Warner Music Group had an impressive final three months of calendar 2023, it revealed today (February 7) – with quarterly global revenues across the company increasing by 10.6% YoY on a normalized, constant currency basis to USD $1.748 billion.
MBW will dig deeper into WMG’s financial performance tomorrow… because, right now, there’s a bigger story unfolding.
In a memo to staff sent in the past few hours, WMG’s CEO, Robert Kyncl, has confirmed that his company will be reducing its headcount by approximately 10%, resulting in layoffs for around 600 employees.
The majority of these layoffs will take place within WMG’s ‘owned and operated’ media properties – such as news/entertainment websites Uproxx and HipHopDX, plus the social media publisher IMGN.
Kyncl has confirmed that Warner is “exiting” these ‘owned and operated’ media platforms: WMG is now seeking acquirers for Uproxx and HipHopDX, while IMGN and podcast platform Interval Presents are being shut down.
Kyncl stresses in the memo that WMG is making these changes from a “position of strength” – a claim arguably born out by his company’s topline calendar Q4 2023 (fiscal Q1 2024) results.
Warner expects to create annual cost savings in the region of $200 million from the downsizing (by September 2025), the majority of which Kyncl says will be reinvested by “putting more money behind the music”.
Today’s news comes almost a year after Kyncl announced a 4% global headcount reduction at WMG, via which the company said goodbye to around 270 staff.
Below, you can read Robert Kyncl’s full memo on the latest layoffs, sent earlier today to WMG’s global staff and obtained by MBW:
Hi everyone,
We just finished our first All Hands of 2024 from LA.
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 outlined in my note last month, 2024 is a year during which we will double down on our core business and move at an increased velocity to seize 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 normalized revenue. And with growing momentum in Recorded Music streaming and excellent results in Music Publishing, we hit our highest quarterly revenue ever. We’re in a position of strength, and that’s the smart time to change, innovate, and lead. Music is constantly morphing, so we need to morph with it.
Today, we’re announcing a plan to free up more funds to invest in music and accelerate our growth for the next decade. To do that, we have to make thoughtful choices about where we put our people, resources, and capital. So, as part of that plan, we’ll be realizing approximately $200 million in annualized 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 relate to our Owned & Operated media properties, corporate and various support functions.
We’ve already begun to inform many of the impacted employees, and the vast majority will be notified by the end of September 2024. I recognize this is unsettling news. To the people who will be leaving us: you deserve a heartfelt thank you for your hard work and dedication. We’re fortunate that you’ve been part of the team. We’ll be moving as thoughtfully and respectfully as possible, so you have the critical information you need, and we’ll support you through this transition.
Earlier today, we began exiting our O&O media properties, as well as our in-house ad sales function. These are dynamic platforms, but they operate outside our core responsibilities to our roster. We’re in an exclusive process for the potential sale of the news & entertainment websites Uproxx and HipHopDX, with more to say on that soon. After a thorough exploration of alternatives, we’ve decided to wind down the podcasting brand Interval Presents and social media publisher IMGN. Maria and I continue to discuss the ongoing evolution of WMX, and how best to further improve our services to artists and labels, and she’ll update the team in the coming weeks.
As we carry out our plan, it’s important to bear in mind why we’re making these difficult choices. We’re getting on the front foot to create a sustainable competitive advantage over the next decade. We’ll do so by increasing funding behind artists and songwriters, new skill sets, and tech, to help us deliver on our three strategic priorities:
Grow the engagement with Music
Discovering and developing artists and songwriters is at the heart of everything we do. We’ll turbocharge our efforts and investments, with additional focus on high growth geographies and vibrant genres, as well as using our data and insights to help original talents cut through the increasing noise, and taking a holistic global approach to maximizing the potential of their catalogs.
Increase the value of Music
This is one of our industry’s largest and most complex opportunities and one that we’re working on diligently, whether it’s new DSP deal structures or building superfan experiences to help artists connect directly with their most passionate followers.
Evolve 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 into music at the same time. That requires being intentional about where centralized shared functions make sense, versus where they are best fully dedicated. This will empower subject matter experts, while scaling our resources. We already made moves in this direction by centralizing our technology, finance and business development teams last year.
Above all, we’re positioning ourselves to be first, to be different, and to be exceptional. I – and the entire leadership team – will be keeping you updated as we make progress. In May, we’ll hold our next All Hands meeting, which we’ll 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, we’re partnered with many extraordinary artists and songwriters, and now is the time for us to pioneer the future.
Robert
There are parallels to be drawn between Kyncl’s latest cuts at WMG and moves made by Thomas Coesfeld, the new CEO of BMG.
As MBW reported last month, Coesfeld has cut over 100 roles at Bertelsmann-owned BMG in the past six months – equivalent to around 10% of the firm’s 1,100 staff at the close of 2022.
Coesfeld has also re-focused BMG on music rights, exiting its involvement in non-core operations such as film and TV production.Music Business Worldwide