Sony Music, Warner Music’s Q4 Revenues Rise By Double Digits On Streaming Gains

Warner Music Group – Warner Music Group

Sony Music and Warner Music Group, two of the three major music companies, are finding life after the download. Both companies’ earnings for the fourth quarter of calendar year 2017 were driven by gains in streaming services such as Spotify, Apple Music, and, in the United States, Pandora.

Sony’s revenue grew 22 percent $1.93 billion in its fiscal third quarter and 25 percent in the first three quarters of its fiscal year. (Sony’s fiscal year runs from April 1st to March 31st.) The momentum is expected to continue: Sony forecasts fiscal year revenue will improve 20 percent to $6.9 billion.

Warner’s revenue improved 14 percent to $1.05 billion. (Warner’s fiscal year runs from Oct. 1 to Sep. 30) in the first fiscal quarter ended Dec. 31, 2017). Net income dipped to $5 million from $24 million in the prior year period.

Both of Warner’s two divisions gained in the quarter: recorded music revenue grew 13 percent to $904 million while music publishing improved 15 percent. International improved the most, taking a 59-percent share of total revenue and 70 percent of Warner’s gains in the quarter.

The two majors’ latest quarterly performance jibe with early results from major music markets that showed improvements in 2017. In the United States, the world’s largest music market, streaming revenues helped push music consumption up 13 percent in 2017, according to BuzzAngle (a measure of sales and streaming activity, not consumer spending or trade revenue). In Japan, the second largest music market, sales of physical formats declined just 2 percent (full-year digital music results have not been released, but revenue was up 10 percent through September 30th). Spain’s Promusicae has said early analysis points toward growth for the fourth consecutive year.

At Sony, a 34-percent gain in streaming played a major role in its digital improvement and helped overcome further falls in physical product (-3 percent to $398 million) and downloads (-13 percent to $130 million).

Streaming accounted for 44 percent of the recorded music division’s year-to-date revenue.

Two other Sony Music divisions saw robust growth. Music publishing revenues rose 13 percent to $138 billion last quarter. A third segment of Sony Music, “visual media and platform,” grew 58 percent on the continued success mobile app Fate/Grand Order; visual media and platform accounted for 31 percent of Sony Music’s revenue in the fiscal third quarter.

Parent company Sony Corp. posted 12-percent revenue growth in the latest quarter. Segments throughout the company experienced a strong quarter. In particular, game and network services segment, the company’s largest segment by revenue and nearly three times the size of music, posted a 16-percent revenue gain over the prior-year period.

Warner’s digital revenue jumped 20 percent on the back of big streaming gains (and the continued global success of Ed Sheeran). In fact, the recorded music segment’s streaming revenue accounted for 73 percent of the entire company’s growth in the quarter. The digital download is going the other direction; a 15-percent slide left downloads with just an 8 percent share of recorded music sales. Physical products—CDs, LPs, cassettes— declined just 2 percent.

Within Warner’s recorded music division, expanded rights improved 17 percent to $105 million and licensing revenue climbed 22 percent to $95 million. The aggregate income of the four music publishing divisions—each of the four were in the black—revenue improved 15 percent to $143 million, 15 percent of the company’s overall revenue.