Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2018 | Feb. 05, 2019 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | wmg | |
Entity Registrant Name | Warner Music Group Corp. | |
Entity Central Index Key | 1,319,161 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 1,060 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Dec. 31, 2018 | Sep. 30, 2018 |
Current assets: | ||
Cash and equivalents | $ 548 | $ 514 |
Accounts receivable, net of allowances of $21 million and $45 million | 789 | 447 |
Inventories | 66 | 42 |
Royalty advances expected to be recouped within one year | 136 | 123 |
Prepaid and other current assets | 53 | 50 |
Total current assets | 1,592 | 1,176 |
Royalty advances expected to be recouped after one year | 166 | 153 |
Property, plant and equipment, net | 268 | 229 |
Goodwill | 1,793 | 1,692 |
Intangible assets subject to amortization, net | 1,839 | 1,851 |
Intangible assets not subject to amortization | 153 | 154 |
Deferred tax assets, net | 10 | 11 |
Other assets | 125 | 78 |
Total assets | 5,946 | 5,344 |
Current liabilities: | ||
Accounts payable | 179 | 281 |
Accrued royalties | 1,551 | 1,396 |
Accrued liabilities | 495 | 423 |
Accrued interest | 24 | 31 |
Deferred revenue | 182 | 208 |
Other current liabilities | 162 | 34 |
Total current liabilities | 2,593 | 2,373 |
Long-term debt | 2,998 | 2,819 |
Deferred tax liabilities, net | 219 | 165 |
Other noncurrent liabilities | 275 | 307 |
Total liabilities | 6,085 | 5,664 |
Equity: | ||
Common stock ($0.001 par value; 10,000 shares authorized; 1,060 and 1,052 shares issued and outstanding at December 31, 2018 and September 30, 2018, respectively) | 0 | 0 |
Additional paid-in capital | 1,128 | 1,128 |
Accumulated deficit | (1,078) | (1,272) |
Accumulated other comprehensive loss, net | (212) | (190) |
Total Warner Music Group Corp. deficit | (162) | (334) |
Noncontrolling interest | 23 | 14 |
Total equity | (139) | (320) |
Total liabilities and equity | $ 5,946 | $ 5,344 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2018 | Sep. 30, 2018 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 21 | $ 45 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 10,000 | 10,000 |
Common stock, shares issued | 1,060 | 1,060 |
Common stock, shares outstanding | 1,052 | 1,052 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Income Statement [Abstract] | |||
Revenue | $ 1,203 | $ 1,045 | |
Costs and expenses: | |||
Cost of revenue | (626) | (569) | |
Selling, general and administrative expenses | [1] | (376) | (333) |
Amortization expense | (54) | (53) | |
Total costs and expenses | (1,056) | (955) | |
Operating income | 147 | 90 | |
Loss on extinguishment of debt | (3) | (1) | |
Interest expense, net | (36) | (36) | |
Other income, net | 28 | 4 | |
Income before income taxes | 136 | 57 | |
Income tax expense | (50) | (52) | |
Net income | 86 | 5 | |
Less: Income attributable to noncontrolling interest | (1) | ||
Net income attributable to Warner Music Group Corp. | $ 86 | $ 4 | |
[1] | (a) Includes depreciation expense of: |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Depreciation expense | $ (14) | $ (12) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net income | $ 86 | $ 5 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency adjustment | (16) | 9 |
Deferred (loss) gain on derivative | (6) | 1 |
Other comprehensive (loss) income, net of tax | (22) | 10 |
Total comprehensive income | 64 | 15 |
Less: Income attributable to noncontrolling interest | (1) | |
Comprehensive income attributable to Warner Music Group Corp. | $ 64 | $ 14 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | ||
Net income | $ 86 | $ 5 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 68 | 65 |
Unrealized (gains) losses and remeasurement of foreign denominated loans | (13) | 5 |
Deferred income taxes | 11 | 42 |
Loss on extinguishment of debt | 3 | 1 |
Net gain on divestitures and investments | (15) | (7) |
Non-cash interest expense | 2 | 1 |
Equity-based compensation expense | 12 | 18 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (88) | (93) |
Inventories | 13 | 2 |
Royalty advances | (28) | (5) |
Accounts payable and accrued liabilities | (92) | (23) |
Royalty payables | 92 | 141 |
Accrued interest | (7) | (16) |
Deferred revenue | (5) | (3) |
Other balance sheet changes | 53 | 3 |
Net cash provided by operating activities | 92 | 136 |
Cash flows from investing activities | ||
Acquisition of music publishing rights, net | (5) | (1) |
Capital expenditures | (26) | (16) |
Investments and acquisitions of businesses, net of cash received | (207) | (1) |
Proceeds from the sale of investments | 12 | |
Net cash used in investing activities | (238) | (6) |
Cash flows from financing activities | ||
Call premiums paid on early redemption of debt | (2) | |
Deferred financing costs paid | (4) | (1) |
Distribution to noncontrolling interest holder | (2) | (2) |
Net cash provided by (used in) financing activities | 182 | (3) |
Effect of exchange rate changes on cash and equivalents | (2) | 2 |
Net increase in cash and equivalents | 34 | 129 |
Cash and equivalents at beginning of period | 514 | 647 |
Cash and equivalents at end of period | 548 | $ 776 |
3.625% Senior Notes | ||
Cash flows from financing activities | ||
Proceeds from issuance of Acquisition Corp | 287 | |
4.125% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | (40) | |
4.875% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | (30) | |
5.625% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | $ (27) |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) | Dec. 31, 2018 | Dec. 31, 2017 |
3.625% Senior Notes | ||
Interest rate | 3.625% | 3.625% |
4.125% Senior Secured Notes | ||
Interest rate | 4.125% | 4.125% |
4.875% Senior Secured Notes | ||
Interest rate | 4.875% | 4.875% |
5.625% Senior Secured Notes | ||
Interest rate | 5.625% | 5.625% |
Consolidated Statement of (Defi
Consolidated Statement of (Deficit) Equity (Unaudited) - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Warner Music Group Corp. (Deficit) Equity | Noncontrolling Interest |
Beginning balance at Sep. 30, 2017 | $ 308 | $ 1,128 | $ (654) | $ (181) | $ 293 | $ 15 | |
Beginning balance, shares at Sep. 30, 2017 | 1,055 | ||||||
Net income | 5 | 4 | 4 | 1 | |||
Other comprehensive (loss) income, net of tax | 10 | 10 | 10 | ||||
Distribution to noncontrolling interest holders | (2) | (2) | |||||
Ending balance at Dec. 31, 2017 | 321 | 1,128 | (650) | (171) | 307 | 14 | |
Ending balance, shares at Dec. 31, 2017 | 1,055 | ||||||
Beginning balance at Sep. 30, 2018 | $ (320) | 1,128 | (1,272) | (190) | (334) | 14 | |
Beginning balance, shares at Sep. 30, 2018 | 1,052 | 1,052 | |||||
Cumulative effect of ASC 606 adoption | $ 150 | 139 | 139 | 11 | |||
Net income | 86 | 86 | 86 | ||||
Other comprehensive (loss) income, net of tax | (22) | (22) | (22) | ||||
Dividends | (31) | (31) | (31) | ||||
Distribution to noncontrolling interest holders | (2) | (2) | |||||
Other, shares | 8 | ||||||
Ending balance at Dec. 31, 2018 | $ (139) | $ 1,128 | $ (1,078) | $ (212) | $ (162) | $ 23 | |
Ending balance, shares at Dec. 31, 2018 | 1,052 | 1,060 |
Description of Business
Description of Business | 3 Months Ended |
Dec. 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of Business | 1. Description of Business Warner Music Group Corp. (the “Company”) was formed on November 21, 2003. The Company is the direct parent of WMG Holdings Corp. (“Holdings”), which is the direct parent of WMG Acquisition Corp. (“Acquisition Corp.”). Acquisition Corp. is one of the world’s major music-based content companies. Acquisition of Warner Music Group by Access Industries Pursuant to an Agreement and Plan of Merger, dated as of May 6, 2011 (the “Merger Agreement”), by and among the Company, AI Entertainment Holdings LLC (formerly Airplanes Music LLC), a Delaware limited liability company (“Parent”) and an affiliate of Access Industries, Inc. (“Access”), and Airplanes Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), on July 20, 2011 (the “Merger Closing Date”), Merger Sub merged with and into the Company with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”). In connection with the Merger, the Company delisted its common stock from the NYSE. The Company continues voluntarily to file with the SEC current and periodic reports that would be required to be filed with the SEC pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as provided for in certain covenants contained in the instruments covering its outstanding indebtedness. Recorded Music Operations The Company’s Recorded Music business primarily consists of the discovery and development of artists and the related marketing, distribution and licensing of recorded music produced by such artists. The Company plays an integral role in virtually all aspects of the recorded music value chain from discovering and developing talent to producing music and promoting artists and their products. In the United States, Recorded Music operations are conducted principally through the Company’s major record labels— Warner Bros. Records and Atlantic Records. In October 2018, the Company launched Elektra Music Group in the United States as a standalone label group, which comprises the Elektra, Fueled by Ramen and Roadrunner labels. The Company’s Recorded Music operations also include Rhino, a division that specializes in marketing the Company’s music catalog through compilations and reissuances of previously released music and video titles. The Company also conducts its Recorded Music operations through a collection of additional record labels, including Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Nonesuch, Parlophone, Reprise, Sire, Spinnin’, Warner Classics and Warner Music Nashville. Outside the United States, Recorded Music activities are conducted in more than 50 countries through various subsidiaries, affiliates and non-affiliated licensees. Internationally, the Company engages in the same activities as in the United States: discovering and signing artists and distributing, marketing and selling their recorded music. In most cases, the Company also markets and distributes the music of those artists for whom the Company’s domestic record labels have international rights. In certain smaller markets, the Company licenses the right to distribute the Company’s records to non-affiliated third-party record labels. The Company’s international artist services operations include a network of concert promoters through which it provides resources to coordinate tours for the Company’s artists and other artists as well as management companies that guide artists with respect to their careers. The Company’s Recorded Music distribution operations include Warner-Elektra-Atlantic Corporation (“WEA Corp.”), which markets and sells music and video products to retailers and wholesale distributors; Alternative Distribution Alliance (“ADA”), which distributes the products of independent labels to retail and wholesale distributors; and various distribution centers and ventures operated internationally. The Company’s Recorded Music products are sold in digital form to an expanded universe of digital partners, including digital streaming services such as Amazon, Apple Music, Deezer, Napster, Soundcloud, Spotify, Tencent and YouTube, digital radio services such as iHeart Radio, Pandora and Sirius XM and digital download services such as Apple’s iTunes and Google Play. In addition, Recorded Music products are sold in physical retail outlets and in physical form to online physical retailers such as Amazon.com and bestbuy.com The Company has integrated the exploitation of digital content into all aspects of its business, including artist and repertoire (“A&R”), marketing, promotion and distribution. The Company’s business development executives work closely with A&R departments to ensure that while music is being produced, digital assets are also created with all distribution channels in mind, including streaming services, social networking sites, online portals and music-centered destinations. The Company also works side by side with its digital partners to test new concepts. The Company believes existing and new digital businesses will be a significant source of growth and will provide new opportunities to successfully monetize its assets and create new revenue streams. The proportion of digital revenues attributed to each distribution channel varies by region and proportions may change as the roll out of new technologies continues. As an owner of music content, the Company believes it is well positioned to take advantage of growth in digital distribution and emerging technologies to maximize the value of its assets. The Company has diversified its revenues beyond its traditional businesses by entering into expanded-rights deals with recording artists in order to partner with artists in other aspects of their careers. Under these agreements, the Company provides services to and participates in artists’ activities outside the traditional recorded music business such as touring, merchandising and sponsorships. The Company has built artist services capabilities and platforms for exploiting this broader set of music-related rights and participating more widely in the monetization of the artist brands it helps create. The Company believes that entering into expanded-rights deals and enhancing its artist services capabilities in areas such as concert promotion, merchandising and management have permitted it to diversify revenue streams and capitalize on other revenue opportunities. This provides for improved long-term relationships with artists and allows the Company to more effectively connect artists and fans. Music Publishing Operations While recorded music is focused on exploiting a recording of a composition, music publishing is an intellectual property business focused on the exploitation of the composition itself. In return for promoting, placing, marketing and administering the creative output of a songwriter, or engaging in those activities for other rightsholders, the Company’s Music Publishing business garners a share of the revenues generated from use of the composition. The Company’s Music Publishing operations are conducted principally through Warner/Chappell, its global Music Publishing company, headquartered in Los Angeles with operations in over 50 countries through various subsidiaries, affiliates and non-affiliated licensees. The Company owns or controls rights to more than one million musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions. Assembled over decades, its award-winning catalog includes over 70,000 songwriters and composers and a diverse range of genres including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, techno, alternative and gospel. Warner/Chappell also administers the music and soundtracks of several third-party television and film producers and studios. The Company has an extensive production music library collectively branded as Warner/Chappell Production Music. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Interim Financial Statements The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended December 31, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2019. The consolidated balance sheet at September 30, 2018 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 (File No. 001-32502). Basis of Consolidation The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling voting interest and/or variable interest required to be consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation The Company maintains a 52-53 week fiscal year ending on the last Friday in each reporting period. As such, all references to December 31, 2018 and December 31, 2017 relate to the periods ended December 28, 2018 and December 29, 2017, respectively. For convenience purposes, the Company continues to date its financial statements as of December 31. The fiscal year ended September 30, 2018 ended on September 28, 2018. The Company has performed a review of all subsequent events through the date the financial statements were issued and has determined that no additional disclosures are necessary. Income Taxes At the end of each interim period, the Company makes its best estimate of the effective tax rate expected to be applicable for the full fiscal year and uses that rate to provide for income taxes on a current year-to-date basis before discrete items. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). In accordance with ASC Topic 740, Income Taxes (“ASC 740”) the Company recorded the impacts in the period of enactment. New Accounting Pronouncements Adoption of New Revenue Recognition Standard In May 2014, the FASB issued guidance codified in ASC 606, Revenue from Contracts with Customers (“ASC 606”), which replaces the guidance in former ASC 605, Revenue Recognition and ASC 928-605, Entertainment – Music. The amendment was the result of a joint effort by the FASB and the International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and international financial reporting standards ("IFRS"). The joint project clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and IFRS. The Company adopted ASC 606 on October 1, 2018, using the modified retrospective method to all contracts not completed as of the date of adoption. The reported results as of and for the three-month period ended December 31, 2018 reflect the application of the new standard, while the reported results for the three-month period ending December 31, 2017 have not been adjusted to reflect the new standard and were prepared under prior revenue recognition accounting guidance. The adoption of ASC 606 resulted in a change in the timing of revenue recognition in the Company’s Music Publishing segment as well as international broadcast rights within Recorded Music. Under the new revenue recognition rules, revenue is recorded based on best estimates available in the period of sale or usage whereas revenue was previously recorded when cash was received for both the licensing of publishing rights and international Recorded Music broadcast fees. Additionally, for certain licenses where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. approximately $139 million, net of tax, as of October 1, 2018. The Company also reclassified $28 The following table provides the cumulative effect of the changes made to the opening balance sheet, as of October 1, 2018, from the adoption of ASC 606 and which primarily relates to the accrual of licensing revenue in the period of sale or usage. September 30, Impact of October 1, 2018 Adoption 2018 (in millions) Assets Accounts receivable, net $ 447 $ 257 $ 704 Total current assets 1,176 257 1,433 Other assets 78 15 93 Total assets $ 5,344 $ 272 $ 5,616 Liabilities and Equity Accrued royalties 1,396 79 1,475 Accrued liabilities 423 (1 ) 422 Deferred revenue 208 (27 ) 181 Other current liabilities 34 33 67 Total current liabilities 2,373 84 2,457 Deferred tax liabilities, net 165 37 202 Other noncurrent liabilities 307 1 308 Total liabilities 5,664 122 5,786 Equity: Accumulated Deficit (1,272 ) 139 (1,133 ) Non-controlling interest 14 11 25 Total equity (320 ) 150 (170 ) Total liabilities and equity $ 5,344 $ 272 $ 5,616 The disclosure of the impact of adoption on our consolidated statement of operations and consolidated statement of cash flows for the three months ended December 31, 2018 and the consolidated balance sheet as of December 31, 2018 are as follows (in millions): December 31, 2018 As Reported Balances without adoption of ASC 606 Effect of Change (in millions) Revenues $ 1,203 $ 1,183 $ 20 Cost and expenses: Cost of revenue (626 ) (624 ) (2 ) Operating income 147 129 18 Income before income taxes 136 118 18 Income tax expense (50 ) (43 ) (7 ) Net income 86 75 11 Less: Income attributable to noncontrolling interest — — — Net income attributable to Warner Music Group Corp. $ 86 $ 75 $ 11 December 31, 2018 As Reported Balances without adoption of ASC 606 Effect of Change (in millions) Assets Accounts receivable, net $ 789 $ 499 $ 290 Total current assets 1,592 1,302 290 Other assets 125 110 15 Deferred tax assets, net 10 10 — Total assets $ 5,946 $ 5,641 $ 305 Liabilities and Equity Accrued royalties 1,551 1,471 80 Accrued liabilities 495 496 (1 ) Deferred revenue 182 211 (29 ) Other current liabilities 162 115 47 Total current liabilities 2,593 2,496 97 Deferred tax liabilities, net 219 175 44 Other noncurrent liabilities 275 271 4 Total liabilities 6,085 5,940 145 Equity: Accumulated Deficit (1,078 ) (1,227 ) 149 Non-controlling interest 23 12 11 Total equity (139 ) (299 ) 160 Total liabilities and equity $ 5,946 $ 5,641 $ 305 December 31, 2018 As Reported Balances without adoption of ASC 606 Effect of Change (in millions) Cash flows from operating activities Net income $ 86 $ 75 $ 11 Deferred income taxes 11 4 7 Changes in operating assets and liabilities: Accounts receivable (88 ) (55 ) (33 ) Accounts payable and accrued liabilities (92 ) (95 ) 3 Royalty payables 92 91 1 Deferred revenues (5 ) (3 ) (2 ) Other balance sheet changes 53 40 13 Net cash provided by operating activities 92 92 - Effect of exchange rate changes on cash and equivalents (2 ) (2 ) - Net increase in cash and equivalents 34 34 - Cash and equivalents at beginning of period 514 514 - Cash and equivalents at end of period $ 548 $ 548 $ - Recently Adopted Accounting Pronouncements In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities The Company adopted ASU 2016-01 on October 1, 2018 and has elected to use the measurement alternative to measure our equity investments without readily determinable fair values. This guidance was applied prospectively and did not have a significant impact on the Company’s financial statements. For the three months ended December 31, 2018, there were no observable price change events that were completed related to our equity investments without readily determinable fair values. