Tuesday, February 9, 2010

Warner Music Group's 1st Quarter = LOSS

This morning Warner Music Group reported their financials for the first quarter of their fiscal year (which ended on Dec. 31). Not surprisingly, they lost money this quarter: $17 million dollars, to be exact. If you're interested, the full breakdown can be found at http://tinyurl.com/yd6w67o or on CNNmoney.com.

For me, reading the specifics of Warner's loss remind me of dinner conversations with my mother, the treasurer of a steel company, which inevitably employ financial jargon that goes over my head. What did grab my attention though, were the statements that WMG higher ups made. Edgar Bronfman, Jr., the company's chairman and CEO, said, "We are pleased to have delivered stable revenue and OIBDA in our core Recorded Music and Music Publishing businesses despite ongoing recorded music industry pressures and macroeconomic headwinds," and Steven Marci, CFO, added "As our stable margins show, we carefully manage our costs and regularly work to adjust our business in order to minimize the impact of a transitioning recorded music market."

The company seems to be suggest that the already deflated state of the music industry coupled with the current economic situation are to blame for a bad first quarter. However, they are hopeful that changes in their business practices, like a focus on music publishing and recorded music (digital revenues were up 10.3% from the previous quarter). Has WMG, or any of the other majors for that matter, found a strategy (in increased publishing maybe) that will allow them to weather the bad economy and come out strong on the other side or is this loss the result of too little change to late in the game?

--Katherine Wood

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