×
You will be redirected back to your article in seconds

Warner Music Hits $1 Billion in First Quarter, Digital Revenue Up 20%

Warner Music Group’s revenue was up 14% (or 10% in constant currency) and digital revenue was up 20% (or 17%) in its first-quarter financial results for the period ended December 31, 2017. Streaming represented 51% of total revenue, compared with 48.4% in the prior-year quarter.

“2018 is off to a great start. For three years running, we have grown revenue by double digits in the first quarter, a great testament to the sustainability of our success,” said Steve Cooper, Warner Music Group’s CEO.  “Streaming is driving the industry and we continue to outperform thanks to fantastic new music and the strength of our worldwide operating team.”

“This marks the first time in over 10 years that our quarterly revenue has exceeded a billion dollars”, added Eric Levin, Warner Music Group’s Executive Vice President and CFO.  “Our cash flow is strong and we are committed to maintaining our momentum.”

In a conference call on Friday morning, Cooper pointed to the company’s success at the Grammy Awards on Sunday — where Bruno Mars swept the top categories and Ed Sheeran won two trophies, and Warner/Chappell writers Kendrick Lamar and Chris Stapleton had strong showings — and its recent successes in the U.K. with Liam Gallagher and Dua Lipa.

In terms of future growth, he pointed to the signings of Kenny Chesney in Nashville and popular grime artist Stormzy in the U.K. Levin pointed to the Pandora settlement regarding pre-1972 copyrights as impacting growth by 2% in the quarter.

According to a company statement, operating income was $90 million compared to $94 million in the prior-year quarter.  OIBDA declined 1.3% to $155 million from $157 million in the prior-year quarter and OIBDA margin declined 2.3 percentage points to 14.8% from 17.1% in the prior-year quarter.  The decline in operating income and OIBDA was largely the result of higher variable compensation expense, related to the Company’s deferred compensation plan, increased investment in A&R, the impact of a legal settlement in the prior-year quarter, costs associated with management changes and restructuring, and an increase in facilities costs due to overlap in rent associated with the Company’s Los Angeles headquarters consolidation.

Net income was $5 million compared to net income of $24 million in the prior-year quarter and Adjusted net income was $18 million, compared to net income of $28 million in the prior-year quarter.  The decline was primarily attributable to a $27 million non-cash tax expense related to the new U.S. tax legislation which resulted in a reduction of our net U.S. deferred tax assets, and lower other income mainly due to the impact of Euro debt revaluation.  These factors more than offset the higher loss on extinguishment of debt in the prior-year quarter.

Recorded Music revenue grew 13.4% (or 9.6% in constant currency).  Growth in digital, licensing and artist services and expanded-rights revenue was partially offset by a decline in physical revenue.  Recorded Music operating income was $129 million up from $123 million in the prior-year quarter and operating margin was down 1.1 percentage points to 14.3% versus 15.4% in the prior-year quarter.

Music publishing revenue rose 15.3% (or 11.7% in constant currency).

 

More Biz

  • Streaming Powers U.S. Latin Music Market

    Streaming Powers U.S. Latin Music Market to 18% Growth

    The U.S. Latin music business experienced its second year of double-digit growth in 2018, driven almost entirely by streaming, according to the RIAA’s year-end report. The Latin market grew 18% in 2018 to $413 million, driven by a nearly 50% growth in revenues from paid subscriptions, the report says. Streaming formats made up a whopping [...]

  • Game Industry Layoffs Driven by Past

    Game Industry Layoffs Driven by Past Mistakes, Uncertain Future (Analysts)

    The video game industry is facing a seemingly never-ending string of layoffs and studio closures: Telltale, ArenaNet, Activision, and now EA. According to industry analysts, companies are facing declining earnings, diminishing product pipelines, and an uncertain future that is almost certain to be driven by new technology. While the debate over whether games as art [...]

  • NF_D_JGN-D14-5180.raf

    The Sexist Metal Scene in 'The Dirt' Is Painfully Accurate, Say Veteran Female Execs

    UPDATED: The fallout from Friday’s premiere of Netflix’s few-holds-barred Motley Crue biopic, “The Dirt,” began even before the film, which focuses on the quartet’s ‘80s-‘90s decade of decadence, was released. The group’s ill treatment of many women in their orbit is a matter of public record, and is depicted both seriously and unsettlingly light-heartedly in [...]

  • univision-dish blackout

    Univision, Dish Network Reach Carriage Deal After Nine-Month Blackout

    Univision and satcaster Dish Network have reached a carriage agreement after a nine-month blackout that marked one of the longest standoffs between a major programmer and distributor. Univision channels went dark on Dish Network’s satellite and streaming platforms on June 30. The sides were at odds over carriage fees that have become increasingly contentious for [...]

  • BMG Posts Strong Earnings for 2018

    BMG Posts Strong Earnings for 2018

    BMG announced solid earnings for 2018 — its tenth year since the “new” BMG opened for business after its previous incarnation merged with Sony Music — as part of parent company Bertlesmann’s results Tuesday. According to the announcement, despite “negative exchange rate effects,” BMG’s revenues increased by 7.5 percent to €545 million (around $644 million), [...]

  • Rahm Emanuel

    Chicago Mayor Rahm Emanuel Calls Jussie Smollett Deal a 'Whitewash of Justice'

    Chicago Mayor Rahm Emanuel blasted the decision by Cook County prosecutors to drop charges Tuesday against “Empire” actor Jussie Smollett. Flanked by Chicago Police Superintendent Eddie Johnson and Kevin Graham, the president of the Chicago police union, the mayor said the decision sends a message that high-profile people will not be held accountable for their [...]

  • Viacom HQ LA

    Viacom Shares Spike on DirecTV Deal, Renewed CBS Merger Chatter

    Viacom shares soared 10% on Tuesday after the company reaffirmed financial guidance for its media networks wing on the heels of sealing a hard-fought carriage renewal agreement with AT&T’s DirecTV. The stock gain underscored the importance of maintaining its presence on DirecTV and other AT&T channel bundles. Viacom on Tuesday reaffirmed its guidance of affiliate [...]

More From Our Brands

Access exclusive content