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory In January of 2017, the FASB issued ASU 2017-01, Business Combinations In February 2018, FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities The Company is evaluating the impact of the adoption of this standard on its financial statements and disclosures. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Dec. 31, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition | 3. Revenue Recognition For our operating segments, Recorded Music and Music Publishing, the Company accounts for a contract when it has legally enforceable rights and obligations and collectability of consideration is probable. The Company identifies the performance obligations and determines the transaction price associated with the contract, which is then allocated to each performance obligation, using management’s best estimate of standalone selling price for arrangements with multiple performance obligations. Certain of our arrangements include licenses of intellectual property with consideration in the form of sales- and usage-based royalties. Royalty revenue is recognized when the subsequent sale or usage occurs using the best estimates available of the amounts that will be received by the Company. Disaggregation of Revenue Our revenue consists of the following categories, which aggregate into our segments - Recorded Music and Music Publishing. For the Three Months Ended December 31, 2018 vs. 2017 2018 2017 $ Change % Change Revenue by Type Digital $ 563 $ 481 $ 82 17 % Physical 231 223 8 4 % Total Digital and Physical 794 704 90 13 % Artist services and expanded-rights 166 105 61 58 % Licensing 81 95 (14 ) -15 % Total Recorded Music 1,041 904 137 15 % Performance 53 43 10 23 % Digital 65 53 12 23 % Mechanical 15 18 (3 ) -17 % Synchronization 29 27 2 7 % Other 3 2 1 50 % Total Music Publishing 165 143 22 15 % Intersegment eliminations (3 ) (2 ) (1 ) 50 % Total Revenue $ 1,203 $ 1,045 $ 158 15 % Revenue by Geographical Location U.S. Recorded Music $ 431 $ 370 $ 61 16 % U.S. Music Publishing 73 63 10 16 % Total U.S. 504 433 71 16 % International Recorded Music 610 534 76 14 % International Music Publishing 92 80 12 15 % Total International 702 614 88 14 % Intersegment eliminations (3 ) (2 ) (1 ) 50 % Total Revenue $ 1,203 $ 1,045 $ 158 15 % Recorded Music Recorded Music mainly involves selling, marketing, distribution and licensing of recorded music produced by our artists. Recorded Music revenues are derived from four main sources, which include digital, physical, artist services and expanded rights and licensing. Digital revenues are generated from the expanded universe of digital partners, including digital streaming services and digital download services. These licenses typically contain a single performance obligation, which is ongoing access to all intellectual property in an evolving content library, predicated on: (1) the business practice and contractual ability to remove specific content without a requirement to replace the content and without impact to minimum royalty guarantees and (2) the contracts not containing a specific listing of content subject to the license. Digital licensing contracts are generally long-term with consideration in the form of sales- and usage-based royalties that are typically received monthly. Certain contracts contain non-recoupable fixed fees or minimum guarantees, which are recoupable against royalties. Upon contract inception, the Company will assess whether a shortfall or breakage is expected (i.e., where the minimum guarantee will not be recouped through royalties) in order to determine timing of revenue recognition for the fixed fee or minimum guarantee. For fixed fee and minimum guarantee contracts where breakage (i.e., where the minimum guarantee will not be recouped through royalties) is expected, the total transaction price (fixed fee or minimum guarantee) is recognized on a straight-line basis over the contractual term. The Company updates its assessment of the transaction price each reporting period to see if anticipated royalty earnings exceed the minimum guarantee. For contracts where breakage is not expected, royalties are recognized as revenue as sales or usage occurs based upon the licensee’s usage reports and, when these reports are not available, historical data, industry information and other relevant trends. Additionally, for certain licenses where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Physical revenues are generated from the sale of physical products such as CDs, vinyl and DVDs. Revenues from the sale of physical Recorded Music products are recognized upon transfer of control to the customer, which typically occurs once the product has been shipped and the ability to direct use and obtain substantially all of the benefit from the asset have been transferred. In accordance with industry practice and as is customary in many territories, certain products, such as CDs and DVDs, are sold to customers with the right to return unsold items. Revenues from such sales are generally recognized upon shipment based on gross sales less a provision for future estimated returns. Artist services and expanded-rights revenues are generated from artist services businesses and participations in expanded-rights associated with artists, including sponsorship, fan clubs, artist websites, merchandising, touring, concert promotion, ticketing, and artist and brand management. Artist services and expanded-rights contracts are generally short term. Revenue is recognized as or when services are provided (e.g., at time of an artist’s event) assuming collectability is probable. In some cases, the Company is reliant on the artist to report revenue generating activities. For certain artist services and expanded-rights contracts, collectability is not considered probable until notification is received from the artist’s management. Licensing revenues represent royalties or fees for the right to use sound recordings in combination with visual images such as in films or television programs, television commercials and videogames. In certain territories, the Company may also receive royalties when sound recordings are performed publicly through broadcast of music on television, radio and cable, and in public spaces such as shops, workplaces, restaurants, bars and clubs. Licensing contracts are generally short term. For fixed fee contracts, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Royalty based contracts are recognized as the underlying sales or usage occurs. Music Publishing Music Publishing acts as a copyright owner and/or administrator of the musical compositions and generates revenues related to the exploitation of musical compositions (as opposed to recorded music). Music publishers generally receive royalties from to the use of the composition in public performances, digital and physical recordings and in combination with visual images. Music publishing revenues are derived from five main sources: mechanical, performance, synchronization, digital and other. Performance revenues are received when the composition is performed publicly through broadcast of music on television, radio and cable, live performance at a concert or other venue (e.g., arena concerts and nightclubs), and performance of music in staged theatrical productions. Digital revenues are generated with respect to the compositions being embodied in recordings sold in digital streaming services, digital download services and digital performance. Mechanical revenues are generated with respect to the compositions embodied in recordings sold in any physical format or configuration such as CDs, vinyl and DVDs. Synchronization revenues represent the right to use the composition in combination with visual images such as in films or television programs, television commercials and videogames as well as from other uses such as in toys or novelty items and merchandise. Other revenues represent earnings for use in printed sheet music and other uses. Digital and synchronization revenue recognition is similar for both Recorded Music and Music Publishing, therefore refer to the discussion within Recorded Music. Included in these revenue streams, excluding synchronization and other, are licenses with music societies (e.g., ASCAP, BMI, SESAC, GEMA), which are long term contracts containing a single performance obligation, which is ongoing access to all intellectual property in an evolving content library Royalties are recognized as the sale or usage occurs based upon usage reports and, when these reports are not available, royalties are estimated based on historical data, such as recent royalties reported, Company specific information with respect to changes in repertoire, industry information and other relevant trends. Also included in these revenue streams are smaller, short term contracts for specified content, which generally involve a fixed fee. The Company excludes from the measurement of transaction price all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers. Sales Returns and Uncollectible Accounts In accordance with practice in the recorded music industry and as customary in many territories, certain physical revenue products (such as CDs and DVDs) are sold to customers with the right to return unsold items. Revenues from such sales are recognized when the products are shipped based on gross sales less a provision for future estimated returns. In determining the estimate of physical product sales that will be returned, management analyzes vendor sales of product, historical returns trends, current economic conditions, changes in customer demand and commercial acceptance of our products. Based on this information, management reserves a percentage of each dollar of physical product sales that provide the customer with the right of return, and records an asset for the value of the returned goods and liability for the amounts expected to be refunded. Similarly, management evaluates accounts receivables to determine if they will ultimately be collected. In performing this evaluation, significant judgments and estimates are involved, including an analysis of specific risks on a customer-by-customer basis for larger accounts and customers and a receivables aging analysis that determines the percent that has historically been uncollected by aged category. The time between the Company issuance of an invoice and payment due date is not significant; customer payments that are not collected in advance of the transfer of promised services or goods are generally due no later than 30 days from invoice date. Based on this information, management provides a reserve for the estimated amounts believed to be uncollectible. Based on management’s analysis of sales returns, refund liabilities of $44 million were established at December 31, 2018 and sales return reserves of $28 million were established at September 30, 2018. Based on management’s analysis of uncollectible accounts, reserves of $21 million and $17 million were established at December 31, 2018 and September 30, 2018, respectively. The ratio of our receivable allowances to gross accounts receivables was 3% at December 31, 2018 and 3% at September 30, 2018. Principal versus Agent Revenue Recognition The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service before transfer to the customer. When the Company concludes that it controls the good or service before transfer to the customer, the Company is considered a principal in the transaction and records revenue on a gross basis. When the Company concludes that it does not control the good or service before transfer to the customer but arranges for another entity to provide the good or service, the Company acts as an agent and records revenue on a net basis in the amount it earns for its agency service. In the normal course of business, the Company acts as an intermediary with respect to certain payments received from third parties. For example, the Company distributes music product on behalf of third-party record labels. Based on the above guidance, the Company records the distribution of product on behalf of third-party record labels on a gross basis, subject to the terms of the contract, as the Company controls the content before transfer to the customer. Conversely, recorded music compilations distributed by other record companies where the Company has a right to participate in the profits are recorded on a net basis. Deferred Revenue Deferred revenue principally relates to fixed fees and minimum guarantees received in advance of the Company’s performance or usage by the licensee. Reductions in deferred revenue are a result of the Company’s performance under the contract or usage by the licensee. Deferred revenue increased $69 million during the three months ended December 31, 2018 related to cash received from our customers for fixed fees and minimum guarantees in advance of performance. Revenues of $70 million Performance Obligations The Company recognized $17 Wholly and partially unsatisfied performance obligations represent future revenues not yet recorded under long term intellectual property licensing contracts. Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at December 31, 2018 are as follows (in millions): Rest of FY19 FY20 FY21 Thereafter Total (in millions) Remaining performance obligations $ 157 $ 119 $ 86 $ 6 $ 368 Total $ 157 $ 119 $ 86 $ 6 $ 368 |
Acquisition of EMP
Acquisition of EMP | 3 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisition of EMP | 4. Acquisition of EMP On October 10, 2018, Warner Music Group Germany Holding GmbH (“WMG Germany”), a limited liability company under the laws of Germany and an indirect subsidiary of Warner Music Group Corp., closed its previously announced acquisition (the “Acquisition”) of certain shares of E.M.P. Merchandising Handelsgesellschaft mbH, a limited liability company under the laws of Germany, all of the share capital of MIG Merchandising Investment GmbH, a limited liability company under the laws of Germany (“MIG”), certain shares of Large Popmarchandising BVBA, a limited liability company under the laws of Belgium (“Large”), and each of EMP Merchandising Handelsgesellschaft mbH and MIG’s direct and indirect subsidiaries (the “Subsidiaries” and, together with EMP Merchandising Handelsgesellschaft mbH, MIG and Large, “EMP”) from funds associated with Sycamore Partners, pursuant to the Sale and Purchase Agreement, dated as of September 11, 2018, by and between SP Merchandising Holding GmbH & Co. KG, a limited partnership under the laws of Germany, and WMG Germany (“Acquisition Agreement”). The cash consideration paid at closing of the Acquisition was approximately €166 million, which reflects an agreed enterprise value of EMP of approximately €155 million (equivalent to approximately $180 million), as adjusted for, among other items, net debt and working capital of EMP. The Acquisition was accounted for in accordance with ASC 805, using the acquisition method of accounting. The assets and liabilities of the Company, including identifiable intangible assets, have been measured at their fair value primarily using Level 3 inputs (see Note 13 for additional information on fair value inputs). Determining the fair value of the assets acquired and liabilities assumed requires judgment and involved the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset useful lives and market multiples, among other items. The use of different estimates and judgments could yield materially different results. The excess of the purchase price, over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets and deferred tax adjustments, has been recorded to goodwill. The resulting goodwill has been allocated to our Recorded Music reportable segment. The recognized goodwill will not be deductible for income tax purposes. Any impairment charges made in future periods associated with goodwill will not be tax deductible. The table below presents (i) the preliminary estimate of the Acquisition consideration as it relates to the acquisition of EMP by the WMG Germany and (ii) the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of October 10, 2018 (in millions): Purchase Price € 155 Preliminary Working Capital 11 Adjusted Preliminary Purchase Price € 166 Foreign Currency Rate at October 10, 2018 1.15 Adjusted Preliminary Purchase Price in U.S. dollars $ 190 Fair value of assets acquired and liabilities assumed Cash and equivalents $ 7 Accounts receivable 3 Inventories 37 Other current assets 5 Property plant and equipment 28 Intangible assets 57 Accounts payable (18 ) Other current liabilities (11 ) Deferred revenue (7 ) Deferred tax liabilities (18 ) Other noncurrent liabilities (2 ) Fair value of assets acquired and liabilities assumed 81 Goodwill recorded 109 Total purchase price allocated $ 190 The acquisition accounting is subject to revision based on final determinations of fair value and allocations of purchase price to the identifiable assets and liabilities acquired, in addition to the determination of the final consideration, including the determination of the final working capital adjustment pursuant to the mechanism set forth in the Acquisition Agreement Pro Forma Financial Information The following unaudited pro forma information has been presented as if the Acquisition occurred on October 1, 2017. This information is based on historical results of operations, adjusted to give effect to pro forma events that are (i) directly attributable to the Acquisition; (ii) factually supportable; and (iii) expected to have a continuing impact on the Company’s combined results. The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the Acquisition had taken place at the beginning of fiscal 2017. Three Months Ended Three Months Ended December 31, 2018 December 31, 2017 (in millions) Revenue $ 1,208 $ 1,127 Operating income 147 92 Net income attributable to Warner Music Group $ 86 $ 5 Actual results related to EMP included in the Consolidated Statements of Operations for the quarter ended December 31, 2018 relate to the transition period from October 10, 2018 to December 31, 2018 and consist of revenues of $76 million and operating income of $6 million. |
