finance
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Would you rather own the rights to Bruce Springsteen’s song catalog or the musical scores to hit Nickelodeon TV shows such as iCarly, Victorious and Henry Danger?
While those tween comedies may not be household names, fans stream them worldwide, and unlike Springsteen’s masters and publishing rights — which Sony bought for $500 million in 2021 — the rights to their scores sold for tens of millions, presenting, for some, an appealing and approachable investment.The Nickelodeon shows’ music is an example of the kinds of deals being done by a new crop of music investment funds that are focused on acquiring the one type of music they know best, often for a much lower price than the deals making headlines.
Funds like Armada Music’s BEAT (focused on dance), Jamar Chess’ Wahoo Music Fund One (Latin), Singapore’s blackx (the Asian music market) and Multimedia Music (film and TV music) have all launched in roughly the last 18 months with similar aims: to exploit their specialized genre knowledge and industry connections to buy rights to songs in one category and earn a return.
The principals of these funds, which have raised between $100 million (BEAT, blackx) and $200 million (Multimedia) from banks and investment firms, say the primary difference between them and funds like Primary Wave and Hipgnosis, which have institutional and private equity backing, is that their success hinges on a lower cost of entry and therefore present less risk.
“It’s a niche within a niche,” says Phil Hope, founder/CEO of Multimedia Music, which recently bought the music income and copyrights to scores from the Nickelodeon shows. “People see that there’s a well-priced opportunity in what we’re doing. Is it as obvious or as sexy as buying a big artist’s catalog? It needs a bit of explaining.”
Each fund faces its own challenges, but in an investment class, where the slowing of streaming growth and high interest rates are prompting greater investor scrutiny, these funds present the next natural step, says Bob Valentine, president of Concord. “We are now at the evolution stage of the investment thesis,” says Valentine, who will become Concord’s CEO in July. “There is still supersize growth in some of these genres — like Latin, dance, EDM. Investment managers are thinking, ‘The cost of capital is going up. Let’s find the genres that are going to outpace that index trend. Then, if the cost of capital goes up, we still outpace it.’ ”
Founded in late 2021 by Hope and James Gibb, Multimedia Music has acquired the rights to dozens of film and TV scores, including James Newton Howard’s catalog (Pretty Woman, Fantastic Beasts and the Hunger Games films), the STX music library catalog (Bad Moms, The Foreigner) and in-demand composers like Tyler Bates (the Guardians of the Galaxy and John Wick franchises, Deadpool 2).Multimedia has raised $200 million in debt and investment from Metropolitan Partners, Pinnacle Financial Partners and others to buy the rights to film and TV music that is reliably played — whether streamed, broadcast or licensed by filmmakers.
“Initially, investors were excited but didn’t understand it. They kept saying, ‘I don’t know who’s going to be streaming film and TV music on Spotify,’ ” Gibb says. “What we’re looking at are the TV shows and films that have longevity so that every time they get played anywhere in the world, we get streaming royalties paid back to us.”
Chess, whose Latin music-focused Wahoo Music Fund One launched in 2022, says he also spends time educating prospective investors. “You’re buying into cultural artifacts and less into a net publisher’s share of now. That’s why it’s a good deal,” says Chess, whose grandfather, Leonard Chess, co-founded Chicago’s legendary Chess Records.
Last year, Wahoo acquired a 50% stake in the publishing and recording catalog of Oro Solido, a classic merengue group, for an undisclosed amount. Chess says he is in talks to acquire two more catalogs that are also considered classics in the Latin genre — a status that makes them marketable for new recordings and sampling by current Latin artists.
But despite the surging popularity of Latin American music — recorded-music revenue grew by nearly 26% in Latin America last year, according to IFPI — Chess says investor interest is still lagging.“We are not competing against a Sony buying [Bad Bunny’s label] Rimas,” says Chess, who is also president of Spirit Music Latino. “There is a wealth of opportunity across the [Latin American] territories, and sometimes lining up investors can be a challenge.”
