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Warner losses widen, but management remain optimistic

By | Published on Monday 16 December 2013

Warner Music

Warner Music posted a $57 million net loss on the quarter up to 30 Sep, a financial report from the mini-major confirmed last week. Revenue for the quarter was up 4.5% year-on-year to $764 million, though that was mainly due to the acquisition of the Parlophone Label Group, the various EMI units in the UK and Europe that Universal was forced to sell by the regulator after its purchase of the EMI record company.

Warner Music’s CFO Brian Roberts said that the decline in profits (and in revenues if Parlophone is taken out of the mix) was down to a “light release schedule” in the quarter compared to the same period a year earlier, particularly in Japan where the summer quarter in 2012 included three major artist releases. Which is good news, after a decade of record companies blaming disappointing financials on “challenging times for the entire recorded music sector”, it’s good to get back to the classic “slow release quarter” excuse.

For the financial year, which ended with this quarter, the company posted net losses of $198 million on revenues of $2.87 billion, compared to $112 million on £2.78 billion the previous year. Roberts said that the acquisition of Parlophone had contributed to the losses, though the merger would result in $70 million in cost savings over the next two years.

Meanwhile Warner boss Stephen Cooper gave a positive spin on his company’s future direction, insisting that digital is coming of age. He said that streaming music would continue to grow, with both subscription and ad-funded services expected to generate increasing revenues in the years to come, while also indicating that he expected the download market to co-exist with streaming platforms, even though growth in download sales is slowing.