2024-11-22 03:03:58 :
(Bloomberg) — Warner Music Group Corp. shares fell the most in 18 months after the company reported disappointing fourth-quarter results and said streaming growth was stalling.
The record company reported net profit of $48 million for the three months ended September 30, down 69% from the same period last year. Revenue rose 2.8% to $1.63 billion, beating analysts’ expectations of $1.59 billion.
Recorded music streaming revenue grew 2.1% in the quarter, a sharp slowdown from the 9.6% growth in the same period last year and lower than some analysts’ expectations.
The stock fell 11% to $29.96 in New York after the results were released, but recovered most of its losses later in the day. Down 5.9% at 2:53 p.m.
Warner Music and its larger rival Universal Music Group have both been grappling with investor concerns about slowing growth in streaming.
UMG stock took a hit in July after second-quarter results showed subscription revenue decelerating due to slowing subscriber growth on some platforms and Meta Platforms Inc. stopping licensing premium music videos to Facebook. Apple and Amazon aren’t signing many new customers either. Investors have known the streaming boom was over for some time, but seeing the impact in the numbers has alarmed Wall Street.
Warner Music also said that the termination of its music distribution agreement with BMG will affect its financial results next year. In September, BMG, owned by Germany’s Bertelsmann, said it would handle its digital distribution business in-house, ending a nearly eight-year agreement with WMG.
Warner Music Group Chief Financial Officer Bryan Castellani said that in the first quarter “streaming growth will be impacted by the removal of BMG Digital Distribution, prior year digital license renewals and Spotify price increases” Call with analysts to discuss results. “Our digital distribution relationship with BMG, which was originally planned to end at the end of FY24, will now continue through FY25.” He said this will impact first-quarter revenue by approximately $16 million.
The company said fourth-quarter recorded music revenue rose 3.6% to $1.34 billion, but the end of a distribution agreement with BMG caused revenue to be $25 million lower than the same period last year. A renewal with one of the company’s digital partners also had an “adverse impact” of $4 million on recorded music streaming revenue.
Music publishing revenue fell 1% to $295 million, missing analysts’ expectations of $313 million.
(Update on streaming revenue in third paragraph.)
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