BEAT Music Fund was launched in April by independent dance music label Armada Music. Its first acquisitions were rights belonging to artists it has ties to, like Detroit techno forefather Kevin Saunderson’s KMS Records and Russian DJ ARTY. BEAT enters the investment space at a time when the global dance music industry grew by 34% to $11.3 billion in revenue in 2022. Its fan base is also growing 10 times faster than hip-hop on TikTok, according to a new report from MIDiA Research.
“Our plan is to invest $100 million in its first two years and increase the investment to at least $500 million in coming years,” says Nadine van Bodegraven, COO for the fund. “Our goal is to announce at least one new deal every month this year.”
The Billboard Global Music Index improved 1.8% to 1,270.57 in the week ending June 9, marking gains in successive weeks and four out of the last six weeks. iHeartMedia was the index leader for the second straight week. Shares of the radio company were up 13.5% to $3.54 a week after rising 30.5%. Thirteen of […]
Universal Music Group plans to raise 750 million euros ($801 million) from the sale of 4.000% senior unsecured notes due 2031, the company announced on Tuesday (June 6). The notes will be issued from UMG’s Euro Medium Term Note program and listed on Euronext Amsterdam. The proceeds will be used to refinance existing debt and […]
Institutional investors are increasingly using a new playbook when it comes to sinking money into the music industry. Instead of buying individual artist and songwriter rights, some firms have shifted to acquiring stakes in or outright ownership of operational music companies.
One of the newest players approaching the market in this way is Firebird Music Holdings, a 17-month-old enterprise backed by institutional money that is building out a multi-sector music company that includes labels and publishing with an emphasis on management and label services.
Michigan Retirement Systems first invested in Concord back in 2010, and more recently, Brookfield Asset Management and Oaktree Capital Management have placed bets on Primary Wave, to name just two, but Firebird co-founder and executive chairman Nat Zilkha is taking a different approach to the companies it’s rolling up.
“We are maintaining separate brands of the companies that we invest in,” Zilkha says. “We allow their creative process to remain very independent from us; but we’re giving those companies an ecosystem that helps them create opportunities for themselves and the artists that they work with. They can now access really sophisticated resources, both in terms of capital and expertise.”
Zilkha, a former partner at KKR and the chairman of Gibson Brands (after leading the guitar manufacturer out of bankruptcy) formed Firebird with Nathan Hubbard, the former CEO of Ticketmaster and e-commerce company MusicToday.
So far Firebird has acquired stakes in Coran Capshaw’s Red Light Management, which represents approximately 400 artists, including Dave Matthews Band, Phish, Brandi Carlile, Chris Stapleton, and, according to sources, recently signed Mumford & Sons in a co-management deal with Split Second Management; Mick Management, which specializes in independent singer-songwriters such as Maggie Rogers and Hamilton Leithauser; Transgressive Records, the home of Arlo Parks and Alvvays; Defected Records, a U.K.-based electronic music label; Ashley Gorely’s Tape Room and U.K.-based One Two Many Music publishing outfits and the Latin entertainment company Ntertain, which was co-founded by former Sony Music Entertainment chairman/CEO Tommy Mottola. Firebird has also backed two start-ups, dance label EasierSaid, and country label Leo33, the latter of which is in partnership with Capshaw’s Red Light Ventures.
Zilkha says that Firebird tends to acquire a majority stake in the companies it brings under its umbrella, using a combination of cash and Firebird stock, thus requiring its new partners to have a stake in Firebird’s overall business approach. Industry sources say that Firebird has a minority stake in Red Light.
While Zilkha has a lot to say about Firebird’s operating strategy, he is tightlipped when asked about the financial underpinnings of the company. He will say only that Firebird has so far invested “several hundred million dollars acquiring stakes in companies; and that the company has access to over $1 billion in equity. Sources tell Billboard that the Raine Group is lead investor in Firebird, which is also backed by KKR Partners, Goldman Sachs Asset Management, and other institutional investors and high net-worth individuals.
Zilkha says he and his partners are building Firebird to respond to a changing industry in which artists are moving away from label structures to partner with companies that can provide label services and artist development, as well as help them tap into additional income streams, such as publishing, merchandising, branding, and live events.
