Warner Music is selling media properties and cutting staff after making big profits

Warner Music is selling media properties and cutting staff after making big profits

Warner Music Group announced on Wednesday (February 7) that its quarterly revenue increased 17% for the period ending December 31, 2023, with an 11% increase in organic revenue to $1.75 billion, its highest quarterly mark ever, ahead of its earnings call on Thursday. . At the same time CEO Robert Kinkel He announced in an internal memo to staff obtained by him painting 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 will come in the form of Warner’s owned-and-operated media properties — such as Uproxx and HipHopDX, which it acquired in August 2018 — as well as in corporate and support roles, Kyncl wrote. “Earlier today, we began exiting our owned and managed media properties, as well as our internal ad sales function,” Kyncl wrote. “These are dynamic platforms, but they operate outside of our core responsibilities to our roster. We are in the exclusive process for the potential sale of news and entertainment sites Uproxx and HipHopDX, and we will say more about that soon. After a thorough exploration of alternatives, we have decided to terminate the Interval Presents podcast 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 top 10 songs on the Hot 100, “and this is a smart time to change, innovate and lead. Music is constantly changing, so we need to shift with it.”

Kinsel said in the memo that $200 million in cost savings will be achieved by the end of September 2025; Some of those laid off have already begun 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 continued. “We are moving forward to create a sustainable competitive advantage over the next decade,” he says. “We will do this through increased funding for artists and songwriters, new skill sets, and technology, to help us achieve our three strategic priorities, which include, he says, ‘increasing engagement with music, and increasing the value of music. , and developing how Warner teams work together.

Read Kyncl’s full memo to employees below.

Hello all,

We just finished our first awards show of 2024 from Los Angeles.

This is a pivotal moment in the evolution of this great company, so I wanted to make sure you heard about it directly from me. As I explained in my note last month, 2024 is the year we will double down on our core businesses and move with increasing speed to seize the amazing opportunities for music in the new world.

This week, our recording artists make up five of the top 10s, and our songwriters have six of the top 10s, on the Billboard Hot 100. Today, we reveal our latest quarterly results: We achieved 11% organic revenue growth. With growing momentum in recorded music streaming and excellent results in music publishing, we achieved our highest quarterly revenue ever. We are in a position of strength, and this is the time for change, innovation and leadership. Music is constantly changing, so we need to shift with it.

Today we’re announcing a plan to free up more money to invest in music and accelerate our growth over the next decade. To do this, we have to make informed choices about where we put our people, resources and capital. Therefore, as part of this plan, we will achieve annual cost savings of approximately $200 million by the end of September 2025. The majority of these savings will be reinvested, resulting in more funds being allocated to supporting music.

Our plan includes reducing our workforce by approximately 10%, or 600 people – most of whom will be associated with our owned and operated media properties, corporates and various support functions.

We have already begun notifying many affected employees, and the vast majority will be notified by the end of September 2024. I realize this is troubling news. To the people who are leaving us: You deserve a huge thank you for your hard work and dedication. We are lucky to have you as part of the team. We will move as thoughtfully and respectfully as possible, so that you have the important information you need, and we will support you through the transition.

Earlier today, we began exiting our owned and managed media properties, as well as our internal ad sales function. These are dynamic platforms, but they operate outside of our core responsibilities to our roster. We are in the process of exclusivity for the potential sale of news and entertainment sites Uproxx and HipHopDX, and we will say more about that soon. After a thorough exploration of alternatives, we have decided to terminate the Interval Presents podcast brand and social media publisher IMGN. Maria and I continue to discuss the continued evolution of WMX, and how best to improve our services for artists and labels, and she will update the team in the coming weeks.

As we implement our plan, it is important to consider why we are making these difficult choices. We are moving forward to create a sustainable competitive advantage over the next decade. We will do this through increased funding for artists and songwriters, new skill sets, and technology, to help us achieve our three strategic priorities:

Develop interaction with music

Discovering and developing artists and songwriters is at the core of everything we do. We will enhance our efforts and investments, focusing additionally on high-growth geographies and vibrant genres, as well as using our data and insights to help indigenous talent cut through the growing noise, and take a global, holistic approach to maximizing their potential. Catalogs.

Increase the value of music

This is one of the biggest and most complex opportunities in our industry and one we’re working hard on, whether it’s new DSP deal structures or building great experiences to help artists connect directly with their most passionate followers.

Developing how we work together

In order to grow at an accelerated pace, 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 that we be intentional about where shared central functions make sense, versus where it is best to devote them entirely. This will empower subject matter experts, while expanding the scope of our resources. We have already taken steps in this direction by centralizing our technology, finance, and business development teams last year.

Above all, we put ourselves first, be different, and be exceptional. The entire leadership team and I will keep you updated on our developments. In May, we will hold the next All Hands meeting, which we will devote 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, partnered with so many exceptional artists and songwriters, and now is the time for us to pioneer the future.

Robert

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