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Warner Music Group sets a new quarterly revenues record


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Anyone looking for licensing-related drama in Warner Music Group’s latest quarterly earnings call will have been disappointed. “Our partnerships with our digital distributors have never been better,” said CEO Steve Cooper. “We’ve put the India litigation with Spotify behind us, and we’re looking forward to working with all the streaming services to grow the industry and create new possibilities for artists and songwriters.”

Cooper did talk about WMG’s determination to “preserve and protect the value of music”, but rather than being a warning to DSPs about bundles and podcast encroachment, this was about the recent $1bn copyright infringement verdict against US ISP Cox Communications, in a case brought by the major labels. WMG fully expects Cox to appeal, but alongside UMG and Sony will press on with its similar cases against four other ISPs.

The actual financial results? They were good. A new quarterly record for revenues for WMG as a standalone company, in fact. In the final quarter of 2019 (WMG’s fiscal Q1) its total revenues grew by 4.4% year-on-year to $1.26bn, including a 12.6% increase in digital revenue to $706m. WMG’s net profit jumped from $86m a year ago to $122m last quarter.

Recorded music revenue grew by 4.1% to $1.08bn and publishing revenue grew by 5% to $173m, with the two categories enjoying digital-revenue growth of 12.4% and 12.3% respectively. Digital accounted for 58.4% of WMG’s recorded music revenues last quarter, and 42.2% of its publishing revenues. WMG also broke down its digital revenues into streaming and downloads/other. The latter fell by 27.9% to just $44m last quarter, while streaming was up by 17.3% to $589m – 54.3% of the company’s total recorded music revenues.

Other titbits from the earnings call: “We are in the process of evaluating what impact the Tencent investment in Universal [Music] could have on the current valuation,” said EVP and CFO Eric Levin, although that’s hardly a surprise. Meanwhile, Cooper revealed that French artist Renaud and Japanese artist Twice “featured high up on our list of top sellers, despite not yet having significant global fanbases” – a sign of shifting trends in the global industry.

Stuart Dredge

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