Warner Posts Profit on Sale of Stake

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Selling its stake in Front Line Management to Ticketmaster Entertainment enabled Warner Music Group Corp to report a profit rather than a loss in its fiscal first quarter, the recording company said Thursday.

Warner Music, which has corporate headquarters in Los Angeles and New York, reported first quarter net income of $23 million (15 cents a share), compared with a loss of $16 million (-11 cents) a year earlier.

Revenue dropped 11 percent to $878 million. Digital sales of music, via such services as Apple Inc.’s iTunes, now accounts for 31 percent of total sales, and climbed 20 percent to $171 million. But that growth rate is slower than in previous quarters and couldn’t offset a nearly 20 percent drop in compact disc sales. Major sellers included Seal, Nickelback, Enya and Johnny Hallyday.

Without the 24 cents-a-share gain from the Front Line Management transaction, Warner would have posted a loss of 9 cents a share. Analysts surveyed by Reuters Estimates anticipated a 14 cents-a-share loss on $902 million revenue.

“Though facing difficult economic conditions and tough prior-year comparisons, we executed on our strategy and remain confident in achieving our long-term goals,” Chief Executive Edgar Bronfman Jr. said in a statement.

Shares of Warner Music were up 6 cents, or 3 percent, to $2.07 in morning trading on the New York Stock Exchange.

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