Did you hear the one about the major record label that didn't do so badly this past quarter?
It's not a joke. Warner Music Group
The label behind artists like James Blunt, P. Diddy, and Disturbed posted a 5% gain in third-quarter revenue, to $848 million. Warner's loss from continuing operations narrowed to $0.06 a share from last year's $0.11 bloodletting. Wall Street skipped a beat here, looking for a steeper loss on a dip in revenue.
Warner may have been helped out by its global recording stars like Luis Miguel -- as a healthy spurt in international sales and favorable currency translations helped more than offset a stateside decline -- but a win is a win, especially in a battered sector like the prerecorded music industry.
The music world is definitely changing. Sony
The industry is also grappling with the digital revolution. After initial reluctance, the labels are embracing the merits of selling music downloads. This is a fast-growing segment at Warner, climbing 39% over the past year to account for a 20% slice of total revenue.
The digital shift has involved sacrifices. Warner has had to swallow its copy-protected pride in offering up unshackled MP3s through stores like Amazon.com
Warner better hope that the digital migration takes off, and it's not just because of fading CD sales. The company closed out the quarter with a net debt position of $1.9 billion.
But why dwell on the negatives and the hurdles? Warner took it to the cynics today. It's not dying. It is generating free cash flow. It's in on the joke for a change, and that -- quite frankly -- is pretty funny.
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