Warner Music Inks Game-Changing Deal With Major Label

Warner Music’s recent 3.4% adjusted revenue increase showcases the strength of its music publishing segment while net income overall grew 25%. The company’s vast catalog of over 80,000 songwriters and composers provides a solid foundation for sustained growth in a high-margin business made even more compelling with digital innovation.

That’s why a focus on new subscription tiers and innovative content bundles through its Spotify partnership is so important: the company is actively exploring new ways to monetize its vast music catalog and establish an even better position to capture additional revenue streams.

Meanwhile, the stock trades at 22.2 times the company’s forward earnings forecast.

WARNER MUSIC GROUP CORP. (Symbol WMG on Nasdaq) began trading on June 3, 2020, following an IPO.

Warner Music is one of the world’s leading music entertainment companies. Its record labels include Atlantic Records, Warner Records, and Elektra Records. Musicians recording on these labels include Bruno Mars, Lizzo, Ed Sheeran, Cardi B, Katy Perry, Madonna, Metallica, Neil Young and Led Zeppelin.

The company also owns Warner Chappell Music, a music publishing company representing more than 80,000 songwriters and composers.

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In the three months ended December 31, 2024, Warner Music’s revenue fell 4.6%, to $1.67 billion from $1.75 billion. Excluding one-time licensing renewal adjustments, revenue rose 3.4%. Earnings rose 24.9%, to $241 million, or $0.45 a share, from $193 million or $0.30.

Warner Music Group: Innovative digital partnerships pave the way for future success

Warner has announced a new multi-year agreement with Spotify and the acquisition of Tempo Music Investments to enhance its catalog management capabilities.

The Spotify deal focuses on enhancing artist royalties, expanding music catalogs, introducing new subscription tiers, and fostering innovation in the music ecosystem. The controlling stake in Tempo Music values that firm at over $450 million, which significantly expands Warner’s music rights portfolio with works from high-profile artists like Bruno Mars, Adele, and Twenty One Pilots. This acquisition, the firm’s largest under CEO Robert Kyncl, aligns with the company’s strategy to invest in valuable music catalogs and grow its market share in the music publishing sector.

The stock yields 2.1% as the shares trade at a reasonable 22.2 times its forecast earnings for 2025 of $1.52 a share.

Recommendation in Power Growth Investor: Warner Music Group Corp. is a buy.

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Scott Clayton

Scott is an associate editor at TSI Network. He is the lead reporter and analyst for Dividend Advisor, Power Growth Investor and Canadian Wealth Advisor and a member of the Investment Planning Committee. Scott began his investment and financial career working with Pat McKeough at The Investment Reporter in the 1980s. Subsequently, he worked at the Financial Post Corporation Service for 10 years. He joined TSI Network in 1998. He is a Bachelor of Economics graduate of York University, and he also has an M.B.A. from the Schulich School of Business.

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