Comprehensive Income (Loss)
Comprehensive Income (Loss) | 3 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Comprehensive Income (Loss) | 5. Comprehensive Income (Loss) Comprehensive income (loss), which is reported in the accompanying consolidated statements of (deficit) equity, consists of net income (loss) and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net income (loss). For the Company, the components of other comprehensive income (loss) primarily consist of foreign currency translation gains and losses, minimum pension liabilities, and deferred gains and losses on financial instruments designated as hedges under ASC 815, which include foreign exchange contracts. The following summary sets forth the changes in the components of accumulated other comprehensive loss, net of related taxes of less than $1 million: Foreign Minimum Deferred Gains Accumulated Currency Pension On Derivative Other Translation Liability Financial Comprehensive Loss (a) Adjustment Instruments Loss, net (in millions) Balance at September 30, 2018 $ (184 ) $ (9 ) $ 3 $ (190 ) Other comprehensive loss (16 ) — (6 ) (22 ) Amounts reclassified from accumulated other comprehensive income — — — — Balance at December 31, 2018 $ (200 ) $ (9 ) $ (3 ) $ (212 ) (a) Includes historical foreign currency translation related to certain intra-entity transactions. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets Goodwill The following analysis details the changes in goodwill for each reportable segment: Recorded Music Music Publishing Total (in millions) Balance at September 30, 2018 $ 1,228 $ 464 $ 1,692 Acquisitions (a) 109 — 109 Divestitures — — — Other adjustments (b) (8 ) — (8 ) Balance at December 31, 2018 $ 1,329 $ 464 $ 1,793 (a) Relates to the acquisition of EMP during the three months ended December 31, 2018. (b) Other adjustments during the three months ended December 31, 2018 represent foreign currency movements. The Company performs its annual goodwill impairment test in accordance with ASC 350, Intangibles—Goodwill and other Intangible Assets Intangible assets consist of the following: Weighted Average December 31, September 30, Useful Life 2018 2018 (in millions) Intangible assets subject to amortization: Recorded music catalog 10 years $ 857 $ 870 Music publishing copyrights 26 years 1,534 1,540 Artist and songwriter contracts 13 years 852 864 Trademarks 6 years 12 12 Other intangible assets 5 years 82 26 Total gross intangible asset subject to amortization 3,337 3,312 Accumulated amortization (1,498 ) (1,461 ) Total net intangible assets subject to amortization 1,839 1,851 Intangible assets not subject to amortization: Trademarks and tradenames Indefinite 153 154 Total net intangible assets $ 1,992 $ 2,005 |
Debt
Debt | 3 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | 7. Debt Debt Capitalization Long-term debt, all of which was issued by Acquisition Corp., consists of the following: December 31, September 30, 2018 2018 (in millions) Revolving Credit Facility (a) $ — $ — Senior Term Loan Facility due 2023 (b) 1,311 1,310 5.625% Senior Secured Notes due 2022 (c) 220 246 5.000% Senior Secured Notes due 2023 (d) 297 297 4.125% Senior Secured Notes due 2024 (e) 351 399 4.875% Senior Secured Notes due 2024 (f) 217 247 3.625% Senior Secured Notes due 2026 (g) 281 — 5.500% Senior Notes due 2026 (h) 321 320 Total debt (i) $ 2,998 $ 2,819 (a) Reflects $180 million of commitments under the Revolving Credit Facility available at both December 31, 2018 and September 30, 2018, less letters of credit outstanding of approximately $16 million at December 31, 2018 and $8 million at September 30, 2018. There were no loans outstanding under the Revolving Credit Facility at December 31, 2018 or September 30, 2018. (b) Principal amount of $1.326 billion less unamortized discount of $4 million and unamortized deferred financing costs of $11 million and $12 million at December 31, 2018 and September 30, 2018, respectively. (c) Principal amount of $221 million and $248 million less unamortized deferred financing costs of $1 million and $2 million at December 31, 2018 and September 30, 2018 respectively. (d) Principal amount of $300 million less unamortized deferred financing costs of $3 million at both December 31, 2018 and September 30, 2018. (e) Face amount of €311 million and €345 million at December 31, 2018 and September 30, 2018 respectively. Above amounts represent the dollar equivalent of such note at December 31, 2018 and September 30, 2018. Principal amount of $354 million and $402 million at December 31, 2018 and September 30, 2018, respectively, less unamortized deferred financing costs of $3 million and $3 million at December 31, 2018 and September 30, 2018, respectively. (f ) Principal amount of $220 million and $250 million less unamortized deferred financing costs of $3 million and $3 million at December 31, 2018 and September 30, 2018 respectively. ( g ) Face amount of €250 million at December 31, 2018. Above amounts represent the dollar equivalent of such note at December 31, 2018. Principal amount of $285 million at December 31, 2018 less unamortized deferred financing costs of $4 million at December 31, 2018. (h ) Principal amount of $325 million and $325 million less unamortized deferred financing costs of $4 million and $5 million at December 31, 2018 and September 30, 2018 respectively. ( i ) Principal amount of debt of $3.031 billion and $2.851 billion less unamortized discount of $4 million and $4 million and unamortized deferred financing costs of $29 million and $28 million at December 31, 2018 and September 30, 2018, respectively. December 2017 Senior Term Loan Credit Agreement Amendment On December 6, 2017, Acquisition Corp. entered into an amendment (the “December 2017 Senior Term Loan Credit Agreement Amendment”) to the Senior Term Loan Credit Agreement, dated November 1, 2012, among Acquisition Corp., the guarantors party thereto, the lenders party thereto and Credit Suisse AG, as administrative agent, governing Acquisition Corp.’s senior secured term loan facility with Credit Suisse AG, as administrative agent, and the other financial institutions and lenders from time to time party thereto, to, among other things, reduce the pricing terms of its outstanding term loans, change certain incurrence thresholds governing the ability to incur debt and liens, change certain EBITDA add-backs and increase the thresholds above which the excess cash flow sweep is triggered. The Company recorded a loss on extinguishment of debt of approximately $1 million, which represented the discount and unamortized deferred financing costs related to the prior tranche of debt of the lenders that was replaced. New Revolving Credit Agreement On January 31, 2018, the Company entered into a new revolving credit agreement (the “Revolving Credit Agreement”) for its Revolving Credit Facility, and terminated its existing revolving credit agreement (the “Old Revolving Credit Agreement”). The Revolving Credit Agreement differs from the Old Revolving Credit Agreement in that it, among other things, reduces the interest rate margin applicable to the loans, extends the maturity date thereunder, provides for the option to increase the commitments under the Company’s then existing revolving credit agreement, provides for greater flexibility to amend and extend the Company’s then existing revolving credit agreement and create additional tranches thereunder, provides for greater flexibility over future amendments, increases the springing financial maintenance covenant to 4.75:1.00 and provides that the covenant shall not be tested unless at the end of a fiscal quarter the outstanding amount of loans and drawings under letters of credit which have not been reimbursed exceeds $54 million and aligns the other negative covenants with those of the Senior Term Loan Credit Agreement. References to “Revolving Credit Facility” below in this Note 7 are to our new revolving credit facility. March 2018 Senior Term Loan Credit Agreement Amendment On March 14, 2018, Acquisition Corp. incurred $320 million of supplemental term loans (the “Supplemental Term Loans”) pursuant to an increase supplement (the “March 2018 Senior Term Loan Credit Agreement Supplement”) to the Senior Term Loan Credit Agreement, dated November 1, 2012, among Acquisition Corp., the guarantors party thereto, the lenders party thereto and Credit Suisse AG, as administrative agent, governing Acquisition Corp.’s senior secured term loan facility with Credit Suisse AG, as administrative agent, and the other financial institutions and lenders from time to time party thereto (as amended, the “Senior Term Loan Credit Agreement”). The principal amount outstanding under the Senior Term Loan Credit Agreement including the Supplemental Term Loans is $1.326 billion . Notes Offering On March 14, 2018, Acquisition Corp. issued $325 million in aggregate principal amount of its 5.500% Senior Notes due 2026. Acquisition Corp. used the net proceeds to pay the consideration in the tender offer for its 6.750% Senior Notes due 2022 (the “6.750% Senior Notes”) and to redeem the remaining 6.750% Senior Notes as described below. Tender Offer and Notes Redemption On March 14, 2018, Acquisition Corp. accepted for purchase in connection with the tender offer for the 6.750% Senior Notes that had been validly tendered and not validly withdrawn at or prior to 5:00 p.m., New York City time on March 13, 2018 (the “Expiration Time”) thereby reducing the aggregate principal amount of the 6.750% Senior Notes by $523 million. Acquisition Corp. then issued a notice of redemption on March 14, 2018 with respect to the remaining $112 million of 6.750% Senior Notes outstanding that were not accepted for payment pursuant to the tender offer. Following payment of the 6.750% Senior Notes tendered at or prior to the Expiration Time, Acquisition Corp. deposited with the Trustee funds of $119 million to satisfy all obligations under the applicable indenture governing the 6.750% Senior Notes, including call premiums and interest through the date of redemption on April 15, 2018, for the remaining 6.750% Senior Notes not accepted for purchase in the tender offer. On April 15, 2018, Acquisition Corp. redeemed the remaining outstanding 6.750% Senior Notes. The Company recorded a loss on extinguishment of debt in connection with the tender offer of approximately $23 million as a result of the partial debt redemption, which represents the premium paid on early redemption and unamortized deferred financing costs in March 2018. The Company incurred an additional loss on extinguishment of approximately $5 million in April 2018 related to the redemption on the remaining 6.750% Senior Notes, which represents the premium paid on early redemption and unamortized deferred financing costs. June 2018 Senior Term Loan Credit Agreement Amendment On June 7, 2018, Acquisition Corp. entered into an amendment (the “June 2018 Senior Term Loan Credit Agreement Amendment”) to the Senior Term Loan Credit Agreement, dated November 1, 2012, among Acquisition Corp., the guarantors party thereto, the lenders party thereto and Credit Suisse AG, as administrative agent, governing Acquisition Corp.’s senior secured term loan facility with Credit Suisse AG, as administrative agent, and the other financial institutions and lenders from time to time party thereto, to, among other things, reduce the pricing terms of its outstanding term loans, change certain incurrence thresholds governing the ability to incur debt and liens and exclude from the definition of “Senior Secured Indebtedness” certain liens that have junior lien priority on the collateral in relation to the outstanding term loans and the relevant guarantees, as applicable. The Company recorded a loss on extinguishment of debt of approximately $2 million, which represented the discount and unamortized deferred financing costs related to the prior tranche of debt of the lenders that was replaced. 3.625% Secured Notes Offering On October 9, 2018, Acquisition Corp. issued and sold €250 million in aggregate principal amount of 3.625% Senior Secured Notes due 2026 (the “3.625% Secured Notes”). Net proceeds of the offering were used to pay the purchase price of the acquisition of EMP, to redeem €34.5 million of the 4.125% Secured Notes (as described below), purchase $30 million of the Company’s 4.875% Senior Secured Notes (as described below) on the open market, and to redeem $26.55 million of the 5.625% Senior Secured Notes (as described below). Partial Redemption of 4.125% Secured Notes On October 12, 2018, Acquisition Corp. redeemed €34.5 million aggregate principal amount of its 4.125% Senior Secured Notes due 2024 (the “4.125% Secured Notes”) using a portion of the proceeds from the offering of 3.625% Secured Notes described above. The redemption price for the 4.125% Secured Notes was approximately €36.17 million, equivalent to 103% of the principal amount of the 4.125% Secured Notes, plus accrued but unpaid interest thereon to, but excluding, the redemption date, which was October 12, 2018. Following the partial redemption of the 4.125% Secured Notes, €310.5 million of the 4.125% Secured Notes remain outstanding. The Company recorded a loss on extinguishment of debt of approximately $2 million, which represents the premium paid on early redemption and unamortized deferred financing costs related to the partial redemption of this note. Open Market Purchase On October 9, 2018, Acquisition Corp. purchased, in the open market, $30 million aggregate principal amount of its outstanding 4.875% Senior Secured Notes due 2024 (the “4.875% Secured Notes”). The acquired notes were subsequently retired. Following retirement of the acquired notes, $220 million of the 4.875% Secured Notes remain outstanding. The Company recorded a loss on extinguishment of debt of less than $1 million, which represents the unamortized deferred financing costs related to the open market purchase. Partial Redemption of 5.625% Secured Notes On November 5, 2018, Acquisition Corp. redeemed $26.55 million aggregate principal amount of its 5.625% Senior Secured Notes due 2022 (the “5.625% Secured Notes”). The redemption price for the 5.625% Secured Notes was approximately $27.38 million, equivalent to 102.813% of the principal amount of the 5.625% Secured Notes, plus accrued but unpaid interest thereon to, but excluding, the redemption date, which was November 5, 2018. Following the partial redemption of the 5.625% Secured Notes, $220.95 million of the 5.625% Secured Notes remain outstanding. The Company recorded a loss on extinguishment of debt of approximately $1 million, which represents the premium paid on early redemption and unamortized deferred financing costs related to the partial redemption of this note. Interest Rates The loans under the Revolving Credit Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in the borrowing currency in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Revolving LIBOR”) subject to a zero floor, plus 1.75% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) the one-month Revolving LIBOR plus 1.0% per annum, plus, in each case, 0.75% per annum. If there is a payment default at any time, then the interest rate applicable to overdue principal will be the rate otherwise applicable to such loan plus 2.0% per annum. Default interest will also be payable on other overdue amounts at a rate of 2.0% per annum above the amount that would apply to an alternative base rate loan. The loans under the Senior Term Loan Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in U.S. dollars in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Term Loan LIBOR”) subject to a zero floor, plus 2.125% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) one-month Term Loan LIBOR, plus 1.00% per annum, plus, in each case, 1.125% per annum. If there is a payment default at any time, then the interest rate applicable to overdue principal and interest will be the rate otherwise applicable to such loan plus 2.0% per annum. Default interest will also be payable on other overdue amounts at a rate of 2.0% per annum above the amount that would apply to an alternative base rate loan. The Company has entered into, and in the future may enter into, interest rate swaps to manage interest rate risk. Maturity of Senior Term Loan Facility The loans outstanding under the Senior Term Loan Facility mature on November 1, 2023. Maturity of Revolving Credit Facility The maturity date of the Revolving Credit Facility is January 31, 2023. Maturities of Senior Notes and Senior Secured Notes As of December 31, 2018, there are no scheduled maturities of notes until 2022, when $221 million is scheduled to mature. Thereafter, $1.5 billion is scheduled to mature. Interest Expense, net Total interest expense, net, was $36 million and $36 million for the three months ended December 31, 2018 and December 31, 2017, respectively. The weighted-average interest rate of the Company’s total debt was 4.7% at December 31, 2018 and September 30, 2018 and 4.9% and December 31, 2017. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Sirius XM On September 11, 2013, the Company joined with Capitol Records, LLC, Sony Music Entertainment, UMG Recordings, Inc. and ABKCO Music & Records, Inc. in a lawsuit brought in California Superior Court against Sirius XM Radio Inc., alleging copyright infringement for Sirius XM’s use of pre-1972 sound recordings under California law. A nation-wide settlement was reached on June 17, 2015 pursuant to which Sirius XM paid the plaintiffs, in the aggregate, $210 million on July 29, 2015 and the plaintiffs dismissed their lawsuit with prejudice. The settlement resolves all past claims as to Sirius XM’s use of pre-1972 recordings owned or controlled by the plaintiffs and enables Sirius XM, without any additional payment, to reproduce, perform and broadcast such recordings in the United States through December 31, 2017. The allocation of the settlement proceeds among the plaintiffs was determined and the settlement proceeds were distributed accordingly. This resulted in a cash distribution to the Company of $33 million of which $28 million was recognized in revenue during the 2016 fiscal year and $4 million was recognized in revenue during the 2017 fiscal year. The balance of $1 million was recognized in the first quarter of the 2018 fiscal year. The Company is sharing its allocation of the settlement proceeds with its artists on the same basis as statutory revenue from Sirius XM is shared, i.e., the artist share of our allocation will be paid to artists by SoundExchange. As part of the settlement, plaintiffs agreed to negotiate in good faith to grant Sirius XM a license to publicly perform the plaintiffs’ pre-1972 sound recordings for the five-year period running from January 1, 2018 to December 31, 2022. Pursuant to the settlement, if the parties are unable to reach an agreement on license terms, the royalty rate for each license will be determined by binding arbitration on a willing buyer/willing seller standard. On December 21, 2017, Sirius XM commenced a single arbitration against all of the plaintiffs in California through JAMS to determine the rate for the five-year period. On May 1, 2018, the Company filed a lawsuit against Sirius XM in New York state court to stay the California arbitration and to compel a separate arbitration in New York solely between Sirius XM and the Company. On August 23, 2018, the Company filed a Stipulation of Discontinuance without Prejudice as to the New York state court action after Sirius XM agreed to participate in a separate arbitration with the Company in New York. The Company and Sirius XM are in discussions in an attempt to resolve this matter outside of the arbitration. Other Matters In addition to the matters discussed above, the Company is involved in various litigation and regulatory proceedings arising in the normal course of business. Where it is determined, in consultation with counsel based on litigation and settlement risks, that a loss is probable and estimable in a given matter, the Company establishes an accrual. In the currently pending proceedings, the amount of accrual is not material. An estimate of the reasonably possible loss or range of loss in excess of the amounts already accrued cannot be made at this time due to various factors typical in contested proceedings, including (1) the results of ongoing discovery; (2) uncertain damage theories and demands; (3) a less than complete factual record; (4) uncertainty concerning legal theories and their resolution by courts or regulators; and (5) the unpredictable nature of the opposing party and its demands. However, the Company cannot predict with certainty the outcome of any litigation or the potential for future litigation. As such, the Company continuously monitors these proceedings as they develop and adjusts any accrual or disclosure as needed. Regardless of the outcome, litigation could have an adverse impact on the Company, including the Company’s brand value, because of defense costs, diversion of management resources and other factors and it could have a material effect on the Company’s results of operations for a given reporting period. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act contains significant revisions to U.S. federal corporate income tax provisions, including, but not limited to, a reduction of the U.S. federal corporate statutory tax rate from 35% to 21%, a one-time transition tax on accumulated foreign earnings, an income inclusion of global intangible low-taxed income (“GILTI”), a deduction against foreign-derived intangible income (“FDII”) and a new minimum tax, the base erosion anti-abuse tax (“BEAT”). In accordance with ASC 740, the Company recorded the effects of the Tax Act during the three months ended December 31, 2017. The reduction in U.S. federal corporate statutory tax rate from 35% to 21% was effective January 1, 2018. The Tax Act requires companies with a fiscal year that begins before and ends after the effective date of the rate change to calculate a blended tax rate based on the pro rata number of days in the fiscal year before and after the effective date. As a result, for the fiscal year ending September 30, 2018, the Company’s U.S. federal statutory income tax rate was 24.5%. For the fiscal year ending September 30, 2019, the Company will be subject to the U.S. federal corporate statutory tax rate of 21%. The reduction in the U.S. federal corporate statutory tax rate required the Company to adjust its U.S. deferred tax assets and liabilities using the newly enacted tax rate of 21%. As a result, the Company recorded a U.S. income tax expense of $23 million for the reduction of its net U.S. deferred tax assets for the year ended September 30, 2018. The Company has not recorded any income tax liability related to the one-time transition tax on accumulated foreign earnings (“Transition Tax”) due to an overall deficit in accumulated foreign earnings. GILTI, FDII and BEAT are effective for the Company’s fiscal year ending September 30, 2019. The Company expects that the impact of GILTI offset by FDII will increase its U.S. federal tax in fiscal 2019 due primarily to the negative impact of U.S. net operating loss carryforward utilization on the allowable GILTI and FDII deductions. The Company has elected to recognize the GILTI impact in the specific period in which it occurs. For the three months ended December 31, 2018, the Company recorded an income tax expense of $50 million. The income tax expense for the three months ended December 31, 2018 is higher than the expected tax at the statutory tax rate of 21% primarily due to GILTI, non-deductible long term incentive plan, U.S. state and local taxes, foreign income taxed at rates higher than the U.S. statutory tax rate, income withholding taxes, foreign losses with no tax benefit offset by the tax benefit of a reduction in foreign income tax rates. For the three months ended December 31, 2017, the Company recorded an income tax expense of $52 million. The income tax expense for the three months ended December 31, 2017 is greater than the expected tax at the blended statutory tax rate of 24.5% primarily due to a U.S. income tax of $27 million arising from a reduction in net U.S. deferred tax assets due to the change in the U.S. statutory tax rate, foreign income taxed at rates higher than the U.S. statutory tax rate, income withholding taxes, foreign losses with no tax benefit and an increase in uncertain tax positions. The Company has determined that it is reasonably possible that the gross unrecognized tax benefits as of December 31, 2018 could decrease by up to approximately $2 million related to various ongoing audits and settlement discussions in various foreign jurisdictions during the next twelve months. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 10. Derivative Financial Instruments The Company uses derivative financial instruments, primarily foreign currency forward exchange contracts and interest rate swaps, for the purposes of managing foreign currency exchange rate risk and interest rate risk on expected future cash flows. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates. The Company enters into foreign currency forward exchange contracts primarily to hedge the risk that unremitted or future royalties and license fees owed to its domestic companies for the sale, or anticipated sale, of U.S.-copyrighted products abroad may be adversely affected by changes in foreign currency exchange rates. The Company focuses on managing the level of exposure to the risk of foreign currency exchange rate fluctuations on its major currencies, which include the Euro, British pound sterling, Japanese yen, Canadian dollar, Swedish krona and Australian dollar. The foreign currency forward exchange contracts related to royalties are designated and qualify as cash flow hedges under the criteria prescribed in ASC 815, Derivatives and Hedging The Company may at times choose to hedge foreign currency risk associated with financing transactions such as third-party debt and other balance sheet items. The foreign currency forward exchange contracts related to balance sheet items denominated in foreign currency are reviewed on a contract-by-contract basis and are designated accordingly. If these foreign currency forward exchange contracts do not qualify for hedge accounting, then the Company records these contracts at fair value on its balance sheet and the related gains and losses are immediately recognized in the statement of operations where there is an equal and offsetting entry related to the underlying exposure. The Company has entered into, and in the future may enter into, interest rate swaps to manage interest rate risk. These instruments may offset a portion of changes in income or expense, or changes in fair value of the Company’s long-term debt. The interest rate swap instruments are designated and qualify as cash flow hedges under the criteria prescribed in ASC 815, Derivatives and Hedging The fair value of foreign currency forward exchange contracts is determined by using observable market transactions of spot and forward rates (i.e., Level 2 inputs) which is discussed further in Note 13. Additionally, netting provisions are provided for in existing International Swap and Derivative Association Inc. agreements in situations where the Company executes multiple contracts with the same counterparty. As a result, net assets or liabilities resulting from foreign exchange derivatives subject to these netting agreements are classified within other current assets or other current liabilities in the Company’s consolidated balance sheets. The Company’s hedged interest rate transactions as of December 31, 2018 are expected to be recognized within 4 years. The fair value of interest rate swaps is based on dealer quotes of market rates (i.e., Level 2 inputs) which is discussed further in Note 13. Interest income or expense related to interest rate swaps is recognized in interest income, net in the same period as the related expense is recognized. The ineffective portions of interest rate swaps are recognized in other income/(expense), net in the period measured. The Company monitors its positions with, and the credit quality of, the financial institutions that are party to any of its financial transactions. As of December 31, 2018, the Company had outstanding hedge contracts for the sale of $309 million and the purchase of $178 million of foreign currencies at fixed rates that will be settled by September 2019. As of December 31, 2018, the Company had $2 million of unrealized deferred losses in comprehensive income related to foreign exchange hedging. As of September 30, 2018, the Company had no outstanding hedge contracts and no deferred gains or losses in comprehensive loss related to foreign exchange hedging. As of December 31, 2018 and September 30, 2018, the Company had outstanding $320 million in pay-fixed receive-variable interest rate swaps with unrealized deferred losses in comprehensive income related to the interest rate swap of $1 million and unrealized deferred gains in comprehensive income related to the interest rate swap of $3 million, respectively. The unrealized pre-tax losses of the Company’s foreign exchange forward exchange contracts designated as cash flow hedges recorded in other comprehensive income during the three months ended December 31, 2018 was $3 million. The unrealized pre-tax gain of the Company’s foreign exchange forward contracts designated as cash flow hedges recorded in other comprehensive income during the three months ended December 31, 2017 was $1 million. The unrealized pre-tax losses of the Company’s derivative interest rate swaps designated as cash flow hedges recorded in other comprehensive income during the three months ended December 31, 2018 was $6 million. As of December 31, 2017, the Company had no derivative interest rate swaps designated as cash flow hedges recorded in other comprehensive income. The following is a summary of amounts recorded in the Consolidated Balance Sheets pertaining to the Company’s designated cash flows hedges at December 31, 2018 and September 30, 2018: December 31, September 30, 2018 (a) 2018 (b) (in millions) Other current assets $ 2 $ — Other current liabilities — — Other noncurrent assets — 4 Other noncurrent liabilities 1 — (a) $8 million and $6 million of foreign exchange derivative contracts in asset and liability positions, respectively, and $1 million of interest rate swap in a liability position including non-designated cash flow hedges. (b) $4 million of interest rate swap in an asset position. |
Segment Information
Segment Information | 3 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | 11. Segment Information As discussed more fully in Note 1, based on the nature of its products and services, the Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing, which also represent the reportable segments of the Company. Information as to each of these operations is set forth below. The Company evaluates performance based on several factors, of which the primary financial measure is operating income (loss) before non-cash depreciation of tangible assets and non-cash amortization of intangible assets (“OIBDA”). The Company has supplemented its analysis of OIBDA results by segment with an analysis of operating income (loss) by segment. The accounting policies of the Company’s business segments are the same as those described in the summary of significant accounting policies included elsewhere herein. The Company accounts for intersegment sales at fair value as if the sales were to third parties. While intercompany transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses recognized by the segment that is counterparty to the transaction) are eliminated in consolidation, and therefore, do not themselves impact consolidated results. Corporate Recorded Music expenses and Music Publishing eliminations Total Three Months Ended (in millions) December 31, 2018 Revenues $ 1,041 $ 165 $ (3 ) $ 1,203 Operating income (loss) 163 22 (38 ) 147 Amortization of intangible assets 38 16 — 54 Depreciation of property, plant and equipment 10 1 3 14 OIBDA 211 39 (35 ) 215 December 31, 2017 Revenues $ 904 $ 143 $ (2 ) $ 1,045 Operating income (loss) 129 (1 ) (38 ) 90 Amortization of intangible assets 36 17 — 53 Depreciation of property, plant and equipment 8 1 3 12 OIBDA 173 17 (35 ) 155 |
Additional Financial Informatio
Additional Financial Information | 3 Months Ended |
Dec. 31, 2018 | |
Additional Financial Information [Abstract] | |
Additional Financial Information | 12. Additional Financial Information Cash Interest and Taxes The Company made interest payments of approximately $42 million and $51 million during the three months ended December 31, 2018 and December 31, 2017, respectively. The Company paid approximately $7 million of income and withholding taxes, during the three months ended December 31, 2018 and paid approximately $8 million of income and withholding taxes during the three months ended December 31, 2017. Special Cash Dividend On January 8, 2018, the Company’s Board of Directors approved a special cash dividend of $125 million, which was paid on January 12, 2018 to stockholders of record as of January 11, 2018. On May 7, 2018, the Company’s Board of Directors approved a special cash dividend of $300 million, which was paid on May 11, 2018 to stockholders of record as of May 7, 2018. On August 7, 2018, the Company’s Board of Directors approved a special cash dividend of $500 million which was paid on August 10, 2018 to stockholders of record as of August 7, 2018. Dividend Polic y The Company’s ability to pay dividends is restricted by covenants in the indentures governing our notes and in the credit agreements for our Senior Term Loan Facility and the Revolving Credit Facility. In the first quarter of 2019, the Company instituted a regular quarterly dividend policy whereby it intends to pay a modest regular quarterly dividend in each fiscal quarter and a variable dividend for the fourth fiscal quarter in an amount commensurate with cash expected to be generated from operations in such fiscal year, in each case, after taking into account other potential uses for cash, including acquisitions, investment in our business and repayment of indebtedness. On December 20, 2018 the Company’s board of directors approved the first dividend of $31.25 million paid on January 4, 2019 and recorded as an accrual on December 31, 2018. The declaration of each dividend will continue to be at the discretion of the Board. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 13. Fair Value Measurements ASC 820, Fair Value Measurement In addition to defining fair value, ASC 820 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: • Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. • Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. In accordance with the fair value hierarchy, described above, the following table shows the fair value of the Company’s financial instruments that are required to be measured at fair value as of December 31, 2018 and September 30, 2018. Fair Value Measurements as of December 31, 2018 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Assets: Foreign Currency Forward Exchange Contracts (a) $ — $ 2 $ — $ 2 Other Current Liabilities: Foreign Currency Forward Exchange Contracts (a) — — — — Contractual Obligations (b) — — (1 ) (1 ) Other Non-Current Assets: Interest Rate Swap (c) — — — — Equity Method Investment (d) — 35 — 35 Other Non-Current Liabilities: Contractual Obligations (b) — — (6 ) (6 ) Interest Rate Swap (c) — (1 ) — (1 ) Total $ — $ 36 $ (7 ) $ 29 Fair Value Measurements as of September 30, 2018 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Liabilities: Contractual Obligations (b) $ — $ — $ (2 ) $ (2 ) Other Non-Current Assets: Interest Rate Swap (c) — 4 — 4 Other Non-Current Liabilities: Contractual Obligations (b) — — (6 ) (6 ) Interest Rate Swap (c) — — — — Total $ — $ 4 $ (8 ) $ (4 ) (a) The fair value of foreign currency forward exchange contracts is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay at their maturity dates for contracts involving the same currencies and maturity dates. (b) This represents purchase obligations and contingent consideration related to the Company’s various acquisitions. This is based on a probability weighted performance approach and it is adjusted to fair value on a recurring basis and any adjustments are included as a component of operating income in the statement of operations. These amounts were mainly calculated using unobservable inputs such as future earnings performance of the Company’s various acquisitions and the expected timing of the payment. (c) The fair value of the interest rate swap is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay as of December 31, 2018 for contracts involving the same attributes and maturity dates. (d) The fair value of equity method investment represents an equity method investment acquired during the three months December 31, 2018 the Company has elected the fair value option under ASC 825 – Financial Instruments . The valuation is based upon quoted prices in active markets and model-based valuation techniques to determine fair value The following table reconciles the beginning and ending balances of net assets and liabilities classified as Level 3: Total (in millions) Balance at September 30, 2018 $ (8 ) Additions — Reductions — Payments 1 Balance at December 31, 2018 $ (7 ) The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories, and property, plant, and equipment, are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the asset is written down to its fair value. In addition, an impairment analysis is performed at least annually for goodwill and indefinite-lived intangible assets. Equity Investments Without Readily Determinable Fair Value The Company evaluates its equity investments without readily determinable fair values for impairment if factors indicate that a significant decrease in value has occurred. Beginning in October 2018, the Company prospectively adopted a new accounting standard on the accounting for equity investments that do not have readily determinable fair values. Refer to Note 2, summary of Significant Accounting Policies Fair Value of Debt Based on the level of interest rates prevailing at December 31, 2018, the fair value of the Company’s debt was $2.972 billion. Based on the level of interest rates prevailing at September 30, 2018, the fair value of the Company’s debt was $2.862 billion. The fair value of the Company’s debt instruments are determined using quoted market prices from less active markets or by using quoted market prices for instruments with identical terms and maturities; both approaches are considered a Level 2 measurement. |
