PUBLISHING PUMPS UP WMG'S QUARTER
Warner Music Group’s music-publishing division posted double-digit increases in the first three months of 2023, while the recorded-music unit saw a small rise over the previous year’s numbers.
Overall, WMG revenue was up 4.6% in constant currency to $1.4b; streaming revenue—$915m—drove the numbers up, whereas foreign-currency exchange rates had a negative impact. Decreases in operating income, OIBDA and OIBDA margin were primarily due to $41m in severance costs related to the restructuring plan announced in the quarter and expenses related to the departure of previous CEO Steve Cooper and the planned departure of CFO Eric Levin.
The publishing unit was the quarter’s shining star as revenue increased 14.7% in constant currency to $257m.
Streaming revenue increased 18.3% in constant currency to $142m. Performance revenue increased due to the timing of payments from collection societies and continued recovery from COVID-19 disruption. Operating margin increased 3.7 percentage points to 20.2%.
“With continued momentum in music publishing and a more robust schedule that includes the return of worldwide superstars and new artists breaking globally, we are optimistic about the second half of the year,” said WMG CEO Robert Kyncl. “As the music ecosystem continues to morph and the use cases multiply, it only increases conviction in our tech-enabled strategy. In a highly proactive, fiscally responsible way, we're investing in the artists, songwriters, team and technology that will deliver continued growth and long-term success.”
Recorded-music revenue was up 2.5% in constant currency to $1.14b. Streaming revenue of $773m reflected “a lighter release schedule and a market-related slowdown in ad-supported revenue,” the company said. Licensing revenue was up 27.3% in constant currency. Physical revenue was relatively flat.
Major sellers in the quarter, which is Q2 in WMG’s fiscal 2023, included Michael Bublé, Ed Sheeran, Linkin Park, Zach Bryan and Dua Lipa.
In a call with analysts, Kyncl attributed Recorded Music’s financial results to a release schedule that was “less robust than normal.” He said the labels now have a “better cadence of releases,” pointing to early results from new albums by Ed Sheeran, Tiësto and Jack Harlow and non-U.S. artists posting strong streaming numbers on U.S. services. He singled out upcoming albums from David Guetta, Lil Uzi Vert, Kelly Clarkson, Bailey Zimmerman and others as reasons to be optimistic about WMG’s future.
Said Levin, “While macroeconomic, currency and release-slate headwinds continued to impact our revenue this quarter, our fiscal discipline enabled us to deliver solid adjusted OIBDA growth and margin expansion. As we look to the future, we'll combine A&R and marketing excellence with tech innovation to achieve greater efficiency, scale and growth.”
