Warner Music Posts $17 Million Quarterly Loss

Despite a small increase in digital revenue Warner Music Group posted a $17 million loss or $.11 per diluted share for the 1st quarter of its fiscal year which ended December 31st.

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  • Total revenue of $918 million increased 3% from the prior-year quarter, and declined 2% on a constant-currency basis.
  • Digital revenue was $184 million, or 20% of total revenue, flat sequentially from the fourth quarter of fiscal 2009, and up 8% from $171 million in the prior-year quarter.  
  • On a constant-currency basis, digital revenue grew 4% sequentially and was up 5% from the prior-year quarter.
  • Operating income grew 15% to $47 million compared to $41 million in the prior-year quarter.
  • Operating income before depreciation and amortization (OIBDA) was up 5% to $112 million from $107 million in the prior-year quarter.
  • Net loss was ($0.11) per diluted share compared to net income of $0.15 per diluted share in the prior-year quarter. The prior-year quarter included a gain of $0.24 per diluted share related to the sale of WMG's investment in Front Line Management.
  • Free Cash Flow (cash flow from operations less capital expenditures and cash paid or received for investments) was negative $44 million, compared to positive $160 million in the comparable fiscal 2009 quarter, which included $123 million from the sale of the company's Front Line Management stake.
  • Unlevered After-Tax Cash Flow (defined as Free Cash Flow excluding cash interest paid) was $37 million, compared to $205 million in the comparable fiscal 2009 quarter, which included $123 million from the sale of Front Line.
"We are pleased to have delivered stable revenue and OIBDA in our core Recorded Music and Music Publishing businesses despite ongoing recorded music industry pressures and macroeconomic headwinds," said Edgar Bronfman, Jr., WMG Chairman and CEO said in statement released with the SEC fiiling. "Our goals remain focused on delivering strong returns on A&R investments while we develop new business models, diversify our revenue mix and fortify our digital leadership position."

"As our stable margins show, we carefully manage our costs and regularly work to adjust our business in order to minimize the impact of a transitioning recorded music market," Steven Macri, Warner Music EVP and CFO, added. "Similar to last year, we expect our release schedule in fiscal year 2010 to be back-end weighted."

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