Warner Music Group Lost Another $205M Last Year

Against a backdrop of a 4-5% rise in U.S. music sales industry-wide, Warner Music Group reported a net loss of $205 million for the fiscal year ending September 30, 2011. Half the loss came in the fourth quarter. The company also warned of weak earnings for the current quarter ending December 31st.

Speaking in his first earnings call as Warner Music Group, CEO Steve Cooper blamed much of the last quarter's loss on costs related to WMG's acquisition by Access Industries. Charge included professional fees ($46 million), severance ($10 million) and refinancing charges. In that same quarter the company had major releases from Red Hot Chili Peppers, Bruno Mars, Lenny Kravitz and Blake Shelton, but their sales proved insufficient to cover other losses.

Digital revenue inched up just 1.5% to 29.7% globally (50% in the U.S. by the September quarter.) Revenue from the 360 and multi-rights deals that outgoing Chairman Edgar Bronfman Jr. touted as the company's future, rose to 17% of overall global revenue and now represents 70% of new release revenue in the U.S.

Asked by an analyst if WMG's under-performance signaled a lack of investment in A&R, Cooper  responded that "as far as he could tell" better performing releases were ahead and that a strong A&R plan was in place for 2012, but offered no specifics.

Commenting on WMG's loss of EMI to Universal, Cooper said that "as disciplined investors we were not willing to pay a price that would not allow us to operate it as a profitable business".