Warner Music’s revenue takes a hit amid pandemic

The net income of $67m in Q1 last year is now a net loss of $74m year-on-year. Although streaming revenues grew 11% year-on-year to $586m, the growth was not enough to offset the impact of the coronavirus (COVID-19) crisis on the music industry.

WMG’s recorded music revenues were hit “primarily due a lighter release schedule, some COVID-related business disruption and foreign exchange rates in the current quarter and the one-time impact of a digital streaming license in the prior-year quarter”. This could include the closure of physical music retail outlets in Q1 due to COVID-19 lockdowns around the world. The top sellers in terms of physical sales included artists such as Roddy Ricch, Dua Lipa, Ed Sheeran and Tones and I.

WMG’s income from live events, ticketing and merch also took a significant knock. However, the biggest drop came in physical music sales, which fell from $130m to $94m year-on-year, representing a 27.7% decrease.

“We had a tough comparison with an especially strong Q2 in 2019, so I’m pleased that we’ve matched our excellent performance in the prior-year quarter, due in large part to an 11% increase in recorded music streaming revenue and a 17% increase in music publishing digital revenue,” Warner Music Group CEO Steve Cooper said.

“That’s 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. 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.”

WMG’s publishing arm made $166m in revenue, a 5.1% rise over the $158m that the division garnered in the same period last year.

The company also recorded music revenues from licensing, including synch and public performance, which remained flat at $72m.

Despite the loss, the company is profitable due to its performance in the first half of the year. The company generated a net income of $46 compared to $153m in the previous year, representing a 70% drop in net income.

WMG declared a regular cash dividend of $37.5m, which was paid to shareholders on 17 April 2020.

Meanwhile, also on 7 May, the music company announced it had been approved to list its shares on Nasdaq. WMG's parent company, Access Industries, will continue to control a majority of the total combined voting power of the firm’s outstanding common stock.

There have also been rumours that WMG may be privately acquired by a Saudi Arabia-controlled fund, but Music Business Worldwide has cast doubt on the claims.

View WMG's full report here.