Guarantor and Non-Guarantor Sub
Guarantor and Non-Guarantor Subsidiaries Financial Information | 3 Months Ended |
Dec. 31, 2018 | |
Condensed Financial Information Of Parent Company Only Disclosure [Abstract] | |
Guarantor and Non-Guarantor Subsidiaries Financial Information | WARNER MUSIC GROUP CORP. Consolidating Financial Statements The Company is the direct parent of Holdings, which is the direct parent of Acquisition Corp. As of December 31, 2018, Acquisition Corp. had issued and outstanding the 5.625% Senior Secured Notes due 2022, the 5.00% Senior Secured Notes due 2023, the 4.125% Senior Secured Notes due 2024, the 4.875% Senior Secured Notes due 2024, the 3.625% Senior Secured Notes due 2026 and the 5.50% Senior Notes due 2026 (together, the “Acquisition Corp. Notes”). The Acquisition Corp. Notes are guaranteed by the Company and, in addition, are guaranteed by all of Acquisition Corp.’s domestic wholly-owned subsidiaries. The secured notes are guaranteed on a senior secured basis and the unsecured notes are guaranteed on an unsecured senior basis. The Company’s guarantee of the Acquisition Corp. Notes is full and unconditional. The guarantee of the Acquisition Corp. Notes by Acquisition Corp.’s domestic, wholly-owned subsidiaries is full, unconditional and joint and several. The following condensed consolidating financial statements are also presented for the information of the holders of the Acquisition Corp. Notes and present the results of operations, financial position and cash flows of (i) Acquisition Corp., which is the issuer of the Acquisition Corp. Notes, (ii) the guarantor subsidiaries of Acquisition Corp., (iii) the non-guarantor subsidiaries of Acquisition Corp. and (iv) the eliminations necessary to arrive at the information for Acquisition Corp. on a consolidated basis. Investments in consolidated subsidiaries are presented under the equity method of accounting. There are no restrictions on Acquisition Corp.’s ability to obtain funds from any of its wholly-owned subsidiaries through dividends, loans or advances. The Company and Holdings are holding companies that conduct substantially all of their business operations through Acquisition Corp. Accordingly, the ability of the Company and Holdings to obtain funds from their subsidiaries is restricted by the indentures for the Acquisition Corp. Notes and the credit agreements for the Acquisition Corp. Senior Credit Facilities, including the Revolving Credit Facility and Senior Term Loan Facility. Consolidating Balance Sheet (Unaudited) December 31, 2018 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Assets: Current assets: Cash and equivalents $ 6 $ 233 $ 309 $ — $ 548 $ — $ — $ — $ 548 Accounts receivable, net — 345 444 — 789 — — — 789 Inventories — 16 50 — 66 — — — 66 Royalty advances expected to be recouped within one year — 85 51 — 136 — — — 136 Prepaid and other current assets — 16 37 — 53 — — — 53 Total current assets 6 695 891 — 1,592 — — — 1,592 Due from (to) parent companies 473 (307 ) (166 ) — — — — — — Investments in and advances to consolidated subsidiaries 2,240 2,196 — (4,436 ) — 739 739 (1,478 ) — Royalty advances expected to be recouped after one year — 103 63 — 166 — — — 166 Property, plant and equipment, net — 168 100 — 268 — — — 268 Goodwill — 1,370 423 — 1,793 — — — 1,793 Intangible assets subject to amortization, net — 940 899 — 1,839 — — — 1,839 Intangible assets not subject to amortization — 71 82 — 153 — — — 153 Deferred tax assets, net — — 10 — 10 — — — 10 Other assets 6 94 25 — 125 — — — 125 Total assets $ 2,725 $ 5,330 $ 2,327 $ (4,436 ) $ 5,946 $ 739 $ 739 $ (1,478 ) $ 5,946 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 103 $ 76 $ — $ 179 $ — $ — $ — $ 179 Accrued royalties — 794 757 — 1,551 — — — 1,551 Accrued liabilities — 256 239 — 495 — — — 495 Accrued interest 24 — — — 24 — — — 24 Deferred revenue — 99 83 — 182 — — — 182 Other current liabilities — 49 113 — 162 — — — 162 Total current liabilities 24 1,301 1,268 — 2,593 — — — 2,593 Long-term debt 2,998 — — — 2,998 — — — 2,998 Deferred tax liabilities, net — 27 192 — 219 — — — 219 Other noncurrent liabilities 4 163 108 — 275 — — — 275 Total liabilities 3,026 1,491 1,568 — 6,085 — — — 6,085 Total Warner Music Group Corp. (deficit) equity (301 ) 3,835 740 (4,436 ) (162 ) 739 739 (1,478 ) (162 ) Noncontrolling interest — 4 19 — 23 — — — 23 Total equity (301 ) 3,839 759 (4,436 ) (139 ) 739 739 (1,478 ) (139 ) Total liabilities and equity $ 2,725 $ 5,330 $ 2,327 $ (4,436 ) $ 5,946 $ 739 $ 739 $ (1,478 ) $ 5,946 Consolidating Balance Sheet September 30, 2018 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Assets: Current assets: Cash and equivalents $ — $ 169 $ 345 $ — $ 514 $ — $ — $ — $ 514 Accounts receivable, net — 262 185 — 447 — — — 447 Inventories — 18 24 — 42 — — — 42 Royalty advances expected to be recouped within one year — 79 44 — 123 — — — 123 Prepaid and other current assets — 15 35 — 50 — — — 50 Total current assets — 543 633 — 1,176 — — — 1,176 Due from (to) parent companies 488 (214 ) (274 ) — — — — — — Investments in and advances to consolidated subsidiaries 2,018 2,192 — (4,210 ) — 675 675 (1,350 ) — Royalty advances expected to be recouped after one year — 93 60 — 153 — — — 153 Property, plant and equipment, net — 155 74 — 229 — — — 229 Goodwill — 1,370 322 — 1,692 — — — 1,692 Intangible assets subject to amortization, net — 956 895 — 1,851 — — — 1,851 Intangible assets not subject to amortization — 71 83 — 154 — — — 154 Deferred tax assets, net — — 11 — 11 — — — 11 Other assets 12 55 11 — 78 — — — 78 Total assets $ 2,518 $ 5,221 $ 1,815 $ (4,210 ) $ 5,344 $ 675 $ 675 $ (1,350 ) $ 5,344 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 200 $ 81 $ — $ 281 $ — $ — $ — $ 281 Accrued royalties — 869 527 — 1,396 — — — 1,396 Accrued liabilities — 195 228 — 423 — — — 423 Accrued interest 31 — — — 31 — — — 31 Deferred revenue — 94 114 — 208 — — — 208 Other current liabilities — 2 32 — 34 — — — 34 Total current liabilities 31 1,360 982 — 2,373 — — — 2,373 Long-term debt 2,819 — — — 2,819 — — — 2,819 Deferred tax liabilities, net — 3 162 — 165 — — — 165 Other noncurrent liabilities 2 197 108 — 307 — — — 307 Total liabilities 2,852 1,560 1,252 — 5,664 — — — 5,664 Total Warner Music Group Corp. (deficit) equity (334 ) 3,656 554 (4,210 ) (334 ) 675 675 (1,350 ) (334 ) Noncontrolling interest — 5 9 — 14 — — — 14 Total equity (334 ) 3,661 563 (4,210 ) (320 ) 675 675 (1,350 ) (320 ) Total liabilities and equity $ 2,518 $ 5,221 $ 1,815 $ (4,210 ) $ 5,344 $ 675 $ 675 $ (1,350 ) $ 5,344 Consolidating Statement of Operations (Unaudited) For The Three Months Ended December 31, 2018 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Revenues $ — $ 481 $ 854 $ (132 ) $ 1,203 $ — $ — $ — $ 1,203 Costs and expenses: Cost of revenue — (223 ) (505 ) 102 (626 ) — — — (626 ) Selling, general and administrative expenses — (189 ) (217 ) 30 (376 ) — — — (376 ) Amortization of intangible assets — (25 ) (29 ) — (54 ) — — — (54 ) Total costs and expenses — (437 ) (751 ) 132 (1,056 ) — — — (1,056 ) Operating income — 44 103 — 147 — — — 147 Loss on extinguishment of debt (3 ) — — — (3 ) — — — (3 ) Interest (expense) income, net (31 ) 1 (6 ) — (36 ) — — — (36 ) Equity gains from equity method investments 172 109 — (281 ) — 86 86 (172 ) — Other (expense) income, net (2 ) 19 11 — 28 — — — 28 Income before income taxes 136 173 108 (281 ) 136 86 86 (172 ) 136 Income tax expense (50 ) (45 ) (24 ) 69 (50 ) — — — (50 ) Net income 86 128 84 (212 ) 86 86 86 (172 ) 86 Less: income attributable to noncontrolling interest — — - — — — — — — Net income attributable to Warner Music Group Corp. $ 86 $ 128 $ 84 $ (212 ) $ 86 $ 86 $ 86 $ (172 ) $ 86 Consolidating Statement of Operations (Unaudited) For The Three Months Ended December 31, 2017 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Revenues $ — $ 547 $ 621 $ (123 ) $ 1,045 $ — $ — $ — $ 1,045 Costs and expenses: Cost of revenue — (257 ) (393 ) 81 (569 ) — — — (569 ) Selling, general and administrative expenses — (235 ) (138 ) 40 (333 ) — — — (333 ) Amortization of intangible assets — (24 ) (29 ) — (53 ) — — — (53 ) Total costs and expenses — (516 ) (560 ) 121 (955 ) — — — (955 ) Operating income — 31 61 (2 ) 90 — — — 90 Loss on extinguishment of debt (1 ) — — — (1 ) — — — (1 ) Interest (expense) income, net (29 ) 1 (8 ) — (36 ) — — — (36 ) Equity gains from equity method investments 90 44 — (133 ) 1 4 4 (8 ) 1 Other (expense) income, net (4 ) 9 (2 ) — 3 — — — 3 Income before income taxes 56 85 51 (135 ) 57 4 4 (8 ) 57 Income tax expense (52 ) (51 ) (10 ) 61 (52 ) — — — (52 ) Net income 4 34 41 (74 ) 5 4 4 (8 ) 5 Less: income attributable to noncontrolling interest — — (1 ) — (1 ) — — — (1 ) Net income attributable to Warner Music Group Corp. $ 4 $ 34 $ 40 $ (74 ) $ 4 $ 4 $ 4 $ (8 ) $ 4 Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended December 31, 2018 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Net income (loss) $ 86 $ 128 $ 84 $ (212 ) $ 86 $ 86 $ 86 $ (172 ) $ 86 Other comprehensive (loss) income, net of tax: Foreign currency adjustment (16 ) — 16 (16 ) (16 ) (16 ) (16 ) 32 (16 ) Deferred losses on derivatives (6 ) — (2 ) 2 (6 ) (6 ) (6 ) 12 (6 ) Other comprehensive (loss) income, net of tax: (22 ) — 14 (14 ) (22 ) (22 ) (22 ) 44 (22 ) Total comprehensive income 64 128 98 (226 ) 64 64 64 (128 ) 64 Less: income attributable to noncontrolling interest — — - — — 64 — — - Comprehensive income attributable to Warner Music Group Corp. $ 64 $ 128 $ 98 $ (226 ) $ 64 $ 128 $ 64 $ (128 ) $ 64 Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended December 31, 2017 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Net income $ 4 $ 34 $ 41 $ (74 ) $ 5 $ 4 $ 4 $ (8 ) $ 5 Other comprehensive income, net of tax: Foreign currency adjustment 9 — (9 ) 9 9 9 9 (18 ) 9 Deferred gains (losses) on derivative financial instruments 1 — (1 ) 1 1 1 1 (2 ) 1 Other comprehensive income (loss), net of tax: 10 — (10 ) 10 10 10 10 (20 ) 10 Total comprehensive income 14 34 31 (64 ) 15 14 14 (28 ) 15 Less: income attributable to noncontrolling interest — — (1 ) — (1 ) — — — (1 ) Comprehensive income attributable to Warner Music Group Corp. $ 14 $ 34 $ 30 $ (64 ) $ 14 $ 14 $ 14 $ (28 ) $ 14 Consolidating Statement of Cash Flows (Unaudited) For The Three Months Ended December 31, 2018 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Cash flows from operating activities Net income $ 86 $ 128 $ 84 $ (212 ) $ 86 $ 86 $ 86 $ (172 ) $ 86 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization — 34 34 — 68 — — — 68 Unrealized gains and remeasurement of foreign denominated loans (10 ) (4 ) — 1 (13 ) — — — (13 ) Deferred income taxes — — 11 — 11 — — — 11 Loss on extinguishment of debt 3 — — — 3 — — — 3 Net gain on investments — (15 ) — — (15 ) — — — (15 ) Non-cash interest expense 2 — — — 2 — — — 2 Equity-based compensation expense — 12 — — 12 — — — 12 Equity gains, including distributions (172 ) (109 ) — 281 — (86 ) (86 ) 172 — Changes in operating assets and liabilities: Accounts receivable — (3 ) (85 ) — (88 ) — — — (88 ) Inventories — 2 11 — 13 — — — 13 Royalty advances — (15 ) (13 ) — (28 ) — — — (28 ) Accounts payable and accrued liabilities — 64 (86 ) (70 ) (92 ) — — — (92 ) Royalty payables — (91 ) 183 — 92 — — — 92 Accrued interest (7 ) - — — (7 ) — — — (7 ) Deferred revenue — 3 (8 ) — (5 ) — — — (5 ) Other balance sheet changes 4 24 25 — 53 — — — 53 Net cash provided (used in) by operating activities (94 ) 30 156 — 92 — — — 92 Cash flows from investing activities Acquisition of music publishing rights, net — (4 ) (1 ) — (5 ) — — — (5 ) Capital expenditures — (22 ) (4 ) — (26 ) — — — (26 ) Investments and acquisitions of businesses, net — (23 ) (184 ) — (207 ) — — — (207 ) Proceeds from the sale of investments — — — — — — — — — Advances from issuer (84 ) — — 84 — — — — — Net cash used in investing activities (84 ) (49 ) (189 ) 84 (238 ) — — — (238 ) Cash flows from financing activities Proceeds from issuance of Acquisition Corp. 3.625% Senior Notes due 2026 287 — — — 287 — — — 287 Repayment of Acquisition Corp. 4.125% Senior Secured Notes (40 ) — — — (40 ) — — — (40 ) Repayment of Acquisition Corp. 4.875% Senior Secured Notes (30 ) — — — (30 ) — — — (30 ) Repayment of Acquisition Corp. 5.625% Senior Secured Notes (27 ) — — — (27 ) — — — (27 ) Call premiums paid on and redemption deposit for early redemption of debt (2 ) — — — (2 ) — — — (2 ) Deferred financing costs paid (4 ) — — — (4 ) — — — (4 ) Distribution to noncontrolling interest holder — (1 ) (1 ) — (2 ) — — — (2 ) Dividends paid — — — — — — — — — Change in due to (from) issuer — 84 — (84 ) — — — — — Net cash provided by (used in) financing activities 184 83 (1 ) (84 ) 182 — — — 182 Effect of exchange rate changes on cash and equivalents — — (2 ) — (2 ) — — — (2 ) Net increase (decrease) in cash and equivalents 6 64 (36 ) — 34 — — — 34 Cash and equivalents at beginning of period — 169 345 — 514 — — — 514 Cash and equivalents at end of period $ 6 $ 233 $ 309 $ — $ 548 $ — $ — $ — $ 548 Consolidating Statement of Cash Flows (Unaudited) For The Three Months Ended December 31, 2017 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Cash flows from operating activities Net income $ 4 $ 34 $ 41 $ (74 ) $ 5 $ 4 $ 4 $ (8 ) $ 5 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization — 32 33 — 65 — — — 65 Unrealized losses (gains) and remeasurement of foreign denominated loans 6 1 (2 ) — 5 — — — 5 Deferred income taxes — — 42 — 42 — — — 42 Loss on extinguishment of debt 1 — — — 1 — — — 1 Net gain on divestitures and investments — (7 ) — — (7 ) — — — (7 ) Non-cash interest expense 1 — — — 1 — — — 1 Equity-based compensation expense — 18 — — 18 — — — 18 Equity gains, including distributions (90 ) (43 ) — 133 — (4 ) (4 ) 8 — Changes in operating assets and liabilities: Accounts receivable — (33 ) (60 ) — (93 ) — — — (93 ) Inventories — — 2 — 2 — — — 2 Royalty advances — 5 (10 ) — (5 ) — — — (5 ) Accounts payable and accrued liabilities — 65 (29 ) (59 ) (23 ) — — — (23 ) Royalty payables — 59 82 — 141 — — — 141 Accrued interest (16 ) — — — (16 ) — — — (16 ) Deferred revenue — 17 (20 ) — (3 ) — — — (3 ) Other balance sheet changes — 37 (34 ) — 3 — — — 3 Net cash (used in) provided by operating activities (94 ) 185 45 — 136 — — — 136 Cash flows from investing activities Acquisition of music publishing rights, net — — (1 ) — (1 ) — — — (1 ) Capital expenditures — (13 ) (3 ) — (16 ) — — — (16 ) Investments and acquisitions of businesses, net — (1 ) — — (1 ) — — — (1 ) Proceeds from the sale of investments — 12 — — 12 — — — 12 Advances from issuer 95 — — (95 ) — — — — — Net cash provided by (used in) investing activities 95 (2 ) (4 ) (95 ) (6 ) — — — (6 ) Cash flows from financing activities Deferred financing costs paid (1 ) — — — (1 ) — — — (1 ) Distribution to noncontrolling interest holder — — (2 ) — (2 ) — — — (2 ) Change in due to (from) issuer — (95 ) — 95 — — — — — Net cash used in financing activities (1 ) (95 ) (2 ) 95 (3 ) — — — (3 ) Effect of exchange rate changes on cash and equivalents — — 2 — 2 — — — 2 Net increase in cash and equivalents — 88 41 — 129 — — — 129 Cash and equivalents at beginning of period — 347 300 — 647 — — — 647 Cash and equivalents at end of period $ — $ 435 $ 341 $ — $ 776 $ — $ — $ — $ 776 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Interim Financial Statements | Interim Financial Statements The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended December 31, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2019. The consolidated balance sheet at September 30, 2018 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 (File No. 001-32502). |
Basis of Consolidation | Basis of Consolidation The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling voting interest and/or variable interest required to be consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation The Company maintains a 52-53 week fiscal year ending on the last Friday in each reporting period. As such, all references to December 31, 2018 and December 31, 2017 relate to the periods ended December 28, 2018 and December 29, 2017, respectively. For convenience purposes, the Company continues to date its financial statements as of December 31. The fiscal year ended September 30, 2018 ended on September 28, 2018. The Company has performed a review of all subsequent events through the date the financial statements were issued and has determined that no additional disclosures are necessary. |
Income Taxes | Income Taxes At the end of each interim period, the Company makes its best estimate of the effective tax rate expected to be applicable for the full fiscal year and uses that rate to provide for income taxes on a current year-to-date basis before discrete items. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). In accordance with ASC Topic 740, Income Taxes (“ASC 740”) the Company recorded the impacts in the period of enactment. |