He uses the word “holistic” to describe the company’s approach and says its first investment was Capshaw’s Red Light because that company was already pursuing a strategy that aligned with Firebird’s strategy. Capshaw founded the direct-to-consumer e-commerce company MusicToday, which sells vinyl, CDs and merch direct-to-consumer, sold it to Live Nation in 2006, then reacquired it in 2017. Hubbard was CEO of the company from 2002 and moved to Live Nation and then Ticketmaster with the sale.
“Firebird has built an artist friendly platform,” Capshaw says of his decision to throw in with the company. “We’re like-minded in focusing on the success of artists over the long run of their careers, including enhancing the value of their IP from music to licensing, and providing additional resources like audience insights, community building and marketing. There was a need for more artist-friendly options out there, and our partnership with Firebird is helping to fill that need. I’m impressed by the team that they’re building.”
Zilkha spoke with Billboard about Firebird’s launch and where it’s headed.
How did you and your partners come together to form Firebird, and what is your investment approach?
It started in the fall of 1994 when I was in college and heard guitar coming from a dorm room. I poked my head and there’s Nathan Hubbard playing guitar. We bonded over a shared passion for music. Both of us initially tried to start our careers by pursuing music from a creative perspective. Ultimately, we came back together 25 or so years later, initially around Gibson. And that’s really how we began looking at the music industry which we believe is in transition. It led us to believe there was a real opportunity to build a better kind of partner for music artists.
Considering your background, I would refer to you as an institutional investor, even if Firebird is not using the traditional institutional investor approach of buying stakes in songs. You are acquiring stakes in companies.
There are a few things that differentiate what we’re doing versus what most institutional capital flooding into music is doing. First, we’re not a fund. We’re building an operating company that acts in a holistic, integrated, coordinated way; and where the individual components mean more together than they would apart. We are trying to build a company that solves specific problems in the marketplace.
What problems are you trying to solve and how else are you different from other institutional money?
The world of music, technology and direct to consumer commerce have evolved very substantially over the last five to 10 years; and the rate of change continues to accelerate. But many of the incumbent partners for artists have not caught up. We think there’s an opportunity to create a new kind of partner for artists, one that is fully aligned across everything they do. One that has sophisticated capabilities to create content and provide access to capital. What we are doing is long-term and isn’t oriented toward worrying about a near term return on investment. The question we are answering for the entrepreneurs is: How do you build value for your artists and ultimately for the company?
But you seem to have started in an institutional investment kind of way. There’s a form D filed with the SEC in November 2021 that says Firebird raised $120 million to make an acquisition by selling equity.
Those numbers in the filing are probably stale. We’ve got access to over $1 billion of capital right now. We are not raising capital for funding. We’re raising capital for an operating vehicle. Some of that capital is being used to invest in companies, but some of that capital is being used to build out organic capabilities like our own distribution structure, where we’ve got over 30 people at Firebird. They’re not investment people; they are digital marketing, data analytics, and brand partnerships. We also helped start two other businesses from scratch. There’s nothing about it that’s like a fund.
Nat Zilkha
Courtesy of Firebird
There are other efforts in the marketplace that have built out label services and distribution companies, like The Orchard, BMG, Believe and DistroKid. How are you going to differentiate yourself from them?
A lot of the distribution businesses that exist currently are focused on the long tail to make distribution accessible to every artist irrespective of their scale. We’re really focused on premium artists. That’s one area of differentiation. The second is we view label services not as a stand-alone but as something you use in conjunction with how you activate artist across all different forms of media.
What do you mean by that?
With our label partners and their artists, we want to participate across a much broader range of all the activities artists participate in by having a horizontal relationship with them so that we can be more forward leaning in terms of how we invest in artists’ careers. Most of the music industry is stuck in silos where you’re an artist’s label, or you’re their manager, or you’re their publisher, or you’re their agent or you’re their merch partner. That under optimizes the investment behind an artist’s career. There isn’t a single best-in-class consumer brand that operates with separate economic sleeves in the way it interacts with its fans and customers.
