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Warner Music Group to go public
Associated Press
Published March 12, 2005
LOS ANGELES - Nearly a year after a group of investors led by Edgar Bronfman Jr. completed its purchase of Warner Music Group, officials took the first formal step Friday toward taking their company public.
Warner Music, home to acts like Madonna, Linkin Park and Kid Rock, filed a document with the Securities and Exchange Commission detailing plans to sell up to $750-million of common stock in an initial public offering.
The company did not give an estimate of how many shares or at what price it planned to offer its stock but said shares will be sold by the company and several shareholders. The company plans to list its stock on the New York Stock Exchange or on the Nasdaq Stock Market.
The move, widely anticipated in recent weeks, came as the recording industry has seen some improvement in sales, particularly in the United States. Growth in digital and mobile entertainment markets have helped cushion losses in recent years that the industry blames on online piracy.
"The problem with the music industry is that it's extremely volatile; this was a good year to do the transaction," said Christina Padgett, a senior credit officer for Moody's Investors Service in New York.
A day after the investor group closed on its $2.6-billion purchase of Time Warner Inc.'s music division in March 2004, Bronfman, Warner Music's chairman and chief executive, began restructuring the company, consolidating labels, slashing artist rolls, ousting several top executives and trimming 20 percent of the work force.
In its SEC filing, the company said it was poised to save $250-million a year - surpassing its initial goal by $50-million.
"They clearly did better than we anticipated when we initially met with them," Padgett said.
So far this year, Warner Music Group has 15.90 percent of overall U.S. market share, third behind Sony BMG's 28.42 percent and Universal Music Group's 34.90 percent, according to data compiled by Nielsen SoundScan.
For the latest quarter ended Dec. 31, Warner Music posted a profit of $36-million on $1.09-billion in revenue. In last year's quarter, its loss was $1.15-billion, saddled by more than $1-billion of impairment charges. Revenue totaled $1.18-billion.
In its SEC filing Friday, Warner Music said proceeds from the IPO will be used to repay debt and for general corporate purposes.
[Last modified March 12, 2005, 00:48:09]
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