Diskery plans $750 mil offering
Warner Music Group Corp., home to Madonna and Linkin Park, on Friday revealed plans for an initial public offering, filing with regulators to sell up to $750 million of common stock.
In its Securities and Exchange Commission statement, the company did not estimate how many shares or at what price it planned to offer its stock, but said shares will be sold by both the company and several shareholders. Warner Music, one of the world’s largest record companies, plans to list its stock on either the New York Stock Exchange or on the Nasdaq.
Proceeds from the deal will be used to repay debt and for general corporate purposes, according to the SEC document, submitted Friday.
New York-based Warner Music was formed about a year ago when a group of investors, led by Chairman and Chief Executive Edgar Bronfman Jr., bought Time Warner Inc.’s music division for $2.6 billion in mostly cash.
A day after the deal closed in March 2004, Warner Music ousted several top executives and trimmed 20 percent of its work force as the company embarked on a massive turnaround campaign. In its SEC filing, Warner Music said it is poised to save $250 million a year — surpassing its initial goal by $50 million.
The company’s IPO plans emerge as the music industry shows signs of recovery following years of sagging sales blamed on the rise of illegal downloading and digital piracy. Last year, U.S. unit sales in the industry grew about 1 percent from 2003, when worldwide retail sales reached $32 billion, Warner Music said, citing industry tracker SoundScan.
But Warner Music — considered the smaller label in the group including Sony BMG, Universal Music Group and EMI — is looking to capitalize on the fast-growing online music market with planned initiatives such as collaborating with legal music-downloading shops and simplifying the process for clearing its music for digital distribution.
The proliferation of music sales over the Internet has already shown returns for the company: In 2004, its share of domestic digital track sales topped its slice of overall recorded album sales, Warner Music said.
The group, whose labels include Atlantic Records, Elektra Records and London Records, boasts a roster of more than 38,000 artists, with top singers such as Madonna, Linkin Park and Kid Rock. Recorded music accounted for 83 percent of revenue last year, while its publishing business generated the remaining 17 percent, Warner Music said.
For the latest quarter ended Dec. 31, Warner Music posted a profit of $36 million on $1.09 billion in revenue. In last year’s quarter, its loss was $1.15 billion, saddled by more than a billion of impairment charges. Revenue totaled $1.18 billion
Warner Music also holds rights to more than a million copyright-protected songs, including “Happy Birthday to You,” “When a Man Loves a Woman” and John Williams’ venerable “Star Wars” theme.
Goldman, Sachs & Co. and Morgan Stanley are managing the deal, along with underwriters Lehman Brothers, Merrill Lynch, Deutsche Bank Securities, Banc of America Securities and Citigroup.