Warner Music Profits Surge

Despite a 4 percent drop in revenue, Warner Music Group‘s earnings soared during the first fiscal quarter.

Warner said its earnings increased 92 percent to $69 million, or 46 cents per share, during the October-December period, up from $36 million, or 31 cents a share, a year ago. Revenue dropped to $1.04 billion from $1.09 billion.

“This report demonstrates that we are transforming our vision into results,” CEO Edgar Bronfman Jr. said in a statement. “Our intense focus on and investment in the digital music business yielded dramatic growth in digital revenue, which was a major contributor.”

Bronfman said record-high sales of digital music players and gift cards during the holiday season drove digital sales.

Warner’s revenue from its recorded music business fell 2 percent to $920 million. Digital music made up 7 percent of the total and grew 36 percent from the fourth fiscal quarter of 2005.

“We’ve expanded our digital leadership position,” Bronfman told Wall Street analysts during a conference. “For the December quarter, our digital album share in the U.S. of 23 percent is 6 percentage points above our physical album share, a greater share differential than any of our competitors.”

Bronfman also noted the company’s 1.1 percent rise in U.S. album market share from a year ago.

“We’re particularly proud that Warner Bros. was the No. 1 selling label in the United States,” he said. “We have gained album unit share year-over-year in four out of the top five musical genres.”

Big sellers in the quarter include Madonna, Enya, James Blunt, Green Day, and Notorious B.I.G.