New Accounting Pronouncements | New Accounting Pronouncements Adoption of New Revenue Recognition Standard In May 2014, the FASB issued guidance codified in ASC 606, Revenue from Contracts with Customers (“ASC 606”), which replaces the guidance in former ASC 605, Revenue Recognition and ASC 928-605, Entertainment – Music. The amendment was the result of a joint effort by the FASB and the International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and international financial reporting standards ("IFRS"). The joint project clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and IFRS. The Company adopted ASC 606 on October 1, 2018, using the modified retrospective method to all contracts not completed as of the date of adoption. The reported results as of and for the three-month period ended December 31, 2018 reflect the application of the new standard, while the reported results for the three-month period ending December 31, 2017 have not been adjusted to reflect the new standard and were prepared under prior revenue recognition accounting guidance. The adoption of ASC 606 resulted in a change in the timing of revenue recognition in the Company’s Music Publishing segment as well as international broadcast rights within Recorded Music. Under the new revenue recognition rules, revenue is recorded based on best estimates available in the period of sale or usage whereas revenue was previously recorded when cash was received for both the licensing of publishing rights and international Recorded Music broadcast fees. Additionally, for certain licenses where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. approximately $139 million, net of tax, as of October 1, 2018. The Company also reclassified $28 The following table provides the cumulative effect of the changes made to the opening balance sheet, as of October 1, 2018, from the adoption of ASC 606 and which primarily relates to the accrual of licensing revenue in the period of sale or usage. September 30, Impact of October 1, 2018 Adoption 2018 (in millions) Assets Accounts receivable, net $ 447 $ 257 $ 704 Total current assets 1,176 257 1,433 Other assets 78 15 93 Total assets $ 5,344 $ 272 $ 5,616 Liabilities and Equity Accrued royalties 1,396 79 1,475 Accrued liabilities 423 (1 ) 422 Deferred revenue 208 (27 ) 181 Other current liabilities 34 33 67 Total current liabilities 2,373 84 2,457 Deferred tax liabilities, net 165 37 202 Other noncurrent liabilities 307 1 308 Total liabilities 5,664 122 5,786 Equity: Accumulated Deficit (1,272 ) 139 (1,133 ) Non-controlling interest 14 11 25 Total equity (320 ) 150 (170 ) Total liabilities and equity $ 5,344 $ 272 $ 5,616 The disclosure of the impact of adoption on our consolidated statement of operations and consolidated statement of cash flows for the three months ended December 31, 2018 and the consolidated balance sheet as of December 31, 2018 are as follows (in millions): December 31, 2018 As Reported Balances without adoption of ASC 606 Effect of Change (in millions) Revenues $ 1,203 $ 1,183 $ 20 Cost and expenses: Cost of revenue (626 ) (624 ) (2 ) Operating income 147 129 18 Income before income taxes 136 118 18 Income tax expense (50 ) (43 ) (7 ) Net income 86 75 11 Less: Income attributable to noncontrolling interest — — — Net income attributable to Warner Music Group Corp. $ 86 $ 75 $ 11 December 31, 2018 As Reported Balances without adoption of ASC 606 Effect of Change (in millions) Assets Accounts receivable, net $ 789 $ 499 $ 290 Total current assets 1,592 1,302 290 Other assets 125 110 15 Deferred tax assets, net 10 10 — Total assets $ 5,946 $ 5,641 $ 305 Liabilities and Equity Accrued royalties 1,551 1,471 80 Accrued liabilities 495 496 (1 ) Deferred revenue 182 211 (29 ) Other current liabilities 162 115 47 Total current liabilities 2,593 2,496 97 Deferred tax liabilities, net 219 175 44 Other noncurrent liabilities 275 271 4 Total liabilities 6,085 5,940 145 Equity: Accumulated Deficit (1,078 ) (1,227 ) 149 Non-controlling interest 23 12 11 Total equity (139 ) (299 ) 160 Total liabilities and equity $ 5,946 $ 5,641 $ 305 December 31, 2018 As Reported Balances without adoption of ASC 606 Effect of Change (in millions) Cash flows from operating activities Net income $ 86 $ 75 $ 11 Deferred income taxes 11 4 7 Changes in operating assets and liabilities: Accounts receivable (88 ) (55 ) (33 ) Accounts payable and accrued liabilities (92 ) (95 ) 3 Royalty payables 92 91 1 Deferred revenues (5 ) (3 ) (2 ) Other balance sheet changes 53 40 13 Net cash provided by operating activities 92 92 - Effect of exchange rate changes on cash and equivalents (2 ) (2 ) - Net increase in cash and equivalents 34 34 - Cash and equivalents at beginning of period 514 514 - Cash and equivalents at end of period $ 548 $ 548 $ - Recently Adopted Accounting Pronouncements In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities The Company adopted ASU 2016-01 on October 1, 2018 and has elected to use the measurement alternative to measure our equity investments without readily determinable fair values. This guidance was applied prospectively and did not have a significant impact on the Company’s financial statements. For the three months ended December 31, 2018, there were no observable price change events that were completed related to our equity investments without readily determinable fair values. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory In January of 2017, the FASB issued ASU 2017-01, Business Combinations In February 2018, FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities The Company is evaluating the impact of the adoption of this standard on its financial statements and disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) - Topic 606 | 3 Months Ended |
Dec. 31, 2018 | |
Schedule of Cumulative Effect of Changes to Opening Balance Sheet from Adoption of ASC 606 | The following table provides the cumulative effect of the changes made to the opening balance sheet, as of October 1, 2018, from the adoption of ASC 606 and which primarily relates to the accrual of licensing revenue in the period of sale or usage. September 30, Impact of October 1, 2018 Adoption 2018 (in millions) Assets Accounts receivable, net $ 447 $ 257 $ 704 Total current assets 1,176 257 1,433 Other assets 78 15 93 Total assets $ 5,344 $ 272 $ 5,616 Liabilities and Equity Accrued royalties 1,396 79 1,475 Accrued liabilities 423 (1 ) 422 Deferred revenue 208 (27 ) 181 Other current liabilities 34 33 67 Total current liabilities 2,373 84 2,457 Deferred tax liabilities, net 165 37 202 Other noncurrent liabilities 307 1 308 Total liabilities 5,664 122 5,786 Equity: Accumulated Deficit (1,272 ) 139 (1,133 ) Non-controlling interest 14 11 25 Total equity (320 ) 150 (170 ) Total liabilities and equity $ 5,344 $ 272 $ 5,616 |
Schedule of Impact of Adoption on Consolidated Statement of Operations, Balance Sheet and Statement of Cash Flows | The disclosure of the impact of adoption on our consolidated statement of operations and consolidated statement of cash flows for the three months ended December 31, 2018 and the consolidated balance sheet as of December 31, 2018 are as follows (in millions): December 31, 2018 As Reported Balances without adoption of ASC 606 Effect of Change (in millions) Revenues $ 1,203 $ 1,183 $ 20 Cost and expenses: Cost of revenue (626 ) (624 ) (2 ) Operating income 147 129 18 Income before income taxes 136 118 18 Income tax expense (50 ) (43 ) (7 ) Net income 86 75 11 Less: Income attributable to noncontrolling interest — — — Net income attributable to Warner Music Group Corp. $ 86 $ 75 $ 11 December 31, 2018 As Reported Balances without adoption of ASC 606 Effect of Change (in millions) Assets Accounts receivable, net $ 789 $ 499 $ 290 Total current assets 1,592 1,302 290 Other assets 125 110 15 Deferred tax assets, net 10 10 — Total assets $ 5,946 $ 5,641 $ 305 Liabilities and Equity Accrued royalties 1,551 1,471 80 Accrued liabilities 495 496 (1 ) Deferred revenue 182 211 (29 ) Other current liabilities 162 115 47 Total current liabilities 2,593 2,496 97 Deferred tax liabilities, net 219 175 44 Other noncurrent liabilities 275 271 4 Total liabilities 6,085 5,940 145 Equity: Accumulated Deficit (1,078 ) (1,227 ) 149 Non-controlling interest 23 12 11 Total equity (139 ) (299 ) 160 Total liabilities and equity $ 5,946 $ 5,641 $ 305 December 31, 2018 As Reported Balances without adoption of ASC 606 Effect of Change (in millions) Cash flows from operating activities Net income $ 86 $ 75 $ 11 Deferred income taxes 11 4 7 Changes in operating assets and liabilities: Accounts receivable (88 ) (55 ) (33 ) Accounts payable and accrued liabilities (92 ) (95 ) 3 Royalty payables 92 91 1 Deferred revenues (5 ) (3 ) (2 ) Other balance sheet changes 53 40 13 Net cash provided by operating activities 92 92 - Effect of exchange rate changes on cash and equivalents (2 ) (2 ) - Net increase in cash and equivalents 34 34 - Cash and equivalents at beginning of period 514 514 - Cash and equivalents at end of period $ 548 $ 548 $ - |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Summary of Disaggregation of Revenue | Our revenue consists of the following categories, which aggregate into our segments - Recorded Music and Music Publishing. For the Three Months Ended December 31, 2018 vs. 2017 2018 2017 $ Change % Change Revenue by Type Digital $ 563 $ 481 $ 82 17 % Physical 231 223 8 4 % Total Digital and Physical 794 704 90 13 % Artist services and expanded-rights 166 105 61 58 % Licensing 81 95 (14 ) -15 % Total Recorded Music 1,041 904 137 15 % Performance 53 43 10 23 % Digital 65 53 12 23 % Mechanical 15 18 (3 ) -17 % Synchronization 29 27 2 7 % Other 3 2 1 50 % Total Music Publishing 165 143 22 15 % Intersegment eliminations (3 ) (2 ) (1 ) 50 % Total Revenue $ 1,203 $ 1,045 $ 158 15 % Revenue by Geographical Location U.S. Recorded Music $ 431 $ 370 $ 61 16 % U.S. Music Publishing 73 63 10 16 % Total U.S. 504 433 71 16 % International Recorded Music 610 534 76 14 % International Music Publishing 92 80 12 15 % Total International 702 614 88 14 % Intersegment eliminations (3 ) (2 ) (1 ) 50 % Total Revenue $ 1,203 $ 1,045 $ 158 15 % |
Summary of Revenues Expected to be Recognized in Future Related to Performance Obligations | Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at December 31, 2018 are as follows (in millions): Rest of FY19 FY20 FY21 Thereafter Total (in millions) Remaining performance obligations $ 157 $ 119 $ 86 $ 6 $ 368 Total $ 157 $ 119 $ 86 $ 6 $ 368 |
Acquisition of EMP (Tables)
Acquisition of EMP (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Estimated Fair Values of the Assets Acquired and Liabilities Assumed | The table below presents (i) the preliminary estimate of the Acquisition consideration as it relates to the acquisition of EMP by the WMG Germany and (ii) the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of October 10, 2018 (in millions): Purchase Price € 155 Preliminary Working Capital 11 Adjusted Preliminary Purchase Price € 166 Foreign Currency Rate at October 10, 2018 1.15 Adjusted Preliminary Purchase Price in U.S. dollars $ 190 Fair value of assets acquired and liabilities assumed Cash and equivalents $ 7 Accounts receivable 3 Inventories 37 Other current assets 5 Property plant and equipment 28 Intangible assets 57 Accounts payable (18 ) Other current liabilities (11 ) Deferred revenue (7 ) Deferred tax liabilities (18 ) Other noncurrent liabilities (2 ) Fair value of assets acquired and liabilities assumed 81 Goodwill recorded 109 Total purchase price allocated $ 190 |
Schedule of Pro Forma Financial Information | The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the Acquisition had taken place at the beginning of fiscal 2017. Three Months Ended Three Months Ended December 31, 2018 December 31, 2017 (in millions) Revenue $ 1,208 $ 1,127 Operating income 147 92 Net income attributable to Warner Music Group $ 86 $ 5 Actual results related to EMP included in the Consolidated Statements of Operations for the quarter ended December 31, 2018 relate to the transition period from October 10, 2018 to December 31, 2018 and consist of revenues of $76 million and operating income of $6 million. |
Comprehensive Income (Loss) (Ta
Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | Comprehensive income (loss), which is reported in the accompanying consolidated statements of (deficit) equity, consists of net income (loss) and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net income (loss). For the Company, the components of other comprehensive income (loss) primarily consist of foreign currency translation gains and losses, minimum pension liabilities, and deferred gains and losses on financial instruments designated as hedges under ASC 815, which include foreign exchange contracts. The following summary sets forth the changes in the components of accumulated other comprehensive loss, net of related taxes of less than $1 million: Foreign Minimum Deferred Gains Accumulated Currency Pension On Derivative Other Translation Liability Financial Comprehensive Loss (a) Adjustment Instruments Loss, net (in millions) Balance at September 30, 2018 $ (184 ) $ (9 ) $ 3 $ (190 ) Other comprehensive loss (16 ) — (6 ) (22 ) Amounts reclassified from accumulated other comprehensive income — — — — Balance at December 31, 2018 $ (200 ) $ (9 ) $ (3 ) $ (212 ) (a) Includes historical foreign currency translation related to certain intra-entity transactions. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Changes in Goodwill for Each Reportable Segment | The following analysis details the changes in goodwill for each reportable segment: Recorded Music Music Publishing Total (in millions) Balance at September 30, 2018 $ 1,228 $ 464 $ 1,692 Acquisitions (a) 109 — 109 Divestitures — — — Other adjustments (b) (8 ) — (8 ) Balance at December 31, 2018 $ 1,329 $ 464 $ 1,793 (a) Relates to the acquisition of EMP during the three months ended December 31, 2018. (b) Other adjustments during the three months ended December 31, 2018 represent foreign currency movements. |
Schedule of Intangible Assets | Intangible assets consist of the following: Weighted Average December 31, September 30, Useful Life 2018 2018 (in millions) Intangible assets subject to amortization: Recorded music catalog 10 years $ 857 $ 870 Music publishing copyrights 26 years 1,534 1,540 Artist and songwriter contracts 13 years 852 864 Trademarks 6 years 12 12 Other intangible assets 5 years 82 26 Total gross intangible asset subject to amortization 3,337 3,312 Accumulated amortization (1,498 ) (1,461 ) Total net intangible assets subject to amortization 1,839 1,851 Intangible assets not subject to amortization: Trademarks and tradenames Indefinite 153 154 Total net intangible assets $ 1,992 $ 2,005 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term debt, all of which was issued by Acquisition Corp., consists of the following: December 31, September 30, 2018 2018 (in millions) Revolving Credit Facility (a) $ — $ — Senior Term Loan Facility due 2023 (b) 1,311 1,310 5.625% Senior Secured Notes due 2022 (c) 220 246 5.000% Senior Secured Notes due 2023 (d) 297 297 4.125% Senior Secured Notes due 2024 (e) 351 399 4.875% Senior Secured Notes due 2024 (f) 217 247 3.625% Senior Secured Notes due 2026 (g) 281 — 5.500% Senior Notes due 2026 (h) 321 320 Total debt (i) $ 2,998 $ 2,819 (a) Reflects $180 million of commitments under the Revolving Credit Facility available at both December 31, 2018 and September 30, 2018, less letters of credit outstanding of approximately $16 million at December 31, 2018 and $8 million at September 30, 2018. There were no loans outstanding under the Revolving Credit Facility at December 31, 2018 or September 30, 2018. (b) Principal amount of $1.326 billion less unamortized discount of $4 million and unamortized deferred financing costs of $11 million and $12 million at December 31, 2018 and September 30, 2018, respectively. (c) Principal amount of $221 million and $248 million less unamortized deferred financing costs of $1 million and $2 million at December 31, 2018 and September 30, 2018 respectively. (d) Principal amount of $300 million less unamortized deferred financing costs of $3 million at both December 31, 2018 and September 30, 2018. (e) Face amount of €311 million and €345 million at December 31, 2018 and September 30, 2018 respectively. Above amounts represent the dollar equivalent of such note at December 31, 2018 and September 30, 2018. Principal amount of $354 million and $402 million at December 31, 2018 and September 30, 2018, respectively, less unamortized deferred financing costs of $3 million and $3 million at December 31, 2018 and September 30, 2018, respectively. (f ) Principal amount of $220 million and $250 million less unamortized deferred financing costs of $3 million and $3 million at December 31, 2018 and September 30, 2018 respectively. ( g ) Face amount of €250 million at December 31, 2018. Above amounts represent the dollar equivalent of such note at December 31, 2018. Principal amount of $285 million at December 31, 2018 less unamortized deferred financing costs of $4 million at December 31, 2018. (h ) Principal amount of $325 million and $325 million less unamortized deferred financing costs of $4 million and $5 million at December 31, 2018 and September 30, 2018 respectively. ( i ) Principal amount of debt of $3.031 billion and $2.851 billion less unamortized discount of $4 million and $4 million and unamortized deferred financing costs of $29 million and $28 million at December 31, 2018 and September 30, 2018, respectively. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Summary of Amounts Recorded in Consolidated Balance Sheets | The following is a summary of amounts recorded in the Consolidated Balance Sheets pertaining to the Company’s designated cash flows hedges at December 31, 2018 and September 30, 2018: December 31, September 30, 2018 (a) 2018 (b) (in millions) Other current assets $ 2 $ — Other current liabilities — — Other noncurrent assets — 4 Other noncurrent liabilities 1 — (a) $8 million and $6 million of foreign exchange derivative contracts in asset and liability positions, respectively, and $1 million of interest rate swap in a liability position including non-designated cash flow hedges. (b) $4 million of interest rate swap in an asset position. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | The accounting policies of the Company’s business segments are the same as those described in the summary of significant accounting policies included elsewhere herein. The Company accounts for intersegment sales at fair value as if the sales were to third parties. While intercompany transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses recognized by the segment that is counterparty to the transaction) are eliminated in consolidation, and therefore, do not themselves impact consolidated results. Corporate Recorded Music expenses and Music Publishing eliminations Total Three Months Ended (in millions) December 31, 2018 Revenues $ 1,041 $ 165 $ (3 ) $ 1,203 Operating income (loss) 163 22 (38 ) 147 Amortization of intangible assets 38 16 — 54 Depreciation of property, plant and equipment 10 1 3 14 OIBDA 211 39 (35 ) 215 December 31, 2017 Revenues $ 904 $ 143 $ (2 ) $ 1,045 Operating income (loss) 129 (1 ) (38 ) 90 Amortization of intangible assets 36 17 — 53 Depreciation of property, plant and equipment 8 1 3 12 OIBDA 173 17 (35 ) 155 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Financial Instruments | In accordance with the fair value hierarchy, described above, the following table shows the fair value of the Company’s financial instruments that are required to be measured at fair value as of December 31, 2018 and September 30, 2018. Fair Value Measurements as of December 31, 2018 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Assets: Foreign Currency Forward Exchange Contracts (a) $ — $ 2 $ — $ 2 Other Current Liabilities: Foreign Currency Forward Exchange Contracts (a) — — — — Contractual Obligations (b) — — (1 ) (1 ) Other Non-Current Assets: Interest Rate Swap (c) — — — — Equity Method Investment (d) — 35 — 35 Other Non-Current Liabilities: Contractual Obligations (b) — — (6 ) (6 ) Interest Rate Swap (c) — (1 ) — (1 ) Total $ — $ 36 $ (7 ) $ 29 Fair Value Measurements as of September 30, 2018 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Liabilities: Contractual Obligations (b) $ — $ — $ (2 ) $ (2 ) Other Non-Current Assets: Interest Rate Swap (c) — 4 — 4 Other Non-Current Liabilities: Contractual Obligations (b) — — (6 ) (6 ) Interest Rate Swap (c) — — — — Total $ — $ 4 $ (8 ) $ (4 ) (a) The fair value of foreign currency forward exchange contracts is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay at their maturity dates for contracts involving the same currencies and maturity dates. (b) This represents purchase obligations and contingent consideration related to the Company’s various acquisitions. This is based on a probability weighted performance approach and it is adjusted to fair value on a recurring basis and any adjustments are included as a component of operating income in the statement of operations. These amounts were mainly calculated using unobservable inputs such as future earnings performance of the Company’s various acquisitions and the expected timing of the payment. (c) The fair value of the interest rate swap is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay as of December 31, 2018 for contracts involving the same attributes and maturity dates. (d) The fair value of equity method investment represents an equity method investment acquired during the three months December 31, 2018 the Company has elected the fair value option under ASC 825 – Financial Instruments . The valuation is based upon quoted prices in active markets and model-based valuation techniques to determine fair value |
