STUNNED BUNNY: WMG LIMPS TO THE END OF ANOTHER AWFUL YEAR

Warner Music Group confirmed this morning that the reeling company had another lousy quarter, with a 58% drop in net income during Q4, which ended Sept. 30, bringing a disastrous fiscal year to a close. WMG reported a net income of $5 million, or 3 cents a share, versus $12 million, or eight cents a share, a year earlier. Those results included a $12 million one-time spike thanks to the Napster settlement with Bertelsmann and a $9 million restructuring hit. Year-earlier results were sweetened by $13 million derived from the settlement with Kazaa.

Revenue grew 1.8% to $869 million but fell 1.5% on a constant-currency basis, which WMG attributed to a shift "from physical sales to new forms of digital music," repeating the now-familiar mantra.

Said Chairman/CEO Edgar Bronfman Jr.: "As expected, this has been a challenging quarter, reflecting the difficulties in any industry transformation of this scale. But we remain confident for two primary reasons: continued growth in the broader music market that our long-term strategy targets, and the disciplined creative leadership shown by WMG to expand our music business model."

The phrase “disciplined creative leadership” is already drawing snickers from one end of the music industry to the other.

Surprisingly, given a release schedule with a paucity of heavy hitters U.S. sales rose 8.9%, but international sales dropped by 8%. As expected, digital revenue was up 25% to $130 million, representing 15% of total revenue.

Recorded music revenue rose by 0.7%, but fell 1.7% to $736 million on a constant currency basis, once again due to low international sales. At Warner/Chappell, revenue rose 7%, or 0.7% on a constant currency basis. Digital revenue from music publishing was $7 million, which represented 5.1% of total music publishing revenue.

Writes Peter Kafka in the Silicon Valley Insider: “The bad news: Warner looks less bad this quarter only because the year-ago quarter was a real mess: Domestic revenue is up based on lousy comps from 2006. Recorded music sales are still down y/y; currency gains and music publishing are keeping the place afloat. And next year looks positively dreadful.”