In another sign that the music industry is struggling to adapt to the age of digital downloading, Warner Music – one of the world's four major label groups – said it would axe its dividend to save cash in the face of mounting losses.
While the company had chart success with new albums from REM and Nickelback and the Juno film soundtrack, a 48 per cent jump in income from paid-for downloads failed to make up for the dwindling popularity of physical CDs. Group revenue in the second quarter showed a gain only because of currency fluctuations.
The quarterly loss from continuing operations widened to $34m from $27m in the same period last year, and the company said it would save about $19m a quarter by scrapping the dividend. Warner Music is traded on the New York Stock Exchange but majority-owned by private equity firms who have loaded it up with debt. Axeing the dividend will help it meet interest payments on $2.3bn of debt.
Edgar Bronfman Jr, the chief executive, said: "An uncertain economic backdrop and evolving recorded music industry make a conservative approach to our balance sheet a prudent strategy."