Reconciliation of Net Liabilities Classified as Level 3 | The following table reconciles the beginning and ending balances of net assets and liabilities classified as Level 3: Total (in millions) Balance at September 30, 2018 $ (8 ) Additions — Reductions — Payments 1 Balance at December 31, 2018 $ (7 ) |
Guarantor and Non-Guarantor S_2
Guarantor and Non-Guarantor Subsidiaries Financial Information Unaudited (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Condensed Financial Information Of Parent Company Only Disclosure [Abstract] | |
Schedule of Consolidating Balance Sheet | Consolidating Balance Sheet (Unaudited) December 31, 2018 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Assets: Current assets: Cash and equivalents $ 6 $ 233 $ 309 $ — $ 548 $ — $ — $ — $ 548 Accounts receivable, net — 345 444 — 789 — — — 789 Inventories — 16 50 — 66 — — — 66 Royalty advances expected to be recouped within one year — 85 51 — 136 — — — 136 Prepaid and other current assets — 16 37 — 53 — — — 53 Total current assets 6 695 891 — 1,592 — — — 1,592 Due from (to) parent companies 473 (307 ) (166 ) — — — — — — Investments in and advances to consolidated subsidiaries 2,240 2,196 — (4,436 ) — 739 739 (1,478 ) — Royalty advances expected to be recouped after one year — 103 63 — 166 — — — 166 Property, plant and equipment, net — 168 100 — 268 — — — 268 Goodwill — 1,370 423 — 1,793 — — — 1,793 Intangible assets subject to amortization, net — 940 899 — 1,839 — — — 1,839 Intangible assets not subject to amortization — 71 82 — 153 — — — 153 Deferred tax assets, net — — 10 — 10 — — — 10 Other assets 6 94 25 — 125 — — — 125 Total assets $ 2,725 $ 5,330 $ 2,327 $ (4,436 ) $ 5,946 $ 739 $ 739 $ (1,478 ) $ 5,946 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 103 $ 76 $ — $ 179 $ — $ — $ — $ 179 Accrued royalties — 794 757 — 1,551 — — — 1,551 Accrued liabilities — 256 239 — 495 — — — 495 Accrued interest 24 — — — 24 — — — 24 Deferred revenue — 99 83 — 182 — — — 182 Other current liabilities — 49 113 — 162 — — — 162 Total current liabilities 24 1,301 1,268 — 2,593 — — — 2,593 Long-term debt 2,998 — — — 2,998 — — — 2,998 Deferred tax liabilities, net — 27 192 — 219 — — — 219 Other noncurrent liabilities 4 163 108 — 275 — — — 275 Total liabilities 3,026 1,491 1,568 — 6,085 — — — 6,085 Total Warner Music Group Corp. (deficit) equity (301 ) 3,835 740 (4,436 ) (162 ) 739 739 (1,478 ) (162 ) Noncontrolling interest — 4 19 — 23 — — — 23 Total equity (301 ) 3,839 759 (4,436 ) (139 ) 739 739 (1,478 ) (139 ) Total liabilities and equity $ 2,725 $ 5,330 $ 2,327 $ (4,436 ) $ 5,946 $ 739 $ 739 $ (1,478 ) $ 5,946 Consolidating Balance Sheet September 30, 2018 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Assets: Current assets: Cash and equivalents $ — $ 169 $ 345 $ — $ 514 $ — $ — $ — $ 514 Accounts receivable, net — 262 185 — 447 — — — 447 Inventories — 18 24 — 42 — — — 42 Royalty advances expected to be recouped within one year — 79 44 — 123 — — — 123 Prepaid and other current assets — 15 35 — 50 — — — 50 Total current assets — 543 633 — 1,176 — — — 1,176 Due from (to) parent companies 488 (214 ) (274 ) — — — — — — Investments in and advances to consolidated subsidiaries 2,018 2,192 — (4,210 ) — 675 675 (1,350 ) — Royalty advances expected to be recouped after one year — 93 60 — 153 — — — 153 Property, plant and equipment, net — 155 74 — 229 — — — 229 Goodwill — 1,370 322 — 1,692 — — — 1,692 Intangible assets subject to amortization, net — 956 895 — 1,851 — — — 1,851 Intangible assets not subject to amortization — 71 83 — 154 — — — 154 Deferred tax assets, net — — 11 — 11 — — — 11 Other assets 12 55 11 — 78 — — — 78 Total assets $ 2,518 $ 5,221 $ 1,815 $ (4,210 ) $ 5,344 $ 675 $ 675 $ (1,350 ) $ 5,344 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 200 $ 81 $ — $ 281 $ — $ — $ — $ 281 Accrued royalties — 869 527 — 1,396 — — — 1,396 Accrued liabilities — 195 228 — 423 — — — 423 Accrued interest 31 — — — 31 — — — 31 Deferred revenue — 94 114 — 208 — — — 208 Other current liabilities — 2 32 — 34 — — — 34 Total current liabilities 31 1,360 982 — 2,373 — — — 2,373 Long-term debt 2,819 — — — 2,819 — — — 2,819 Deferred tax liabilities, net — 3 162 — 165 — — — 165 Other noncurrent liabilities 2 197 108 — 307 — — — 307 Total liabilities 2,852 1,560 1,252 — 5,664 — — — 5,664 Total Warner Music Group Corp. (deficit) equity (334 ) 3,656 554 (4,210 ) (334 ) 675 675 (1,350 ) (334 ) Noncontrolling interest — 5 9 — 14 — — — 14 Total equity (334 ) 3,661 563 (4,210 ) (320 ) 675 675 (1,350 ) (320 ) Total liabilities and equity $ 2,518 $ 5,221 $ 1,815 $ (4,210 ) $ 5,344 $ 675 $ 675 $ (1,350 ) $ 5,344 |
Schedule of Consolidating Statement of Operations | Consolidating Statement of Operations (Unaudited) For The Three Months Ended December 31, 2018 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Revenues $ — $ 481 $ 854 $ (132 ) $ 1,203 $ — $ — $ — $ 1,203 Costs and expenses: Cost of revenue — (223 ) (505 ) 102 (626 ) — — — (626 ) Selling, general and administrative expenses — (189 ) (217 ) 30 (376 ) — — — (376 ) Amortization of intangible assets — (25 ) (29 ) — (54 ) — — — (54 ) Total costs and expenses — (437 ) (751 ) 132 (1,056 ) — — — (1,056 ) Operating income — 44 103 — 147 — — — 147 Loss on extinguishment of debt (3 ) — — — (3 ) — — — (3 ) Interest (expense) income, net (31 ) 1 (6 ) — (36 ) — — — (36 ) Equity gains from equity method investments 172 109 — (281 ) — 86 86 (172 ) — Other (expense) income, net (2 ) 19 11 — 28 — — — 28 Income before income taxes 136 173 108 (281 ) 136 86 86 (172 ) 136 Income tax expense (50 ) (45 ) (24 ) 69 (50 ) — — — (50 ) Net income 86 128 84 (212 ) 86 86 86 (172 ) 86 Less: income attributable to noncontrolling interest — — - — — — — — — Net income attributable to Warner Music Group Corp. $ 86 $ 128 $ 84 $ (212 ) $ 86 $ 86 $ 86 $ (172 ) $ 86 Consolidating Statement of Operations (Unaudited) For The Three Months Ended December 31, 2017 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Revenues $ — $ 547 $ 621 $ (123 ) $ 1,045 $ — $ — $ — $ 1,045 Costs and expenses: Cost of revenue — (257 ) (393 ) 81 (569 ) — — — (569 ) Selling, general and administrative expenses — (235 ) (138 ) 40 (333 ) — — — (333 ) Amortization of intangible assets — (24 ) (29 ) — (53 ) — — — (53 ) Total costs and expenses — (516 ) (560 ) 121 (955 ) — — — (955 ) Operating income — 31 61 (2 ) 90 — — — 90 Loss on extinguishment of debt (1 ) — — — (1 ) — — — (1 ) Interest (expense) income, net (29 ) 1 (8 ) — (36 ) — — — (36 ) Equity gains from equity method investments 90 44 — (133 ) 1 4 4 (8 ) 1 Other (expense) income, net (4 ) 9 (2 ) — 3 — — — 3 Income before income taxes 56 85 51 (135 ) 57 4 4 (8 ) 57 Income tax expense (52 ) (51 ) (10 ) 61 (52 ) — — — (52 ) Net income 4 34 41 (74 ) 5 4 4 (8 ) 5 Less: income attributable to noncontrolling interest — — (1 ) — (1 ) — — — (1 ) Net income attributable to Warner Music Group Corp. $ 4 $ 34 $ 40 $ (74 ) $ 4 $ 4 $ 4 $ (8 ) $ 4 |
Schedule of Consolidating Statement of Comprehensive Income | Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended December 31, 2018 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Net income (loss) $ 86 $ 128 $ 84 $ (212 ) $ 86 $ 86 $ 86 $ (172 ) $ 86 Other comprehensive (loss) income, net of tax: Foreign currency adjustment (16 ) — 16 (16 ) (16 ) (16 ) (16 ) 32 (16 ) Deferred losses on derivatives (6 ) — (2 ) 2 (6 ) (6 ) (6 ) 12 (6 ) Other comprehensive (loss) income, net of tax: (22 ) — 14 (14 ) (22 ) (22 ) (22 ) 44 (22 ) Total comprehensive income 64 128 98 (226 ) 64 64 64 (128 ) 64 Less: income attributable to noncontrolling interest — — - — — 64 — — - Comprehensive income attributable to Warner Music Group Corp. $ 64 $ 128 $ 98 $ (226 ) $ 64 $ 128 $ 64 $ (128 ) $ 64 Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended December 31, 2017 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Net income $ 4 $ 34 $ 41 $ (74 ) $ 5 $ 4 $ 4 $ (8 ) $ 5 Other comprehensive income, net of tax: Foreign currency adjustment 9 — (9 ) 9 9 9 9 (18 ) 9 Deferred gains (losses) on derivative financial instruments 1 — (1 ) 1 1 1 1 (2 ) 1 Other comprehensive income (loss), net of tax: 10 — (10 ) 10 10 10 10 (20 ) 10 Total comprehensive income 14 34 31 (64 ) 15 14 14 (28 ) 15 Less: income attributable to noncontrolling interest — — (1 ) — (1 ) — — — (1 ) Comprehensive income attributable to Warner Music Group Corp. $ 14 $ 34 $ 30 $ (64 ) $ 14 $ 14 $ 14 $ (28 ) $ 14 |
Schedule of Consolidating Statement of Cash Flows | Consolidating Statement of Cash Flows (Unaudited) For The Three Months Ended December 31, 2018 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Cash flows from operating activities Net income $ 86 $ 128 $ 84 $ (212 ) $ 86 $ 86 $ 86 $ (172 ) $ 86 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization — 34 34 — 68 — — — 68 Unrealized gains and remeasurement of foreign denominated loans (10 ) (4 ) — 1 (13 ) — — — (13 ) Deferred income taxes — — 11 — 11 — — — 11 Loss on extinguishment of debt 3 — — — 3 — — — 3 Net gain on investments — (15 ) — — (15 ) — — — (15 ) Non-cash interest expense 2 — — — 2 — — — 2 Equity-based compensation expense — 12 — — 12 — — — 12 Equity gains, including distributions (172 ) (109 ) — 281 — (86 ) (86 ) 172 — Changes in operating assets and liabilities: Accounts receivable — (3 ) (85 ) — (88 ) — — — (88 ) Inventories — 2 11 — 13 — — — 13 Royalty advances — (15 ) (13 ) — (28 ) — — — (28 ) Accounts payable and accrued liabilities — 64 (86 ) (70 ) (92 ) — — — (92 ) Royalty payables — (91 ) 183 — 92 — — — 92 Accrued interest (7 ) - — — (7 ) — — — (7 ) Deferred revenue — 3 (8 ) — (5 ) — — — (5 ) Other balance sheet changes 4 24 25 — 53 — — — 53 Net cash provided (used in) by operating activities (94 ) 30 156 — 92 — — — 92 Cash flows from investing activities Acquisition of music publishing rights, net — (4 ) (1 ) — (5 ) — — — (5 ) Capital expenditures — (22 ) (4 ) — (26 ) — — — (26 ) Investments and acquisitions of businesses, net — (23 ) (184 ) — (207 ) — — — (207 ) Proceeds from the sale of investments — — — — — — — — — Advances from issuer (84 ) — — 84 — — — — — Net cash used in investing activities (84 ) (49 ) (189 ) 84 (238 ) — — — (238 ) Cash flows from financing activities Proceeds from issuance of Acquisition Corp. 3.625% Senior Notes due 2026 287 — — — 287 — — — 287 Repayment of Acquisition Corp. 4.125% Senior Secured Notes (40 ) — — — (40 ) — — — (40 ) Repayment of Acquisition Corp. 4.875% Senior Secured Notes (30 ) — — — (30 ) — — — (30 ) Repayment of Acquisition Corp. 5.625% Senior Secured Notes (27 ) — — — (27 ) — — — (27 ) Call premiums paid on and redemption deposit for early redemption of debt (2 ) — — — (2 ) — — — (2 ) Deferred financing costs paid (4 ) — — — (4 ) — — — (4 ) Distribution to noncontrolling interest holder — (1 ) (1 ) — (2 ) — — — (2 ) Dividends paid — — — — — — — — — Change in due to (from) issuer — 84 — (84 ) — — — — — Net cash provided by (used in) financing activities 184 83 (1 ) (84 ) 182 — — — 182 Effect of exchange rate changes on cash and equivalents — — (2 ) — (2 ) — — — (2 ) Net increase (decrease) in cash and equivalents 6 64 (36 ) — 34 — — — 34 Cash and equivalents at beginning of period — 169 345 — 514 — — — 514 Cash and equivalents at end of period $ 6 $ 233 $ 309 $ — $ 548 $ — $ — $ — $ 548 Consolidating Statement of Cash Flows (Unaudited) For The Three Months Ended December 31, 2017 WMG WMG Warner Warner Acquisition Non- Acquisition WMG Music Music Corp. Guarantor Guarantor Corp. Holdings Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated Corp. Corp. Eliminations Consolidated (in millions) Cash flows from operating activities Net income $ 4 $ 34 $ 41 $ (74 ) $ 5 $ 4 $ 4 $ (8 ) $ 5 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization — 32 33 — 65 — — — 65 Unrealized losses (gains) and remeasurement of foreign denominated loans 6 1 (2 ) — 5 — — — 5 Deferred income taxes — — 42 — 42 — — — 42 Loss on extinguishment of debt 1 — — — 1 — — — 1 Net gain on divestitures and investments — (7 ) — — (7 ) — — — (7 ) Non-cash interest expense 1 — — — 1 — — — 1 Equity-based compensation expense — 18 — — 18 — — — 18 Equity gains, including distributions (90 ) (43 ) — 133 — (4 ) (4 ) 8 — Changes in operating assets and liabilities: Accounts receivable — (33 ) (60 ) — (93 ) — — — (93 ) Inventories — — 2 — 2 — — — 2 Royalty advances — 5 (10 ) — (5 ) — — — (5 ) Accounts payable and accrued liabilities — 65 (29 ) (59 ) (23 ) — — — (23 ) Royalty payables — 59 82 — 141 — — — 141 Accrued interest (16 ) — — — (16 ) — — — (16 ) Deferred revenue — 17 (20 ) — (3 ) — — — (3 ) Other balance sheet changes — 37 (34 ) — 3 — — — 3 Net cash (used in) provided by operating activities (94 ) 185 45 — 136 — — — 136 Cash flows from investing activities Acquisition of music publishing rights, net — — (1 ) — (1 ) — — — (1 ) Capital expenditures — (13 ) (3 ) — (16 ) — — — (16 ) Investments and acquisitions of businesses, net — (1 ) — — (1 ) — — — (1 ) Proceeds from the sale of investments — 12 — — 12 — — — 12 Advances from issuer 95 — — (95 ) — — — — — Net cash provided by (used in) investing activities 95 (2 ) (4 ) (95 ) (6 ) — — — (6 ) Cash flows from financing activities Deferred financing costs paid (1 ) — — — (1 ) — — — (1 ) Distribution to noncontrolling interest holder — — (2 ) — (2 ) — — — (2 ) Change in due to (from) issuer — (95 ) — 95 — — — — — Net cash used in financing activities (1 ) (95 ) (2 ) 95 (3 ) — — — (3 ) Effect of exchange rate changes on cash and equivalents — — 2 — 2 — — — 2 Net increase in cash and equivalents — 88 41 — 129 — — — 129 Cash and equivalents at beginning of period — 347 300 — 647 — — — 647 Cash and equivalents at end of period $ — $ 435 $ 341 $ — $ 776 $ — $ — $ — $ 776 |
Description of Business - Addit
Description of Business - Additional Information (Detail) | 3 Months Ended |
Dec. 31, 2018CountryMusical_compositionsongwriters | |
Accounting Policies [Abstract] | |
Number of countries in which Recorded Music activity conducted | Country | 50 |
Minimum number of musical compositions on which Company owns or controls rights | Musical_composition | 1,000,000 |
Number of songwriters and composers | songwriters | 70,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Oct. 01, 2018 | Sep. 30, 2018 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Accumulated deficit | $ (1,078) | $ (1,272) | |
Topic 606 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Accumulated deficit | $ (1,133) | ||
Reclassified from accounts receivable to other current liabilities | 28 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Topic 606 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Accumulated deficit | $ 149 | $ 139 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Cumulative Effect of Changes to Opening Balance Sheet from Adoption of ASC 606 (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Oct. 01, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 |
Assets | |||||
Accounts receivable, net of allowances of $21 million and $45 million | $ 789 | $ 447 | |||
Total current assets | 1,592 | 1,176 | |||
Other assets | 125 | 78 | |||
Total assets | 5,946 | 5,344 | |||
Liabilities and Equity | |||||
Accrued royalties | 1,551 | 1,396 | |||
Accrued liabilities | 495 | 423 | |||
Deferred revenue | 182 | 208 | |||
Other current liabilities | 162 | 34 | |||
Total current liabilities | 2,593 | 2,373 | |||
Deferred tax liabilities, net | 219 | 165 | |||
Other noncurrent liabilities | 275 | 307 | |||
Total liabilities | 6,085 | 5,664 | |||
Equity: | |||||
Accumulated deficit | (1,078) | (1,272) | |||
Noncontrolling interest | 23 | 14 | |||
Total equity | (139) | (320) | $ 321 | $ 308 | |
Total liabilities and equity | 5,946 | $ 5,344 | |||
Topic 606 | |||||
Assets | |||||
Accounts receivable, net of allowances of $21 million and $45 million | $ 704 | ||||
Total current assets | 1,433 | ||||
Other assets | 93 | ||||
Total assets | 5,616 | ||||
Liabilities and Equity | |||||
Accrued royalties | 1,475 | ||||
Accrued liabilities | 422 | ||||
Deferred revenue | 181 | ||||
Other current liabilities | 67 | ||||
Total current liabilities | 2,457 | ||||
Deferred tax liabilities, net | 202 | ||||
Other noncurrent liabilities | 308 | ||||
Total liabilities | 5,786 | ||||
Equity: | |||||
Accumulated deficit | (1,133) | ||||
Noncontrolling interest | 25 | ||||
Total equity | (170) | ||||
Total liabilities and equity | 5,616 | ||||
Impact of Adoption | Topic 606 | |||||
Assets | |||||
Accounts receivable, net of allowances of $21 million and $45 million | 290 | 257 | |||
Total current assets | 290 | 257 | |||
Other assets | 15 | 15 | |||
Total assets | 305 | 272 | |||
Liabilities and Equity | |||||
Accrued royalties | 80 | 79 | |||
Accrued liabilities | (1) | (1) | |||
Deferred revenue | (29) | (27) | |||
Other current liabilities | 47 | 33 | |||
Total current liabilities | 97 | 84 | |||
Deferred tax liabilities, net | 44 | 37 | |||
Other noncurrent liabilities | 4 | 1 | |||
Total liabilities | 145 | 122 | |||
Equity: | |||||
Accumulated deficit | 149 | 139 | |||
Noncontrolling interest | 11 | 11 | |||
Total equity | 160 | 150 | |||
Total liabilities and equity | $ 305 | $ 272 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Impact of Adoption on Consolidated Statement of Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Revenue | $ 1,203 | $ 1,045 |
Costs and expenses: | ||
Cost of revenue | (626) | (569) |
Operating income | 147 | 90 |
Income before income taxes | 136 | 57 |
Income tax expense | (50) | (52) |
Net income | 86 | 5 |
Less: Income attributable to noncontrolling interest | (1) | |
Net income attributable to Warner Music Group Corp. | 86 | $ 4 |
Balances Without Adoption Of ASC 606 | Topic 606 | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Revenue | 1,183 | |
Costs and expenses: | ||
Cost of revenue | (624) | |
Operating income | 129 | |
Income before income taxes | 118 | |
Income tax expense | (43) | |
Net income | 75 | |
Net income attributable to Warner Music Group Corp. | 75 | |
Impact of Adoption | Topic 606 | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Revenue | 20 | |
Costs and expenses: | ||
Cost of revenue | (2) | |
Operating income | 18 | |
Income before income taxes | 18 | |
Income tax expense | (7) | |
Net income | 11 | |
Net income attributable to Warner Music Group Corp. | $ 11 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Impact of Adoption on Consolidated Statement of Balance Sheet (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Oct. 01, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 |
Assets | |||||
Accounts receivable, net of allowances of $21 million and $45 million | $ 789 | $ 447 | |||
