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STRONG STREAMING NUMBERS POWER WMG'S Q2

Increases in recorded-music streaming revenue and music-publishing digital income provided the bright spots for Warner Music Group in the quarter that ended 3/31.

Digital revenue for the recorded-music division was up 5% to $626m and would have been higher if not for the onetime impact of a digital streaming license payment in the prior year’s quarter. Streaming revenue was up 11% to $586m.

With new releases being moved out of the quarter due to the COVID-19 pandemic, the division’s overall revenue was down 2.8% to $907m.

Overall revenue for the period, Q2 in WMG’s fiscal year, was $1.07b, just a hair off the $1.09b brought in during 2019’s Q2.

Music publishing was strong across the board: Revenue was up 5% to $166m, digital revenue hit $74m (+14%), and adjusted operating income was up 15% to $31m.

The increases in streaming and digital revenue, WMG CEO Steve Cooper said, are “a tremendous achievement, especially coming on the heels of Q1, when we achieved the highest quarterly revenue in our 16-year history as a standalone company.

“In these unprecedented times, we’re determined to protect the livelihoods of our artists, our songwriters and our people. We’re confident that our distinctive combination of creative innovation and financial discipline will help us weather this storm and emerge stronger, better and more agile than ever.”

On a conference call with analysts, Cooper sad the fact that 70% of the company’s revenue is from digital operations, makes WMG “more resilient” to deal with effects of the pandemic.

“It’s no secret we’re in uncharted territory,” he said, noting the company’s priorities are the health of employees and artists, sustaining the careers of artists and songwriters, and supporting the wider music ecosystem.

To that end, Cooper that A&R teams have been signing new talent remotely, recording music and videos on equipment such as iPhones, and adjusting the role of its Songkick website to make it a source of streamed live performances.

The company has created a multimillion fund to support organizations such as MusiCares, WHO, Unison Fund, Help Musicians and the Jazz Foundation.  

While Cooper noted that the full effect of COVID-19 won't be known until the end of Q3, the  impact was felt in Q2 in physical sales, artist services and expanded rights revenue due to the lighter release schedule, tour postponements and, as a result, lower merchandise revenue.

“Despite this real and significant challenge,” said EVP/CFO Eric Levin, “we remain confident we’re positioned for long-term growth.”

Later in the day, WMG announced it has been approved to list shares at Nasdaq under the symbol "WMG."

 

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