Instead of silos we are looking at how intentional, coordinated, thoughtful marketing and brand building behind an artist can be optimized, which allows us to invest heavily in any one area that might benefit the whole ecosystem. So, you may invest in recording music to help activate the tour activity, which helps to sell the merch; and getting the right kind of synch can activate your streaming and make publishing much more valuable. So it might be that we lose money on the distribution or recorded music, but that’s okay, because we’re partnering with the artist in a lot of other places where she or he may be reaching their fans.
What kind of deals are you doing with companies?
It depends on the company and the situation. There are examples where we’ve done minority deals, but most of what we’ve done is buy majority stakes. That comes back to this objective to not have standalone, separate investments, but to have an ecosystem where people are benefiting from other companies that are part of a Firebird family. We very passionately believe that in periods of significant change, like you’re seeing in the music industry today, you want to harness entrepreneurship. You don’t want to be a big, slow, bureaucratic corporate entity. We’re trying to bring the best of what a big company can offer, which is expertise, resources, and capital, but marry that with the best of what entrepreneurs can do—make quick decisions, with lot of creativity and have different approaches for different genres, different regions, and different types of companies—to get the best of both worlds.
What was the rationale for your investment in Transgressive Records.
The hallmark of Transgressive is music that moves culture. Arlo Parks is a great example of that, and so is Mykki Blanco. What we love about Transgressive is they have exceptional A&R and artist development people. They have signed artists who they have nurtured over multi-year periods, with very fair and transparent deals. They are true advocates for their artists.
What does Firebird bring to the table for Transgressive?
We can help them supercharge what they’re doing by bringing all the resources that exist at an internationally focused company as opposed to the resources they have in the United Kingdom. It means having access to more capital to help grow the interests of their artist, and to invest in advances to sign bigger artists who appreciate the aesthetic and the integrity of Transgressive. That’s a perfect example of where one plus one equals three.
Where do the acquisitions of publishing companies Tape Room and One Two Many fit into the equation?
Tape Room is an example of where we will buy catalog. We purchased some of their existing catalogs; and then we created a go-forward joint venture with Ashley Gorley. Coran is also involved in that deal so it’s a three-way partnership to create songs and sign writers. What you won’t see is for us to go and compete with KKR or Primary Wave or anybody else and buy straight catalog without a frontline component, which means that we don’t have something we can build on.
Can you give me an example of the entrepreneurial cross-pollination you’re talking about?
Transgressive, Defected, and One Two Many each do different things and have different genre focuses, but their teams are talking to each other all the time. One Two Many is extremely good at synch, so they’ve been working with Transgressive and Defected on synch strategies. These are separate entities within Firebird that maintain their separate brands, but they’re finding ways to work together where one company’s areas of expertise can be helpful laterally.
With Ntertain, you have a Latin component.
Ntertain is [Neon16 label co-founder] Lex Borrero. When we think about what Firebird is trying to accomplish in how you tell stories around talent, move culture, and create brands around artists, Ntertain is already doing a great job of that within the Latin space. They’re doing it for music, film, and television. They just wrapped up a [Latin music competition] show La Firma, which was very successful on Netflx. They’ve got a management company; they’ve got recorded music; they have publishing, and they’re doing really interesting things around film and TV. In many ways, it’s already the Firebird model focused on Latin music and Latin culture. We think Lex is a superstar and that’s a partnership that we’re really excited about.
What do you mean by moving culture?
We’re focused on any genre where people identify with it beyond just a single song or a single artist. One of the things we love about Red Light is its strength within country music. As you’re seeing from things like Yellowstone, it’s not just a genre, it’s a lifestyle. There’s a lot we can do around that partnership with Red Light and you’re already seeing us start to do that with Leo 33, with Tape Room. And there’s more to come on that front. The same thing is true with Latin culture and Ntertain, which is moving music, film, entertainment. The same is true with dance music. There’s a word we use: tribes. Tribes identify strongly with these genres. In dance music you have a fan base that identifies with Defected, you will see that it’s not only a label, but we have live events in Ibiza, and in Croatia. We’re going to be doing more in New York, Chicago and Vegas — bringing fans together, giving them something special and giving the Defected artists an opportunity to access those fans.
