Bulldog buy bites WMG
(Daily Variety Via Thomson Dialog NewsEdge)
Warner Music Group swung to a $16 million loss last quarter from $18 million in profit the year before on a hefty one-time charge for shuttered subsid Bulldog Music.
The company, run by Edgar Bronfman Jr., said the hit from Bulldog, an entertainment services and high-end concert promotion biz, was about $18 million. Warner acquired Bulldog in May.
Bronfman said during a conference call with investors that WMG was "obviously disappointed" with Bulldog. But, he added, that the company's M&A track record "is a strong one" and not all deals "can be a home run."
Still, investors weren't pleased by the numbers. WMG shares, which have been volatile of late, closed down more than 20% Wednesday at $6.94.
The group's total sales for its first quarter ended in December rose nearly 7% to $989 million. Recorded music sales grew 6.3% to $850 million, while revenue at music publisher Warner/Chappell rose 8% to $144 million.
Worldwide digital music sales grew 42% to $132 million --- or 15.5% of total recorded music revenue. In the U.S., digital sales totaled $89 million.
Warner said its domestic recorded music sales grew more than10% to $400 million, led in part by strong holiday sales. Josh Groban's Christmas album, "Noel," was the nation's best-selling CD last year. Company also had strong sellers in a Led Zeppelin hits package and albums from Michael Buble, Kobukuro and James Blunt.
In a sign of the wide ripple effects of the writers strike, Bronfman noted that the work stoppage has hurt WMG's music synchronization biz, which licenses music for TV and film.
WMG acknowledged that its revenue was inflated by exchange rate considerations as a weak dollar boosted overseas sale figures. On a constant currency basis, the company said international recorded music revenue fell 6.6%.
WMG, and the rest of the music biz, continues to face pressure as consumers shift from what WMG called "physical recorded music" to new forms of digital music.
Last year "was a challenging year for the recorded music industry...We recognize that there remains much to be accomplished and are working toward translating these gains into enhanced value for shareholders," Bronfman said. He said the changes in the industry are pushing the company to forge closer bonds with artists in every aspect of their business, from music and marketing to sponsorships, fan clubs, tours and management. He said Warner will focus on modest-sized acquisitions that fit into that strategy.
Warner's labels include Warner Bros., Atlantic, Bad Boy, Nonesuch, Reprise and Rhino.
Copyright ? 2008 Reed Business Information - US
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