Warner Music Says Profit Fell on Costs to Cut Jobs (Update3)
By Don Jeffrey
Nov. 29 (Bloomberg) — Warner Music Group Corp., the recording company of Eric Clapton and Metallica, said fourth- quarter profit dropped 58 percent because of costs to cut jobs amid a drop in compact disc sales.
Net income fell to $5 million, or 3 cents a share, from $12 million, or 8 cents, a year earlier, the New York-based company said today in a statement. Revenue for the quarter ended Sept. 30 rose 1.8 percent to $869 million, beating the $861.5 million average of five analysts’ estimates compiled by Bloomberg.
Warner, whose best-selling act in the quarter was rock band Linkin Park, said digital revenue from downloads and ringtones rose 25 percent to $130 million, representing 15 percent of total sales. The increase helped offset declining CD demand. Reflecting the industrywide drop in CDs, Warner cut 400 jobs this year, resulting in $9 million in costs in the quarter. “The results were generally mixed,” said Tuna Amobi, a stock analyst at Standard & Poor’s in New York. “Digital at 15 percent of revenue shows some progress, but the decline on the physical side is the biggest concern we have.”
Amobi recommends buying the shares and doesn’t own them. Warner Music had tumbled 69 percent this year before today and declined 3 cents to $7.12 at 10:20 in New York Stock Exchange composite trading.
Recorded music sales, which include downloads and ringtones as well as CDs, vinyl and videos, gained less than 1 percent to $736 million in the quarter, led by artists including Nickelback, James Blunt and Linkin Park. With U.S. CD sales down 19 percent industrywide this year, Warner cut distribution costs for the format and reinvested in digital operations.
International recorded music sales fell 6.3 percent, more than expected, Amobi said. “We had a very weak release schedule in the U.K.,” Chief Executive Officer Edgar Bronfman said on a conference call.
Music publishing revenue, which comes from songs used in recordings, movies, ads and video games and on TV, rose 7 percent to $137 million on higher royalties from performances in international markets.
Warner, the third-largest record company in the world, is now the only one of the top four to be publicly traded. During the quarter it abandoned a possible bid for the fourth-largest, EMI Group Ltd., which was acquired by London-based private equity firm Terra Firma Capital Partners Ltd. for $4.9 billion.
The company is also losing one of its biggest artists, Madonna, after more than 20 years. She signed a 10-year deal in October valued at more than $100 million with concert promoter Live Nation Inc. that covers touring, merchandise, videos, TV and films and new recordings. “It would’ve been economically imprudent of us to do that deal,” Bronfman said on the call.
To add new sources of revenue, Warner invested in artist management companies such as Taisuke in Japan and Irving Azoff’s Front Line Management. Yesterday Warner said it is forming a venture with Frank Sinatra’s family to market recordings and videos as well as merchandise bearing his name and likeness.
For the fiscal year ended Sept. 30, Warner Music reported a net loss of $21 million, or 14 cents a share, on revenue of $3.39 billion, a 3.7 percent decline.
November 29th, 2007 at 12:15 pm
@Billz & TyBâ€¦
As far as ghostwriting goes, do you frown on it when it comes to rappers? Is there a real difference between Babyface writing a song that Mariah Carey ends up singing on her album and Eminem writing for Dre?
Also, ghostwriting (in rap) is not just writing a whole rhyme for someone and them spitting it verbatim. Most times the artist is working directly with the ghostwriter to make his/her lyrics come together better. It may be a suggestion on word placement or using a different sentence to say the same thing. Will Smith said he used Nas to help him with his Big Willie album. Whatever it takes not to be wack, I say go for itâ€¦
……whats good Jamz….I see what your saying and agree to some extent, it depends on how much ghostwriting is odne, like did he just help with the hook or some adlibs, maybe made a few suggestions thats whatever and i realize sometimes people get ghostwriting credit for that shit but theres a BIG difference between a singer getting songs ghostwritten and a rapper, mostly because you are listening to a singer because they can sing, thats where there talent lies, in rap the talent is supposed to be in the lyrics, ( obviously some people can ride a beat etter and have better voices for this shit but it’s much easier to teach someone to rap well than to sing well, no matter what I do in life I will not be able to sing worth shit but I could rap if I had some crazy lyrics to spit )
again with singers no one questions cause no one cares but in rap it seems to be about your character and personality as much as anything else, I don’t care about a rapper image I only care how the music sounds but how are you gonna walk around talking like your some dope emcee when someone else writes everything for you, thats some boy band type shit, that means they think you fit a certain ” look ” and they want to use you to get what they want to get across to the fans.
i remember i was in the studio while ODB was hearing songs that royal flush had wrote for him…..and royal flush recorded the whole song…..hook adlibs and everything……royal flush was spittin the song like he was odb too…its was crazy….i dont remember if obd used any of the songs
Digital scales Says:
November 29th, 2007 at 12:47 pm
i remember i was in the studio while ODB was hearing songs that royal flush had wrote for himâ€¦..and royal flush recorded the whole songâ€¦..hook adlibs and everythingâ€¦â€¦royal flush was spittin the song like he was odb tooâ€¦its was crazyâ€¦.i dont remember if obd used any of the songs
…..see now THAT would bother me….I mean there is one reason why you listen to dirty, cause of his wild personality, so why the fuck do I wanna hear him spit what someone else is saying, it might be dope as hell but I wanna hear what the fuck the ninja dirty is saying….
yo ty this was towards the end of his life….i be he didn’t write much on his last album….but word i feel what you saying…it was almost sad to see how retarded odb was at the end….he wasn’t comprehending anything anybody was saying…..he was getting stuck in his own head….
Digital scales Says:
November 29th, 2007 at 12:56 pm
yo ty this was towards the end of his lifeâ€¦.i be he didnâ€™t write much on his last albumâ€¦.but word i feel what you sayingâ€¦it was almost sad to see how retarded odb was at the endâ€¦.he wasnâ€™t comprehending anything anybody was sayingâ€¦..he was getting stuck in his own headâ€¦.
…..yeah I kind of figured that, just cause I hope you werent in the studio for return to the 36 chambers, lmao…and while I don’t blame dirty for doing it cause he obviously wasn’t in any state of mind to be writing and can’t blame him for trying to get paid, but still if I was buying a Dirty album I’m buying it on the strentgh of his wild personality not someone elses imitation of him…
After reading both of your replies I understand your views a lot more. Here is my spin on the whole ghostwriting thing in rap. Basically, I feel that 95% of the rappers that spit are telling us lies and tall tales anyway. Kind of like playing a character in a movie or television show. It’s not like we are reading a page out of their diaries or something, which is very personal and honest. This is nothing but entertainment and the major concern for most artists is the release the best material possible to hopefully make a profit. Not as fake as wrestling, but it’s getting there…
As Too Short once explained, the person he is on his records is nothing like who he in his personal life. He understands what Too Short fans expect in his music and that’s what he gives them. IMO opinion lyrics are just one aspect of a great record. Production, delivery, cadence, flow, etc. play just as much of factor in the overall product as the lyrics do, especially since I know the majority of the stuff they say are lies anyway. I may be a great writer, but I don’t have the voice for rap which leads to a ghostwriting collaboration. Not a crime in my book.
I except ghostwriting in rap because I know it’s going on A LOT more than most rap fans realize. Regardless, I all I want is some great music!