Warner Music Group To Sell Merch Company EMP?

Warner Music Group (WMG) has written down the value of European rock and metal merchandise e-tailer EMP Merchandising, sparking rumors it may be preparing to sell the company.

Some background:

• WMG acquired EMP in 2018 for $180 million.

• EMP offers merchandise for artists such as AC/DC, Metallica, Guns N’Roses, Nirvana and Pink Floyd, as well as brands such as Disney, Marvel, Star Wars, Nintendo, PlayStation and Vans.

Write-down:

• Music Business Worldwide reports that WMG’s latest earnings press release and quarterly SEC filing reveals a $70 million pre-tax impairment charge on “long-lived assets associated with certain of [WMG’s] non-core e-tailer operations.”

• MBW notes that EMP is the only subsidiary in previous Warner filings referred to as an “e-tailer.”

• It also clarifies that an impairment charge is effectively a corporate write-down.

Non-core asset:

• WMG CEO Robert Kyncl’s July announcement of a $300 million cost-cutting plan saw him refer to a focus on “core” music assets.

• The company’s branding of EMP as “non-core” is therefore telling.

• This development coincides with last week’s retrenchment of four execs from Atlantic’s promotions department as part of the cost-cutting strategy.

• WMG have not commented on the potential sale of EMP.