Warner Music to Cut 10% of Workforce as Part of Cost-Savings Restructuring

Warner Music Group Corp. has announced a significant restructuring plan that will result in the reduction of its workforce by approximately 10%. The move, which translates to about 600 employees being let go, is aimed at generating more funds for investment in critical growth areas of the business.

Streamlining for Growth

The company revealed through a recent filing that it is anticipating approximately $200 million in annual cost savings by the end of fiscal 2025 due to this transition. Similar to other tech and retail companies like Snap Inc., Wayfair Inc., and Okta Inc., Warner Music is undergoing workforce reductions as part of its strategy to adapt and flourish in a changing market.

Investing in Music and Technology

The savings from the layoffs will primarily be directed toward enhancing Warner Music's main operations in recorded music and music publishing. There is also a focus on investing in new talents, acquiring new skills, and upgrading technological capabilities. To streamline its operations, Warner Music is shutting down or scaling back certain non-core ventures, which include their internal ad-sales operations.

Financial Impact and Severance Costs

Warner expects to incur severance and other related costs of around $85 million, payable by the end of fiscal 2026, with the bulk expected to be accounted for by the end of fiscal 2024. The total fiscal 2024 impact is estimated to be $120 million in one-time pre-tax charges, or $90 million after taxes.

Market Reaction and Performance

Following the announcement, Warner Music's shares saw an upward swing of over 6% in post-market trading. The positive shift came despite the company's previous close in the regular trading session with a minor decline. Over the past year, Warner Music's stock has experienced a slight decline in comparison to the S&P 500 which saw approximately 20% gains.

Warner, restructuring, layoffs