Losses narrow for WMG due to digital sales
NEW YORK — Newly public Warner Music Group narrowed its loss last quarter as revenues grew across music publishing and recorded music, with digital sales providing a particular kick.
But Warner Music couldn’t brag about the financial performance since it remains in a mandatory “quiet” period following last week’s initial public offering.
Offering has been lackluster, though, reflecting the unease still tormenting the music biz.
Despite the upbeat quarterly results, WMG shares dove 73¢ in trading Monday to close at $15.23, a loss of 4.57%. Company went public last week at $17 per share.
All told, Warmer Music reported a loss of $18 million in the quarter ended March 31, compared with red ink of $45 million a year ago. Revenue grew 4.4% to $767 million from $735 million.
Even as Warner Music, led by chair-CEO Edgar Bronfman Jr., decided to trade as a stand-alone company, the music biz as a whole is still trying to redefine itself after being ravaged by piracy.
Bronfman, who engineered last year’s buyout of Warner Music from Time Warner, has been particularly aggressive in exploiting digital platforms such as the Internet and ringtones. That strategy appears to be delivering.
Revenues from digital sales topped out at $35 million in the last quarter, compared to $25 million in the previous quarter and $32 million for the full fiscal year 2004.
Digital drove growth at the recorded music group, which saw revenue climb nearly 5% to $621 million. Digital revs were strong enough to offset a decline in traditional sales.
Bestselling WMG artists in the last quarter included Green Day, Michael Buble, Big & Rich and T.I.
Music publishing revenue rose 3.4% to $154 million largely due to beneficial foreign exchange currency rates.
Warner Music ended the quarter with a cash balance of more than $440 million. Insiders say this proves the company had the resources both to go public and bolster its operations.
Linkin Park, one of Warner’s biggest acts, had criticized the IPO for seeking to enrich WMG’s owners instead of funneling cash proceeds to the company or its artists.
When Warner Music went public at $17 a share, it was well below the $22-$24 it anticipated earlier this year, a range Wall Street analysts had said was much too high.
Company operates all of its businesses through WMG Acquisition Group.