Warner Music Group’s Q2 Loss Widens
With its pending sale to Access Industries looming, WMG reported Q2 results this morning; and the numbers, while not unexpected, showed that the music group's downward slide is far from over. The company reported a wider second-quarter net loss of $38 million or 25 cents per share versus $25 million or 17 cents per share a year ago.
That beat analysts predictions slightly. 6 analysts polled by Thomson Reuters expected a loss per share of 28 cents for the quarter. Total revenue for Q2 grew 2% to $682 million from $666 million in the prior-year quarter, up 1.6% on a constant-currency basis.
Digital revenue was $220 million, or 32% of total worldwide revenue (almost 50% in the U.S.) , up 9% from $202 million in the prior-year quarter, and up 8% on a constant-currency basis. Digital revenue grew 18% sequentially from the first quarter of fiscal 2011, or 17% on a constant-currency basis.
But CEO Edgar Bronfman, Jr. offered some bright spots: “We are excited to see our digital revenue approach the 50% milestone for U.S. Recorded Music and to see 60% of our active global artist roster signed to expanded-rights deals.”
This is interesting and probably makes the case for artists working independently. It is very easy for an independent artist to get a good digital distribution deal and keep a large percentage of their sales earnings.
Warner also has over 60% of their roster signed to 360 type deals and I know they keep pushing for more of this. And in spite of this, they are still losing money. That probably means they will cut costs, reducing artist services.
It’s hard to see where their value add is to the artist, other than exposure via traditional channels like radio.