Sony Music Posts Solid Quarter, Despite Drag From Visual Media
By Variety Staff
LOS ANGELES (Variety.com) – The music part of Sony Music posted a strong fiscal fourth quarter of 2019, with streaming revenue soaring 27% to $641.7 million year over year, recorded music bouncing 14% to $1.07 billion and publishing up 15%, in terms of dollars. Physical music revenues were also up 10.9%, to nearly $200 million, driven by strong markets in Japan and Germany.
However, the visual media platform, which is also part of the Japanese company’s music division, was down some 25%, leading the overall music division to finish the quarter flat.
Top performers for the quarter included releases from Harry Styles, Future, Doja Cat, Jackboys, Lil Nas X, Camila Cabello, Luke Combs and Travis Scott.
Music enjoyed a 5% revenue increase over the year to finish with $7.87 billion (JPY850 billion). But operating income at the division was down by more than a third from $2.15 billion (JPY232 billion) to $1.31 billion (JPY142 billion). Sales were lifted by music publishing, primarily resulting from the consolidation of EMI, but also by higher sales for recorded music driven by an increase in streaming revenues. The sector’s bottom line took a hit, however, from accounting changes relating to past acquisitions. However, during the earnings call, Sony’s CFO Hiroki Totoki pointed to costs associated with the company’s acquisition of EMI Music Publishing, which was completed in 2018: “Excluding the extraordinary items associated with the consolidation of EMI as a wholly-owned subsidiary, operating income would have increased 15.2 billion yen year-on-year,” he said.
While the company showed little impact from the coronavirus pandemic — which did not take hold in North America until the final weeks of the quarter — it did warn about trouble ahead.
“Around the world, but especially in the US, the release of new music is being delayed primarily due to some artists being unable to record songs and music videos,” the company said in a statement. “The impact on profitability from the delays in new music is limited at this time in the US and other countries where the proportion of music that is streamed is high. But in countries like Japan and Germany, where the proportion of music that is streamed is relatively low, CDs and other packaged media sales are decreasing due to restrictions on going outside.
“Ticket revenue, merchandising revenue and video revenue are decreasing, as concerts and other events are being postponed and cancelled in Japan and other areas,” it continued. “Due to a global reduction in advertising spending, revenue from advertising-supported streaming services and revenue from the licensing of music in TV commercials is decreasing. Additionally, delays in the production of motion pictures and TV shows are causing a decline in music licensing revenue.”
