Music publishing giant Warner Music Group (WMG 0.27%) has found a new CEO. The new leader comes with an excellent and highly relevant pedigree, and Warner Music might stand on the doorstep of a golden age today.
Warner Music's next CEO: Robert Kyncl
Robert Kyncl left his post as the chief business officer of YouTube, an Alphabet company, three weeks ago. The rumor mill immediately started discussing his potential to take the CEO office at Warner Music. Industry watchers argued that his 12-year stint as strategy developer and partnership promoter at the giant video service had taught him everything a top-level leader in the music business needs to know.
This week, the rumor-spinners were proven right because Kyncl accepted Warner Music's top title. He will start his new job on Jan. 1, serving as co-CEO with current CEO Steve Cooper for the first month. This stepwise transition should make the power transfer as smooth and painless as possible.
Image source: Getty Images.
Kyncl's star-studded work history
At YouTube, Kyncl stepped into a service that had just figured out how to serve video ads and shaped it into an enormous cash machine. In July's second-quarter update, YouTube reported ad sales of $7.3 billion. The digital broadcasting platform YouTube TV passed 5 million paying subscribers during the quarter and the ad-free YouTube Premium option has risen well above 20 million subscribers. Kyncl managed YouTube through these monetization strides and much more.
In particular, Warner Music will benefit from Kyncl's many years as the top liaison between YouTube's video publishing machine and musicians. That role gives him a unique two-sided view of music publishing issues. In a world where YouTube and TikTok videos are the leading platforms for music promotion, that's an invaluable quality.
And there's more to like about Kyncl's resume. When YouTube brought him aboard in 2011, he was already seen as a superstar dealmaker with proven experience in the digital media world. You see, he was a leading content license negotiator for Netflix (NASDAQ: NFLX) as that company transitioned from DVD mailers to online video streams.
Kyncl knows how to change the game
You may never have heard Robert Kyncl's name before, but it's fair to say that today's entertainment industry would have looked very different without him. It's hard to come up with a better or more qualified executive to lead Warner Music right now. The media market is saturated with streaming audio and video services, where the company's growth will be found for the foreseeable future.
At the same time, music publishers face an existential crisis right now. Many of today's best-selling artists kick-started their success independently, without the help of record labels. Artists like Lil Nas X and Bella Poarch found their early success on TikTok. Others, like Charlie Puth and Shawn Mendes, built their fan bases on YouTube. These stars later signed record deals with labels owned by Sony, Warner Music, or Universal Music, proving that established stars still find traditional publishers useful. However, the road to stardom often goes around the big three studios nowadays.
Kyncl is heading into turbulent waters here. He will have a lot to prove over the next couple of years as digital platforms such as Apple Music and Spotify continue to take market share from old-school radio. Video services play an essential role in the mix. Robert Kyncl looks like the perfect Sherpa to guide Warner Music through this uncharted territory, but nothing will come easy.
Warner Music is worth a look now
The most important takeaway from all this is simple. Warner Music just got its hands on a top-quality leader, who also happens to have the perfect mix of experience for this moment in entertainment history. The stock isn't cheap, trading at 113 times free cash flows and 86 times book value, but you're paying a premium for a robust business with superior management. Warner Music's stock is well worth a closer look after this game-changing upgrade in the corner office.
