Warner Music Group said on Wednesday (February 7th) that its quarterly revenue rose 17% for the period ended December 31, 2023, up 11% on regular revenue, to $1.75 billion, its highest quarterly mark ever , ahead of Thursday's earnings call. At the same time, CEO Robert Kyncl announced in an internal memo to staff he received Advertising sign that the company will reduce its workforce by 10%, or about 600 people, as part of a plan to free up $200 million in cost savings to reinvest in the company.
Much of that workforce reduction, Kyncl wrote, will come in the form of media properties owned and operated by Warner — such as Uproxx and HipHopDX, which it acquired in August 2018 — as well as in corporate and ancillary roles. “Earlier today, we began exiting our O&O media properties as well as our domestic ad sales operation,” Kyncl wrote. “These are dynamic platforms, but they operate outside of our core roster responsibilities. We are in an exclusive process for the potential sale of news and entertainment sites Uproxx and HipHopDX, with more to say on that soon. After a thorough exploration of alternatives, we have decided to terminate the Interval Presents podcasting brand and social media publisher IMGN.”
Kyncl also added that Warner is making the move from a “position of strength,” noting that the company currently has five of the top 10 songs on the Hot 100, “and this is the smart time for change, innovation and leadership. Music is constantly transforming, so we must transform with it.”
That $200 million in cost savings will be realized by the end of September 2025, Kyncl said in the memo. Some of those laid off have already started to be notified, while the “vast majority” will be notified “by the end of September 2024,” he writes.
“As we implement our plan, it is important to keep in mind why we are making these difficult choices,” the memo continues. “We are on track to create a sustainable competitive advantage over the next decade. We will do this by increasing the funding behind artists and songwriters, new skill sets and technology to help us deliver on our three strategic priorities,” which he says include growing engagement with music, increasing the value of music and the evolution of how Warner teams work together.
Read Kyncl's full memo to staff below.
Hi to all,
We just finished our first All Hands of 2024 from LA.
This is a pivotal time in the evolution of this great company, so I wanted to make sure you heard it directly from me. As I mentioned in my note last month, 2024 is a year in which we will double down on our core business and move with increased speed to take advantage of the incredible opportunities for music in the new world.
This week, our recording artists make up five of the Top 10, and our songwriters have six of the Top 10, on the Billboard Hot 100. Today, we're revealing our latest quarterly results: we grew 11% in regular revenue. And with growing momentum in Recorded Music streaming and outstanding results in Music Publishing, we achieved our highest quarterly revenue ever. We are in a position of power and this is the smart time to change, innovate and lead. Music is constantly transforming, so we must transform with it.
Today, we're announcing a plan to free up more capital to invest in music and accelerate our growth for the next decade. To do this, we need to make careful choices about where to put our people, resources and capital. So as part of this plan, we will realize approximately $200 million in annual cost savings by the end of September 2025. The majority of these savings will be reinvested, putting more money behind the music.
Our plan includes reducing our workforce by approximately 10%, or 600 people – the majority of which will be related to our owned and operated media properties, corporate and various support functions.
We have already started to notify many of the affected employees and the vast majority will be notified by the end of September 2024. I recognize that this is alarming news. To the people who will be leaving us: you deserve a sincere thank you for your hard work and dedication. We are lucky to have you on the team. We will move as carefully and respectfully as possible so you have the critical information you need and support you through this transition.
Earlier today, we began exiting our O&O media properties as well as our domestic ad sales function. These are dynamic platforms, but they operate outside of our core roster responsibilities. We are in an exclusive process for the potential sale of news and entertainment websites Uproxx and HipHopDX, with more to say about that soon. After a thorough exploration of alternatives, we have decided to discontinue the Interval Presents podcasting brand and social media publisher IMGN. Maria and I continue to discuss the ongoing development of WMX and how best to further improve our service to artists and companies, and she will update the team in the coming weeks.
As we implement our plan, it is important to keep in mind why we are making these difficult choices. We are on track to create a sustainable competitive advantage over the next decade. We will do this by increasing funding for artists and songwriters, new skillsets and technology, to help us deliver on our three strategic priorities:
Increase engagement with Music
Discovering and developing artists and songwriters is at the heart of everything we do. We will supercharge our efforts and investments, with additional focus on high-growth geographies and live genres, as well as using our data and insights to help original talent cut through the growing noise and take a holistic global approach to maximize of their capabilities. catalogs.
Increase the value of Music
This is one of the biggest and most complex opportunities in our industry, and one we're working diligently on, whether it's new DSP deal structures or creating superfan experiences to help artists connect directly with their most passionate fans.
To evolve the way we work together
To grow at an accelerated rate, we need to structure our organization so that we can grow efficiently and continue to invest more in music at the same time. This requires being intentional about where central shared functions make sense, versus where they are better off fully dedicated. This will empower subject matter experts while scaling our resources. We've already made moves in this direction by bringing together our technology, finance and business development teams last year.
Above all, we position ourselves to be first, to be different and to be exceptional. I – and the entire leadership team – will keep you updated as we move forward. In May, we will hold the next All Hands meeting, which will be dedicated to our best new music, as well as our most promising projects.
Thank you for your understanding, passion and determination. We're in an amazing industry, we work with a lot of great artists and songwriters, and now is the time to lead the way.
Robert
from our partners at https://www.billboard.com/business/record-labels/warner-music-sell-media-properties-reduce-staff-earnings-1235602299/
