Music content company Warner Music Group Corp. (WMG) reported Tuesday an unexpected loss for the fourth quarter compared to a profit last year, hurt by severance charges as well as lower operating margins, despite a marginal 0.5% quarterly revenue growth.
The company's results were tempered by the continued general economic pressures and the transition from physical sales to digital sales in the recorded music industry.
In a statement, chairman and chief executive officer, Edgar Bronfman, Jr. said, "WMG had a strong quarter, increasing revenue, growing our cash balance to $384 million and raising digital revenue to 24% of total Recorded Music revenue. Over the fiscal year, even in the midst of difficult economic and industry trends, we grew our market share to 21% in the U.S. and continued progress on our key strategic goals: diversifying our revenue mix, improving our financial flexibility and maintaining our leadership in the industry's digital transition."
Fourth Quarter Results
The New York-based company reported a net loss of $18 million or $0.12 per share for the fourth quarter, compared to net income of $6 million or $0.04 per share in the year-ago quarter. The results for the latest quarter include severance charges of $0.09 per share.
On average, 7 analysts polled by Thomson Reuters expected the company to report earnings of $0.05 per share for the third quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter edged up 0.8% to $861 million from $854 million in the same quarter last year, and topped four Wall Street analysts' consensus estimate of $820.29 million. Revenues grew 4.7% on a constant-currency basis. The marginal growth in revenues reflect the company's strong music release schedule during the quarter.
Other Metrics
Digital revenues for the fourth quarter were $184 million or 21.4% of total revenue, up 10.2% or 11.5% on a constant currency, from the prior-year quarter. Domestic revenues declined 7.4%, while international revenues grew 8.8%, or 17.8% on a constant-currency basis. Revenue growth in Japan, France, Germany, the U.K., Italy and Spain was partially offset by weakness in the U.S. and Latin America.
Revenue from the company's recorded music business edged up 0.3% from the prior-year quarter to $709 million, and was up 3.7% on a constant-currency basis. Music Publishing revenues for the quarter increased 3.8% from the prior-year quarter to $162 million, and was down 16.0% on a constant-currency basis.
Operating income from continuing operations fell 18.2% to $54 million from $66 million in the prior-year quarter, while operating margin from continuing operations was down 150 basis points to 6.3% from last year's 7.8%. Total costs and expenses were $807 million, 2% higher than $788 million in the year-ago quarter.
Full Year Highlights
For fiscal 2009, Warner Music reported a net loss of $100 million or $0.67 per share, sharply wider than $56 million or $0.38 per share posted in fiscal 2008.
Loss from continuing operations for the full-year widened to $100 million or $0.67 per share from $35 million or $0.24 per share in the prior-year period. Analysts expected the company to report a loss of $0.43 per share for the full-year 2009.
Total revenues for the full-year decreased 9% to $3.18 billion from $3.49 billion in the full-year 2008. The Street was looking for full-year 2009 revenues of 3.14 billion. Revenues declined 3% on a constant-currency basis.
Outlook
"Looking ahead to fiscal year 2010, the volatile global economy and ongoing recorded music industry transition are likely to continue to affect our results. Given this backdrop, our conservative approach to managing our costs and our balance sheet gives us the flexibility to optimize results," executive vice president and chief financial officer, Steve Macri added.
Stock Quote
WMG closed Monday's regular trading session at $7.06, up $0.16 on a volume of 0.25 million shares, lower than the three-month average volume of 0.34 million shares. In the past 52-week period, the stock has been trading in a range of $1.58 to $7.80.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.