Warner Music Group saw revenues fall 17% year-over-year for the quarter ended March 31, to $668 million from $800 million–a steeper drop than Wall Street was predicting–and also posted a net loss of $68 million compared to $34 million last year.
Warner Music attributed its results to its release schedule and the current economic climate, while boasting that its digital revenue made up 26% of its quarterly revenue, yet this is only an increase of 6% from Q2 2008. Analysts had expected revenue would only drop to $730.2 million.
The company also took a major digital loss, taking $33 million charge “related to the impairment of cost-method investments in lala and imeem.” According to its 10-Q, Warner Music wrote off $16 million in imeem, more than its 2008 imeem investment of $15 million, including a $4 million receivable write-off. The company also wrote off $11 million of its $20 million investment in lala.
As Media Memo points out, this means the streaming site owes Warner Music money that the label doesn’t expect to receive, noting that last month WMG didn’t renegotiate its streaming-rights deal with the company in which it has an equity stake.
WMG’s recorded music revenue was down 17.6% from Q2 2008 to $537 million. Digital revenue from recorded music was $166 million, up 7.1% from Q2 2008, representing 30.9% of total recorded music revenue, up from 23.8% last year. Operating income in this division fell 86.4% to $3 million.
The company’s music publishing segment posted a 12.9% revenue drop from Q2 2008 to $135 million. The division’s operating income of $36 million was flat from the year prior.
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