Warner Music 1Q loss expands on debt charges
NEW YORK (AP) — Warner Music Group Corp. said Thursday that its loss expanded in the first quarter as it booked charges for refinancing its debt and its revenue declined slightly.
The results were released a week after Warner said it plans to purchase Parlophone — the label of acts like Coldplay, David Guetta and Radiohead — for $765 million from Universal Music by the middle of the year.
The net loss in the three months to Dec. 31 came to $80 million, bigger than the loss of $26 million in the same period a year earlier.
The quarter's results suffered from an $83 million loss on the extinguishment of debt. There was no such charge a year earlier.
Revenue fell 1 percent to $769 million from $775 million a year ago.
Sales of compact discs and other physical formats declined 12 percent to $300 million, but digital music sales rose 16 percent to $237 million. Both figures exclude the impact of currency movements.
Digital revenue accounted for 33 percent of total revenue, up from 28 percent a year ago.
CEO Stephen Cooper said Warner will pay for the acquisition of Parlophone with a new term loan. The new debt will not increase the ratio of debt to earnings for the combined entity, he said.
Cooper called the deal a unique opportunity "to combine forces with legendary record labels and artists" while "maintaining our commitment to financial discipline."
Warner Music is no longer a publicly traded company since it was taken private by billionaire Len Blavatnik's Access Industries for about $1.3 billion in July 2011. It still reports its earnings publicly because it has publicly traded debt.