Warner Music Group Corp. (NASDAQ: WMG)

Warner Music Group Corp. is one of the world’s leading music entertainment companies. The company operates through its renowned family of iconic record labels, including Atlantic Records, Warner Records, Elektra Records and Parlophone Records, which are home to many of the world’s most popular and influential recording artists. It also owns Warner Chappell Music, a global music publishing business with an extraordinary catalog representing works by over 190,000 songwriters and composers and a collection of more than two million musical compositions. The company’s core activities involve discovering, developing, marketing, distributing and licensing music and musical compositions across the globe.

Warner Music Group Corp. generates revenue primarily from the sale and licensing of recorded music and musical compositions. Its Recorded Music business earns income from the discovery, development, marketing, promotion, distribution and licensing of music created by recording artists, including through physical and digital formats such as vinyl, CDs, downloads and streaming services. The Music Publishing business generates revenue from the licensing of musical compositions for use in public performance, digital, mechanical and synchronization contexts, such as in films, television programs, advertisements, video games and live performances. Revenue is derived from a global customer base that includes streaming platforms, digital music services, retailers, broadcasters and other users of music and musical compositions.

The company operates through the following segments: Recorded Music and Music Publishing.

• Recorded Music: This segment primarily consists of the discovery and development of recording artists and the related marketing, promotion, distribution, sale and licensing of music created by such recording artists. It is conducted principally through major record labels including Atlantic Records, Warner Records, Elektra Records and Parlophone Records. Additional labels under this segment include Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Nonesuch, Reprise, Sire, Spinnin’ Records, Warner Classics and Warner Records Nashville. The segment also includes Rhino Entertainment, which specializes in marketing the recorded music catalog through compilations, reissuances and releasing previously unreleased material, and WMX, a next generation services division that connects artists with fans and amplifies brands in creative, immersive and engaging ways.

• Music Publishing: This segment is an intellectual property business focused on generating revenue from uses of the musical composition itself. It is conducted principally through Warner Chappell Music, the company’s global music publishing business. Warner Chappell Music owns or controls rights to more than two million musical compositions, including numerous global pop hits, standards, folk songs and motion picture and theatrical compositions. The segment also administers the music and soundtracks of several third-party television and film producers and studios and maintains an extensive production music catalog collectively branded as Warner Chappell Production Music.

Warner Music Group Corp. holds a strong competitive position in the global music entertainment industry. In recorded music, it is one of the three largest companies alongside Universal Music Group and Sony Music Entertainment, collectively accounting for approximately 70% of global recorded music revenues, with the company holding an approximately 15% share. In music publishing, it ranks among the top three publishers globally, with an approximately 12% share of the market, behind Sony Music Publishing and Universal Music Publishing. Its competitive advantages include a differentiated platform of scale with top industry position, a star-making and culture-defining core capability through its artists and repertoire expertise, and a strong financial profile with continued growth, operating leverage and free cash flow generation.

Warner Music Group Corp. serves a diverse customer base that includes streaming services such as Spotify, YouTube, Apple Music, Amazon Music, Deezer, SoundCloud and Tencent Music Entertainment Group. It also sells to digital and physical retailers including amazon.com, barnesandnoble.com, bestbuy.com, Target and Walmart. The company licenses music to broadcasters such as iHeart Radio and SiriusXM, and to users in film, television, advertising, video games and live performance contexts. Its customer base further includes social media and short-form video platforms, graphic design and editing software platforms and other creator tools that use musical compositions.