Warner Music Group Tops $4 Billion in Revenue on Strength of Digital, Publishing

imageSPACE/Shutterstock
Cardi B performs at Z100's iHeartRadio Jingle Ball on Dec. 7, 2018 in New York City.

The Warner Music Group finished out the year on a high note with annual revenue up 12 percent to slightly over $4 billion from the prior year’s total of $3.58 billion while the company doubled its net income to $307 million as compared to $149 million in the year-earlier period.

For the three month period ended Sept. 30, WMG reported a $14 million loss on revenues of $1.04 billion. That’s an improvement from the $39 million loss the company posted in the prior years fourth quarter when revenue totaled $917 million.

As for the annual results, while the company produced $478 million in adjusted operating income before depreciation and amortization (OIBDA), that was only a slight improvement from the $473 million generated in the prior 12 months. But those results were adjusted in the most recent year to exclude $76 million in costs related to a restructuring; and the company’s relocation of its shared services center to Nashville and the consolidation of its Los Angeles office.   

   

Likewise, operating income was down slightly to $217 million from $222 million in the prior year; coupled with the growth in revenue means that operating income was negatively impacted, falling to 5.4 percent in the just-completed fiscal year, versus 5.4 percent in the prior 12-month period.   

Similarly, cash from operating activities fell to $425 million from $535 million, but the company said that was due to the timing of royalty payables. Meanwhile, free cashflow (cash taking in during the year minus expenditures) more than doubled to $830 million from $409 million, thanks to proceeds from sale of recorded music assets to appease the EU Commission for its Parlophone acquisition.   

Breaking out revenue by operations, recorded music produced $543 million in adjusted OIBDA on revenues of $3.36 billion, which was a big improvement over the $458 million in OIBDA generated in the prior fiscal year when revenue totaled $3.02 billion. Meanwhile, operating income was $307 million, an 8.5 percent increase from the prior year’s $283 million in operating income.

As for music publishing, revenue grew 14.2 percent to $653 million from the prior year’s total of $572 million. Yet operating income was only up slightly to $84 million from $81 million while OIBDA was $159 million versus $152 million. The company said higher A&R costs resulted in operating margin declining to 12.9 percent in the just completed year versus the 14.2 percent in the prior year.

Looking at recorded music revenue by format, digital was $2.019 billion, while physical was $630 million; artist services and expanded rights brought in $389 million in revenue while licensing was $322 million. Percentage wise, digital was 60.1 percent of revenue, digital 18.8 percent, artist services and expanded rights 11.6 percent; and licensing, 9.5 percent.

WMG's biggest sellers for the year included Ed Sheeran, TWICE, The Greatest Showman soundtrack, Cardi B and Dua Lipa.

In music publishing, 2018’s $653 million in revenue breaks out to $212 million performance, $237 million in digital, $72 million in mechanical, $119 million in synchronization and $13 million other, which respectively corresponds to 32.5 percent performance, 36.2 percent digital, 11.2 percent mechanical, 18.2 percent synch and 1.9 percent other.

Geographically speaking, the U.S. accounted for $1.954 billion, or 46.6 percent, while international operations brought in 2.259 million, or 56.4 percent, minus $8 million in intersegment eliminations.


THE BILLBOARD BIZ
SUBSCRIBER EXPERIENCE

The Biz premium subscriber content has moved to Billboard.com/business.


To simplify subscriber access, we have temporarily disabled the password requirement.