Warner Music Group beat Wall Street’s estimates for its performance in Q1 2009, ending December 28, 2008, by losing $.09 a share. (That excludes a one-time gain from the sale of its stake in Frontline management to Ticketmaster.)
Analysts predicted a loss per share of $0.14. Overall music sales for Q1 were down 11 per cent from the year before. Digital revenues were up 20 per cent from Q1 2008, yet this is a smaller increase than digital sales have shown on a year-to-year basis indicating such a revenue stream might be slowing.
Here are more highlights from the quarter, from WMG’s press release:
— Total revenue of $878 million decreased 11% from the prior-year
quarter, or 6% on a constant-currency basis.
— Digital revenue was $171 million, or 19% of total revenue in the
quarter, up 2% sequentially from $167 million in the fourth quarter of
fiscal 2008 and up 20% from $142 million in the prior-year quarter.
— Operating income from continuing operations declined 34% to $41
million compared to $62 million in the prior-year quarter.
— Operating income before depreciation and amortization (OIBDA) from
continuing operations fell 17% to $107 million from $129 million in the
— Income from continuing operations was $0.15 per diluted share compared
to income from continuing operations of $0.01 per diluted share in the
prior-year quarter. The first quarter of fiscal 2009 included a gain of
$0.24 per diluted share from the gain on the previously disclosed sale of a
minority stake in Front Line Management.
Recorded music revenue was down 11.9% from the prior-year quarter to $749 million, despite continued strong sales internationally (domestic sales were down 18.8%). Revenue from digital sales grew 18.2% from the year beore to $156 million. Digital now represents 20.8% of WMG’s total recorded music revenue. However, last year, digital sales had increased 41% from the year before, so this revenue stream appears to be flattening.
Big sellers during the holiday period for WMG were the Twilight soundtrack and titles from Seal, Nickelback, Enya and T.I. but none were as big as Josh Groban’s 2007 album Noel, the massive sales of which WMG uses to explain its drop in recorded music sales.
Music publishing revenue, meanwhile, was down 6.9% from the prior-year quarter to $134 million. But digital and synchronisation revenue for the division were both up dramatically from the year before:
Digital revenue from Music Publishing grew 50.0% to $15 million, representing 11.2% of total Music Publishing revenue.On a constant-currency basis, the decline in mechanical revenue of 16.4% was offset by a 10.0% increase in synchronisation revenue, a 4.3% rise in performance revenue and a strong 66.7% increase in digital revenue.
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