You looked at some specific deals that didn’t happen, such as Glassnote and Mom + Pop. What happened there?
We’ve looked at literally hundreds of transactions. There are lots of reasons deals don’t happen — you just can’t come to an agreement on price; or an agreement structure. Does the team involved in a potential deal really buy into our strategy? Every deal we’ve made, the company we have invested in has taken Firebird stock as part of the deal. We want people who believe in what we’re doing; to be a part of a family; to be a part of this broader strategy. If you want all that, than let’s talk. But if it’s just about dollars, then that’s the wrong partner. If you just want capital, that’s fine but go talk to a private equity firm. Glassnote and Mom + Pop are companies we have enormous respect for; they are leaders in the industry. I’ve nothing but great things to say about those organizations.
Is there any way that you can achieve economies of scale without interrupting the formulas each individual brand has?
That’s where Nathan and I spend a lot of our time strategically: how to balance all the resources to make them successful at whatever scale they can reach without interrupting the very thing that makes them special.
For any of these individual companies to spend the kind of money that we’re spending on our data analytics team would be cost prohibitive. But we can spread that cost across all of the different companies. That’s really where we’re trying to help.
What we do say is, what resources do you need to do five shows instead of one show? Or what would your label do if you had access to $25 million more in capital next year to grow your business? How do we take some of what we’ve learned with Red Light, which is the largest and most successful management company in the world, to help you scale your management business at Ntertain? We’re not going to tell Lex who we think the next great Latin artist is going to be. We’re going to let the creatives we’ve invested in be creative and entrepreneurial. We’ll provide the infrastructure to turn all of that into a world class business.
Reservoir Media on Wednesday reported that revenues grew by 13% during its most recent fiscal year, as investments in record labels and artists rights in the Middle East added to its growth from acquiring works by North American artists like Louis Prima and Dion.
Reservoir reported $122.3 million in revenue for their fiscal year 2023 ending March 31, driven by a 9% increase in music publishing revenue and an 18% increase in recorded music revenue, both helped by the digital release of De La Soul‘s first six studio albums in early March. The legendary rap trio’s catalog netted 12.5 million U.S. song streams and sold 28,000 albums in its first week streaming, according to Luminate.
Founded in 2007, Reservoir said it grew by 8% organically and finished at the top-end of its financial targets in fiscal 2023 despite a 1%-decline in fourth quarter revenue driven by lower performance, sync and other revenues in its music publishing division, which suffered from a tough comparison to a strong year-ago quarter.
Fourth quarter music publishing revenue of $23.2 million was off 8% from the year-ago quarter when Reservoir benefitted from a one-off event in Dubai. Recorded music revenue in the quarter rose 10% to $10.8 million, in part due to the outsized performance of De la Soul’s catalog.
Reservoir has made investing in emerging markets a key prong of its growth and diversification strategy, and on a call with analysts, Reservoir CEO Golnar Khosrowshahi referred to it as “highly important to our overall strategy … as we work to become the largest holder of Arabic music copyrights.”
With its partner PopArabia, an independent music company headquartered in the United Arab Emirates, Reservoir has acquired stakes in the Egyptian label 100COPIES, the Lebanese label and music publisher Voice of Beirut and signed publishing deals with Egypt’s Mohamed Ramadan, Lebanon’s Zeid Hamdan and Moroccan hip-hop star 7liwa. In January, Reservoir announced signed publishing deals for the catalogs and future works of Indian rappers MC Altaf and D’Evil and the producer Stunnah Beatz.
Funds like Reservoir also grow inorganically through acquisitions of song catalogs, and over its past fiscal year it acquired rights by “the Saxophone Colossus” Sonny Rollins and Dion, best known for “Runaround Sue” and “The Wanderer.”
