WMG POSTS REVENUE GROWTH IN Q3

Growth in Recorded Music revenue and artist services and expanded-rights revenue helped Warner Music Group post a 14.2% growth in revenue of $811m for the third quarter of 2016. Operating income was $45 million compared to $23 million in the prior-year quarter.

The company’s net loss was $7m, a dramatic improvement over Q3 2015’s $43m. WMG attributed it to an increase in Operating Income Before Depreciation and Amortization as well as a gain on asset sales and a currency-related gain on the company’s Euro-denominated debt.

“Five years after Access Industries’ acquisition of Warner Music Group, the company is growing revenue, OIBDA and market share,” Warner Music Group CEO Stephen Cooper said. “Our results underscore this momentum, driven by exceptional music from our artists and songwriters, our expanded global reach and strong leadership from our team around the world. With our recorded music streaming revenue now approaching double the size of our download revenue, and still growing fast, we are on course for another excellent year.”

Recorded Music operating income was $64m, up from $43m in the prior-year quarter, while Music Publishing revenue rose 8.9% (or 10.7% in constant currency) to $134m. Digital revenue represented 47% of total revenue, compared to 44.2% in the prior-year quarter, a growth attributed to streaming.

“Streaming revenue for the quarter was about double the size of download revenue, and was meaningfully larger than physical revenue,” Cooper said in a call with investors. He did not give specific numbers.

The company saw declines in Recorded Music licensing revenue, which were primarily related to exchange rates, and in Music Publishing mechanical revenue, which reflect a continuing shift to digital. Revenue grew in the U.S., Europe, Asia and Latin America.

As of 6/30, the company reported a cash balance of $345m, total debt of $2.9b and net debt (total long-term debt, including the current portion, minus cash) of $2.56b.

“Our cash flow has been strong,” WMG EVP and CFO Eric Levin said. “As a result, we have continued to make strides optimizing our capital structure, paying down $175 million in debt so far this year and successfully refinancing a portion of our term loan.”