Warner boss sees rebound despite CD sales decline

By | September 17, 2007 at 6:06 PM

Executive said on Monday the music company’s business was poised to rebound as it tapped new revenue streams to counter the decline in sales of traditional CDs. Warner Music, the only publicly listed major music company in the United States, has seen its share price decline as CD sales have fallen. People are increasingly buying music through online downloads rather than physical CDs and records.

The company’s third-quarter earnings report, for the three months to June 30, showed a 2 percent revenue decline as growth in digital revenue failed to make up for declining CD sales.

To counter this, the company is pursuing new opportunities to drive revenues, through online music, music accessed through mobile phones and expansion of sales internationally.

“Our business is poised to rebound because the demand for music is as strong as it has ever been and our determination to meet that demand has never been greater,” said Warner CEO Edgar Bronfman at a conference organized by The Deal publication.

“While it may take some time for the rise in all the new revenue streams to overtake the short-term effect of the decline in the CD, there is no doubt in my mind that the mid-to-long-term future for Warner Music is very bright indeed,” he added.

Warner had also been looking to expand through partnering with British rival EMI Group Plc but lost out earlier this year when private equity firm Terra Firma bought the company. Warner and EMI had spent several years flirting with the idea of a combination, but Warner decided in July that it could not justify a higher bid for EMI than that made by Terra Firma.

Bronfman said on Monday the “best thing that could happen to Warner Music” would be for Terra Firma’s acquisition of EMI to be “wildly successful.”

He said in the record industry, which is dominated by four major companies, all the company’s fortunes would rise and fall with each other. The four major companies are Universal Music Group, owned by French media giant Vivendi, Warner, Sony BMG Entertainment and EMI.

Asked if he would be interested in owning NBC Universal in the event that General Electric Co. ever spins it off, Bronfman said that he had “no clue” about GE’s plans but said the NBC Universal businesses were “terrific assets.”

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