Reservoir’s chief financial officer Jim Heindlmeyer told analysts that the company expects 6% revenue growth f 9% growth for adjusted earnings before interest, tax, depreciation and amortization for this fiscal year, compared to midpoint of its 2023 guidance ranges.
“Our outlook includes strong top-line growth expectations and margin expansion across our business segments as we continue to see a positive impact on profitability from our strategic acquisitions and benefit from secular tailwinds across the music industry,” Heindlemeyer said.
Stock markets ended the week on a positive note as investors showed optimism believing that Congress can negotiate a deal to increase the nation’s debt limit and avoid a historic default. The S&P 500 increased 1.3% to $4,205.45, up 0.3% on the week, while the Nasdaq composite climbed 2.2% on Friday (May 26) to finish […]
It was a good week for music stocks overall and an even better week for concert promoters, who made the biggest gains on the Billboard Global Music Index ahead of the blockbuster summer touring season.
The index rose 4.4% to 1,256.06 this week, with 15 of the 21 stocks ending in positive territory. It was led by concert promoter Madison Square Garden Entertainment’s (MSGE) 19.4% gain amidst multiple news items that influenced the share price. On Wednesday (May 17), Guggenheim initiated coverage of MSGE with a buy rating, while a report claimed that MSG Entertainment may sell the theater at Madison Square Garden for about $1 billion. On Thursday, the company released first-quarter results that showed a 4% increase in revenue to $201 million, though the company’s executives did not comment on the report during Thursday’s earnings call.
Shares of German promoter CTS Eventim also made big gains, rising 9.2% to 64.30 euros ($68.61). On Thursday, the company’s first-quarter earnings showed a 163% revenue jump to 366.2 million euros ($396 million) — beating pre-pandemic levels from the first quarter of 2019 by 29.5%. Year-to-date, CTS Eventim has sold 18 million tickets online, a 58% increase from the prior-year period. Meanwhile, Live Nation, the world’s largest concert promoter, improved 8.4% to $84.73 and is now up 21.5% year to date. Sphere Entertainment Co., which spun off MSG Entertainment in April, improved 6.1% to $23.61.
The S&P 500 improved 1.6% to 4,191.98 and the Nasdaq composite rose 3% to 12,657.90. The U.K.’s FTSE 100 index was unchanged at 7,756.87, while South Korea’s KOSPI composite index rose 2.5% to 2,537.79.
K-pop companies continued their hot streak this week. Two companies not in the Billboard Global Music Index, JYP Entertainment and YG Entertainment, gained 22.7% and 17.8%, respectively. Year-to-date, shares of JYP Entertainment, home to Stray Kids and Twice, have gained 70.6%. Shares of YG Entertainment, whose roster includes recent Coachella headliner Blackpink, are up 109.8% in 2023. Shares of HYBE dropped slightly by 0.4% but have gained 62% year to date. Likewise, shares of SM Entertainment gained only 1.1% this week but have grown 40% this year.
The New York Stock Exchange (NYSE) has notified radio and podcast giant Audacy of its plan to delist the company’s Class A common stock from the exchange over its consistently low share price, Audacy announced Tuesday (May 16).
According to a press release, “the NYSE will consider commencing delisting procedures when a company’s listed securities experience an abnormally low selling price.” The NYSE abruptly halted trading of Audacy’s stock at 2 p.m. ET on Tuesday, when shares were trading for $.094 — down slightly from $.10 at the start of the day. The company’s share price is down nearly 63% since the beginning of the year.
NYSE rules require a minimum average closing price of $1 per share over 30 consecutive trading days, but Audacy’s share price hasn’t traded above that threshold since July 5, 2022.
The NYSE has applied to the Securities and Exchange Commission (SEC) to delist Audacy’s stock. While that process plays out, trading in the company’s common stock on the exchange will be suspended, though it can still be traded over the counter.
Audacy signaled its intent to appeal the delisting by filing a written request, which it is required to do within 10 days of receiving the delisting notice. If that appeal is successful, the stock may resume trading on the NYSE.
