 6.9 percent to 62 million from $58 million; and other revenue held steady at $5 million.

As a percentage of revenue, that breaks out to performance accounting for 32.2 percent, digital 34.7 percent, mechanical 12 percent, synch 19.6 percent and other 1.6 percent. In the corresponding earlier period those percentages were performance accounting for 32.3 percent, digital 32 percent, mechanical 12.3 percent, synch 21.6 percent and other 1.9 percent. 

Overall, Warner Music Group CEO Steve Cooper said in a statement, "We're having another excellent year with strong momentum around the world in both Recorded Music and Music Publishing We're investing heavily in A&R, digital innovation and the transformation of our operations to ensure that we are positioned for long-term success."


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