Earnings: Warner Music Narrows Loss; Digital Revenue Up Four-Fold

Warner Music’s FY05/FY4Q05 earning reports add a few more signs to read for those trying to determine the actual value of digital downloads to music industry profits. Digital revenue of $53 million made up 6 percent of total revenue for FY4Q05, up 20 percent from the previous quarter. WMG posted a net loss of $30
million for the quarter ending Sept. 30, considerably better than the loss of $137 million in the same quarter last year; revenue rose 13 percent to $905 million.
In its first full fiscal year as a public company, WMG lost $169 million compared to $1.4 billion for FY2004.
Warner Music Chairman and CEO Edgar Bronfman credits digital as one the prime drivers: “Not only did annual digital revenue rise more than four-fold year-over-year to represent 6 percent of our fourth-quarter revenue, but we are also proud to report that for our 2005 fiscal year the absolute growth in digital revenue outpaced the absolute decline in physical revenue for our U.S. Recorded Music business.” Earnings release |
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Anthony Noto, analyst, Goldman Sachs (via Bloomberg): The “results reinforce our view that Warner Music can drive sustainable growth by leveraging the digital transformation and more efficiently running the music business.” WMG beat Glodman’s estimate by 13 percent.

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