Warner Music Group (WMG) is expanding its planned layoffs as part of a restructuring strategy to strengthen recorded music business.
The company now expects to cut approximately 750 employees, representing 13 percent of its total workforce. This is a significant increase from the initial projection of 600 job cuts, or 10 percent of its global headcount.
The expanded layoffs come as Warner Music seeks to streamline its operations and position itself for long-term growth.
According to a filing with the Securities and Exchange Commission (SEC), Warner Music’s goal is to reduce costs and free up more capital for investment in music. It says there is a focus on driving growth in its core recorded music business over the next decade.
Increased Restructuring Costs
As part of this expanded restructuring effort, Warner Music anticipates incurring pretax restructuring charges of $210 million. This is substantially higher than the $140 million originally estimated when the company first unveiled its cost-cutting measures in February.
The entertainment conglomerate attributed the higher costs to additional layoffs and further operational changes.
In the SEC filing, Warner Music noted many of the cuts will affect O&O Media Properties and corporate and support functions. However, the company remains committed to maintaining its focus on music and growth despite the significant organizational changes.
Industry-Wide Restructuring
Warner Music is not alone in making significant operational changes. Universal Music Group, one of Warner’s key competitors, has also implemented its cost-cutting plan. This aims to deliver approximately €250 million ($279 million) in annual savings by 2026.
The restructuring efforts across the music industry reflect a larger trend of record labels seeking greater efficiency. This is due to shifts in consumer behavior and a more competitive marketplace.
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Recent Business Shifts and Leadership Changes
Warner Music’s decision to ramp up layoffs follows a slight decline in quarterly revenue. The company attributes this in part to the end of a distribution deal with BMG.
To mitigate future revenue losses, the company has made significant organizational adjustments aimed at revitalizing its recorded music business.
In August, Warner Music made two key organizational changes that included the restructuring of its U.S. recorded music operations.
Under the new structure, Warner’s U.S. business will now operate under two main label groups: Atlantic Music Group and Warner Records. This shift is designed to provide clearer leadership and drive revenue growth across Warner’s music divisions.
Additionally, Max Lousada, Warner Music’s chief executive of recorded music, announced that he would be stepping down from his role.
Julie Greenwald, who served as the CEO and chair of Atlantic Music Group, will continue to serve as the chair. Elliot Grainge has been appointed as the new CEO of Atlantic Music Group.
Grainge, the son of Universal Music Group’s CEO Lucian Grainge, brings experience as the founder of 10K Projects, a record label known for signing popular acts like rapper Ice Spice.
Future Outlook for Warner Music
Warner Music’s restructuring efforts are a response to the ongoing challenges faced by the music industry, including changing consumer habits and increased competition from both established players and emerging independent labels.
By cutting costs and focusing on its core strengths, the company hopes to accelerate growth and remain competitive in a rapidly evolving market.
While Warner Music’s workforce reductions and organizational changes may be difficult, the company believes these moves will better position it for the future.
With a clear focus on investing in new talent and leveraging its recorded music assets, Warner Music aims to thrive in an industry that continues to be reshaped by digital technology and changing listener preferences.
Looking Forward: A Reshaped Warner Music
As Warner Music executes its restructuring plan, the company’s focus will be on innovation, efficiency, and the continued growth of its recorded music business.
The appointment of new leadership at Atlantic Music Group, coupled with a renewed commitment to the music industry, signals that Warner is taking decisive steps to strengthen its position.
For the company, the future will hinge on how well it can adapt to new challenges while maintaining its iconic status as a leader in the music world.