In a statement, Audacy president/CEO David J. Field said that while the company is “disappointed” in the NYSE’s decision, he is “hopeful” that Audacy stock will start trading on the exchange again later this year “as we execute our action plans which include a reverse stock split to satisfy NYSE rules, the continued execution of our liability management plans and working with our financial advisors to refinance our debt.”
Field also stated that the company is confident it “will benefit from a general market recovery and will be able to capitalize on our investments in strategic transformation that position Audacy well for the future.”
Radio companies have been slammed by an advertising slowdown since the second half of 2022, and Audacy has been particularly hard-hit. In its first-quarter earnings released Wednesday (May 10), the company’s net revenue of $259.6 million was down 5.7% year-over-year, while cash operating expenses were up 3%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $3.5 million, compared to $26 million in the first quarter of 2022.
On a May 10 earnings call, Audacy CFO Richard Schmaeling noted that the company’s network advertising revenue fell 6% year-over-year due to inflation and rising interest rates (though its podcast advertising revenue was up 14%). He warned that advertising demand has “further softened” since the start of 2023 and added that “it could get worse before it gets better,” noting that the company “is continuing to work to accelerate revenue growth, develop and execute added cost reduction actions and to sell other noncore assets.”
“However,” Schmaeling continued, “these actions may not be sufficient to fully mitigate the impact of potential further advertising weakness.”
Cumulus Media’s share price climbed 11.9% to $3.30 on Friday (May 12) after the company announced it commenced a “modified Dutch auction” tender offer to purchase up to $10 million of shares of its common stock at up to $3.25 per share. That news led to a 19.1% improvement this week and made Cumulus, the […]
Warner Music Group reported quarterly revenues grew 1.7% to $1.399 billion (4.6% in constant currency) as strong revenues from its music publishing revenue helped offset a slow quarter for recorded music releases.
WMG, the music industry’s third largest major label, reported revenue from its recorded music revenue was effectively flat at $1.143 billion for the second fiscal quarter ending March 31, compared to $1.147 billion in the year ago quarter. (In constant currency, recorded music revenue rose 2.5%.) Streaming revenue in the quarter was down 0.4% (or, in constant currency 2.2% higher) on fewer releases and a slowdown in ad-supported revenue due to macroeconomic uncertainty.
In contrast, music publishing revenue rose 12% to $257 million from $230 million a year ago.
“While our publishing was best in class, we underperformed in recorded music,” Robert Kyncl, chief executive officer, said on a conference call.
WMG executives have said throughout this fiscal year that the label’s major releases of the year would come in the second half, and on the call, they stressed they are already seeing improvement with the late-April releases of Jack Harlow’s Jackman., Tïesto’s Drive and Ed Sheeran’s Subtract, released in early May.
“Our release slate was a little lighter in the first two quarters of the year and will be weighted to (the third quarter) and (the fourth quarter),” Warner chief financial officer Eric Levin said, flagging releases expected from Dua Lipa with her Barbie soundtrack track, among others.
“We absolutely expect this to improve our results in recorded music streaming in the second half of the year.”
Key Points From WMG’s Q2:
WMG’s revenues grew 1.7% (or 4.6% in constant currency, a measure that standardizes foreign exchange fluctuations) to $1.399 billion
Digital revenue increased 1.2% (or 3.7% in constant currency) to
Streaming revenue increased 1.9% (or 4.5% in constant currency) on growth in music publishing streaming
Music publishing revenue increased 12%, or 14.2% in constant currency
Music publishing streaming revenue grew 16.4% (18.3% in constant currency)
Recorded music streaming revenue decreased 0.4% (an increase of 2.2% in constant currency) on a lighter release schedule, foreign exchange currency fluctuations and slowdown in ad-supported revenue.
Net income was $37 million this quarter, down 60% from $92 million one year ago, primarily driven by the negative impact of currency fluctuations on the company’s Euro-denominated debt. Adjusted net income up 5% to $116 million from $111 million a year ago.
Operating income was $124 million, down 25% from $166 million a year ago, with adjusted operating income up 10% to $203 million from $185 million.
Adjusted net income of $116 million was up 5% from $111 million in the year ago quarter.