Total current assets | 1,592 | 1,176 | |||
Other assets | 125 | 78 | |||
Deferred tax assets, net | 10 | 11 | |||
Total assets | 5,946 | 5,344 | |||
Liabilities and Equity | |||||
Accrued royalties | 1,551 | 1,396 | |||
Accrued liabilities | 495 | 423 | |||
Deferred revenue | 182 | 208 | |||
Other current liabilities | 162 | 34 | |||
Total current liabilities | 2,593 | 2,373 | |||
Deferred tax liabilities, net | 219 | 165 | |||
Other noncurrent liabilities | 275 | 307 | |||
Total liabilities | 6,085 | 5,664 | |||
Equity: | |||||
Accumulated deficit | (1,078) | (1,272) | |||
Noncontrolling interest | 23 | 14 | |||
Total equity | (139) | (320) | $ 321 | $ 308 | |
Total liabilities and equity | 5,946 | $ 5,344 | |||
Topic 606 | |||||
Assets | |||||
Accounts receivable, net of allowances of $21 million and $45 million | $ 704 | ||||
Total current assets | 1,433 | ||||
Other assets | 93 | ||||
Total assets | 5,616 | ||||
Liabilities and Equity | |||||
Accrued royalties | 1,475 | ||||
Accrued liabilities | 422 | ||||
Deferred revenue | 181 | ||||
Other current liabilities | 67 | ||||
Total current liabilities | 2,457 | ||||
Deferred tax liabilities, net | 202 | ||||
Other noncurrent liabilities | 308 | ||||
Total liabilities | 5,786 | ||||
Equity: | |||||
Accumulated deficit | (1,133) | ||||
Noncontrolling interest | 25 | ||||
Total equity | (170) | ||||
Total liabilities and equity | 5,616 | ||||
Balances Without Adoption Of ASC 606 | Topic 606 | |||||
Assets | |||||
Accounts receivable, net of allowances of $21 million and $45 million | 499 | ||||
Total current assets | 1,302 | ||||
Other assets | 110 | ||||
Deferred tax assets, net | 10 | ||||
Total assets | 5,641 | ||||
Liabilities and Equity | |||||
Accrued royalties | 1,471 | ||||
Accrued liabilities | 496 | ||||
Deferred revenue | 211 | ||||
Other current liabilities | 115 | ||||
Total current liabilities | 2,496 | ||||
Deferred tax liabilities, net | 175 | ||||
Other noncurrent liabilities | 271 | ||||
Total liabilities | 5,940 | ||||
Equity: | |||||
Accumulated deficit | (1,227) | ||||
Noncontrolling interest | 12 | ||||
Total equity | (299) | ||||
Total liabilities and equity | 5,641 | ||||
Impact of Adoption | Topic 606 | |||||
Assets | |||||
Accounts receivable, net of allowances of $21 million and $45 million | 290 | 257 | |||
Total current assets | 290 | 257 | |||
Other assets | 15 | 15 | |||
Total assets | 305 | 272 | |||
Liabilities and Equity | |||||
Accrued royalties | 80 | 79 | |||
Accrued liabilities | (1) | (1) | |||
Deferred revenue | (29) | (27) | |||
Other current liabilities | 47 | 33 | |||
Total current liabilities | 97 | 84 | |||
Deferred tax liabilities, net | 44 | 37 | |||
Other noncurrent liabilities | 4 | 1 | |||
Total liabilities | 145 | 122 | |||
Equity: | |||||
Accumulated deficit | 149 | 139 | |||
Noncontrolling interest | 11 | 11 | |||
Total equity | 160 | 150 | |||
Total liabilities and equity | $ 305 | $ 272 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Impact of Adoption on Consolidated Statement of Cash Flows (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | ||
Net income | $ 86 | $ 5 |
Deferred income taxes | 11 | 42 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (88) | (93) |
Accounts payable and accrued liabilities | (92) | (23) |
Royalty payables | 92 | 141 |
Deferred revenue | (5) | (3) |
Other balance sheet changes | 53 | 3 |
Net cash provided by operating activities | 92 | 136 |
Effect of exchange rate changes on cash and equivalents | (2) | 2 |
Net increase in cash and equivalents | 34 | 129 |
Cash and equivalents at beginning of period | 514 | 647 |
Cash and equivalents at end of period | 548 | $ 776 |
Balances Without Adoption Of ASC 606 | Topic 606 | ||
Cash flows from operating activities | ||
Net income | 75 | |
Deferred income taxes | 4 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (55) | |
Accounts payable and accrued liabilities | (95) | |
Royalty payables | 91 | |
Deferred revenue | (3) | |
Other balance sheet changes | 40 | |
Net cash provided by operating activities | 92 | |
Effect of exchange rate changes on cash and equivalents | (2) | |
Net increase in cash and equivalents | 34 | |
Cash and equivalents at beginning of period | 514 | |
Cash and equivalents at end of period | 548 | |
Impact of Adoption | Topic 606 | ||
Cash flows from operating activities | ||
Net income | 11 | |
Deferred income taxes | 7 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (33) | |
Accounts payable and accrued liabilities | 3 | |
Royalty payables | 1 | |
Deferred revenue | (2) | |
Other balance sheet changes | $ 13 |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Disaggregation of Revenue (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 1,203 | $ 1,045 |
Amount of change in revenue | $ 158 | |
Percentage of change in revenue | 15.00% | |
Intersegment Eliminations | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ (3) | (2) |
Amount of change in revenue | $ (1) | |
Percentage of change in revenue | 50.00% | |
Recorded Music | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 1,041 | 904 |
Amount of change in revenue | $ 137 | |
Percentage of change in revenue | 15.00% | |
Recorded Music | Digital | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 563 | 481 |
Amount of change in revenue | $ 82 | |
Percentage of change in revenue | 17.00% | |
Recorded Music | Physical | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 231 | 223 |
Amount of change in revenue | $ 8 | |
Percentage of change in revenue | 4.00% | |
Recorded Music | Total Digital and Physical | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 794 | 704 |
Amount of change in revenue | $ 90 | |
Percentage of change in revenue | 13.00% | |
Recorded Music | Artist Services and Expanded-Rights | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 166 | 105 |
Amount of change in revenue | $ 61 | |
Percentage of change in revenue | 58.00% | |
Recorded Music | Licensing | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 81 | 95 |
Amount of change in revenue | $ (14) | |
Percentage of change in revenue | (15.00%) | |
Music Publishing | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 165 | 143 |
Amount of change in revenue | $ 22 | |
Percentage of change in revenue | 15.00% | |
Music Publishing | Digital | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 65 | 53 |
Amount of change in revenue | $ 12 | |
Percentage of change in revenue | 23.00% | |
Music Publishing | Performance | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 53 | 43 |
Amount of change in revenue | $ 10 | |
Percentage of change in revenue | 23.00% | |
Music Publishing | Mechanical | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 15 | 18 |
Amount of change in revenue | $ (3) | |
Percentage of change in revenue | (17.00%) | |
Music Publishing | Synchronization | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 29 | 27 |
Amount of change in revenue | $ 2 | |
Percentage of change in revenue | 7.00% | |
Music Publishing | Other | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 3 | 2 |
Amount of change in revenue | $ 1 | |
Percentage of change in revenue | 50.00% | |
U.S. | Operating Segments | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 504 | 433 |
Amount of change in revenue | $ 71 | |
Percentage of change in revenue | 16.00% | |
U.S. | Recorded Music | Operating Segments | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 431 | 370 |
Amount of change in revenue | $ 61 | |
Percentage of change in revenue | 16.00% | |
U.S. | Music Publishing | Operating Segments | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 73 | 63 |
Amount of change in revenue | $ 10 | |
Percentage of change in revenue | 16.00% | |
International | Operating Segments | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 702 | 614 |
Amount of change in revenue | $ 88 | |
Percentage of change in revenue | 14.00% | |
International | Recorded Music | Operating Segments | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 610 | 534 |
Amount of change in revenue | $ 76 | |
Percentage of change in revenue | 14.00% | |
International | Music Publishing | Operating Segments | ||
Disaggregation Of Revenue [Line Items] | ||
Total Revenue | $ 92 | $ 80 |
Amount of change in revenue | $ 12 | |
Percentage of change in revenue | 15.00% |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Sep. 30, 2018 | |
Revenue Recognition [Line Items] | ||
Refund liabilities | $ 44 | |
Uncollectible accounts, reserves | $ 21 | $ 17 |
Percentage of receivable allowances to gross accounts receivables | 3.00% | 3.00% |
Deferred revenue increased related to cash received from customers | $ 69 | |
Revenue recognized related to deferred revenue | 70 | |
Revenue recognized related to performance obligations satisfied in previous periods | $ 17 | |
Reserves for Sales Returns | ||
Revenue Recognition [Line Items] | ||
Refund liabilities | $ 28 |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Revenues Expected to be Recognized in Future Related to Performance Obligations (Detail) $ in Millions | Dec. 31, 2018USD ($) |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Remaining performance obligations | $ 368 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-02-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Remaining performance obligations | $ 157 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-10-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Remaining performance obligations | $ 119 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-10-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Remaining performance obligations | $ 86 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-10-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Remaining performance obligations | $ 6 |
Revenue, remaining performance obligation, expected timing of satisfaction, period |
Revenue Recognition - Summary_3
Revenue Recognition - Summary of Revenues Expected to be Recognized in Future Related to Performance Obligations (Detail1) $ in Millions | Dec. 31, 2018USD ($) |
Revenue From Contract With Customer [Abstract] | |
Remaining performance obligations | $ 368 |
Acquisition of EMP - Additional
Acquisition of EMP - Additional Information (Detail) € in Millions, $ in Millions | Oct. 10, 2018USD ($) | Oct. 10, 2018EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Business Acquisition [Line Items] | |||||
Revenues | $ 1,203 | $ 1,045 | |||
Operating income | $ 147 | $ 90 | |||
EMP | |||||
Business Acquisition [Line Items] | |||||
Revenues | $ 76 | ||||
Operating income | $ 6 | ||||
EMP | |||||
Business Acquisition [Line Items] | |||||
Purchase and Sale Agreement Date | Sep. 11, 2018 | Sep. 11, 2018 | |||
Purchase price of selected assets | € | € 166 | ||||
Agreed enterprise value for certain shares acquired | $ 180 | € 155 |
Acquisition of EMP - Schedule o
Acquisition of EMP - Schedule of Estimated Fair Values of the Assets Acquired and Liabilities Assumed (Detail) € in Millions, $ in Millions | Oct. 10, 2018USD ($) | Oct. 10, 2018EUR (€) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) |
Fair value of assets acquired and liabilities assumed | ||||
Goodwill | $ 1,793 | $ 1,692 | ||
EMP | ||||
Business Acquisition [Line Items] | ||||
Purchase Price | $ 180 | € 155 | ||
Preliminary Working Capital | € | 11 | |||
Adjusted Preliminary Purchase Price | $ 190 | € 166 | ||
Foreign Currency Rate at October 10, 2018 | 1.15 | |||
Fair value of assets acquired and liabilities assumed | ||||
Cash and equivalents | $ 7 | |||
Accounts receivable | 3 | |||
Inventories | 37 | |||
Other current assets | 5 | |||
Property plant and equipment | 28 | |||
Intangible assets | 57 | |||
Accounts payable | (18) | |||
Other current liabilities | (11) | |||
Deferred revenue | (7) | |||
Deferred tax liabilities | (18) | |||
Other noncurrent liabilities | (2) | |||
Fair value of assets acquired and liabilities assumed | 81 | |||
Goodwill | 109 | |||
Total purchase price allocated | $ 190 |
Acquisition of EMP - Schedule_2
Acquisition of EMP - Schedule of Pro Forma Financial Information (Detail) - EMP - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | ||
Revenue | $ 1,208 | $ 1,127 |
Operating income | 147 | 92 |
Net income attributable to Warner Music Group | $ 86 | $ 5 |
Comprehensive Income (Loss) - A
Comprehensive Income (Loss) - Additional Information (Detail) $ in Millions | 3 Months Ended |
Dec. 31, 2018USD ($) | |
Maximum | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Changes in accumulated other comprehensive loss, net of related taxes | $ 1 |
Comprehensive Income (Loss) - S
Comprehensive Income (Loss) - Schedule of Accumulated Other Comprehensive Loss (Detail) $ in Millions | 3 Months Ended | |
Dec. 31, 2018USD ($) | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | $ (320) | |
Ending balance | (139) | |
Foreign Currency Translation Loss | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (184) | [1] |
Other comprehensive loss | (16) | [1] |
Ending balance | (200) | [1] |
Minimum Pension Liability Adjustment | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (9) | |
Ending balance | (9) | |
Deferred Gains On Derivative Financial Instruments | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | 3 | |
Other comprehensive loss | (6) | |
Ending balance | (3) | |
Accumulated Other Comprehensive Loss, net | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (190) | |
Other comprehensive loss | (22) | |
Ending balance | $ (212) | |
[1] | Includes historical foreign currency translation related to certain intra-entity transactions. |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Changes in Goodwill for Each Reportable Segment (Detail) $ in Millions | 3 Months Ended | |
Dec. 31, 2018USD ($) | ||
Goodwill [Line Items] | ||
Beginning balance | $ 1,692 | |
Acquisitions | 109 | [1] |
Other adjustments | (8) | [2] |
Ending balance | 1,793 | |
Recorded Music | ||
Goodwill [Line Items] | ||
Beginning balance | 1,228 | |
Acquisitions | 109 | [1] |
Other adjustments | (8) | [2] |
Ending balance | 1,329 | |
Music Publishing | ||
Goodwill [Line Items] | ||
Beginning balance | 464 | |
Ending balance | $ 464 | |
[1] | Relates to the acquisition of EMP during the three months ended December 31, 2018. | |
[2] | Other adjustments during the three months ended December 31, 2018 represent foreign currency movements. |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Intangible Assets (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Sep. 30, 2018 | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Total gross intangible asset subject to amortization | $ 3,337 | $ 3,312 |
Accumulated amortization | (1,498) | (1,461) |
Total net intangible assets subject to amortization | 1,839 | 1,851 |
Intangible assets not subject to amortization | 153 | 154 |
Total net intangible assets | 1,992 | 2,005 |
Trademarks and tradenames | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets not subject to amortization | $ 153 | 154 |
Recorded music catalog | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 10 years | |
Total gross intangible asset subject to amortization | $ 857 | 870 |
Music publishing copyrights | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 26 years | |
Total gross intangible asset subject to amortization | $ 1,534 | 1,540 |
Artist and songwriter contracts | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 13 years | |
Total gross intangible asset subject to amortization | $ 852 | 864 |
Trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 6 years | |
Total gross intangible asset subject to amortization | $ 12 | 12 |
Other Intangible Assets | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 5 years | |
Total gross intangible asset subject to amortization | $ 82 | $ 26 |
Debt - Long-term Debt (Detail)
Debt - Long-term Debt (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Sep. 30, 2018 | |
Debt Instrument [Line Items] | |||
Total debt | [1] | $ 2,998 | $ 2,819 |
Acquisition Corp. | Senior Term Loan Facility due 2023 | |||
Debt Instrument [Line Items] | |||
Total debt | [2] | 1,311 | 1,310 |
Acquisition Corp. | 5.625% Senior Secured Notes due 2022 | |||
Debt Instrument [Line Items] | |||
Total debt | [3] | 220 | 246 |
Acquisition Corp. | 5.000% Senior Secured Notes due 2023 | |||
Debt Instrument [Line Items] | |||
Total debt | [4] | 297 | 297 |
Acquisition Corp. | 4.125% Senior Secured Notes due 2024 | |||
Debt Instrument [Line Items] | |||
Total debt | [5] | 351 | 399 |
Acquisition Corp. | 4.875% Senior Secured Notes due 2024 | |||
Debt Instrument [Line Items] | |||
Total debt | [6] | 217 | 247 |
Acquisition Corp. | 3.625% Senior Secured Notes due 2026 | |||
Debt Instrument [Line Items] | |||
Total debt | [7] | 281 | |
Acquisition Corp. | 5.500% Senior Notes due 2026 | |||
Debt Instrument [Line Items] | |||
Total debt | [8] | $ 321 | $ 320 |
[1] | Principal amount of debt of $3.031 billion and $2.851 billion less unamortized discount of $4 million and $4 million and unamortized deferred financing costs of $29 million and $28 million at December 31, 2018 and September 30, 2018, respectively. | ||
[2] | Principal amount of $1.326 billion less unamortized discount of $4 million and unamortized deferred financing costs of $11 million and $12 million at December 31, 2018 and September 30, 2018, respectively. | ||
[3] | Principal amount of $221 million and $248 million less unamortized deferred financing costs of $1 million and $2 million at December 31, 2018 and September 30, 2018 respectively. | ||
[4] | Principal amount of $300 million less unamortized deferred financing costs of $3 million at both December 31, 2018 and September 30, 2018. | ||
[5] | Face amount of €311 million and €345 million at December 31, 2018 and September 30, 2018 respectively. Above amounts represent the dollar equivalent of such note at December 31, 2018 and September 30, 2018. Principal amount of $354 million and $402 million at December 31, 2018 and September 30, 2018, respectively, less unamortized deferred financing costs of $3 million and $3 million at December 31, 2018 and September 30, 2018, respectively. | ||
[6] | Principal amount of $220 million and $250 million less unamortized deferred financing costs of $3 million and $3 million at December 31, 2018 and September 30, 2018 respectively. | ||
[7] | Face amount of €250 million at December 31, 2018. Above amounts represent the dollar equivalent of such note at December 31, 2018. Principal amount of $285 million at December 31, 2018 less unamortized deferred financing costs of $4 million at December 31, 2018. | ||
[8] | Principal amount of $325 million and $325 million less unamortized deferred financing costs of $4 million and $5 million at December 31, 2018 and September 30, 2018 respectively. |
Debt - Long-term Debt (Parenthe
Debt - Long-term Debt (Parenthetical) (Detail) | Nov. 05, 2018 | Oct. 12, 2018 | Oct. 09, 2018USD ($) | Mar. 14, 2018USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018EUR (€) | Sep. 30, 2018EUR (€) | Dec. 31, 2017 |
Debt Instrument [Line Items] | |||||||||
Face or principal amount of debt instrument | $ 3,031,000,000 | $ 2,851,000,000 | |||||||
Unamortized discount | 4,000,000 | 4,000,000 | |||||||
Unamortized deferred financing costs | 29,000,000 | 28,000,000 | |||||||
Acquisition Corp. | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Commitments under revolving credit facility | 180,000,000 | 180,000,000 | |||||||
Letters of credit outstanding | 16,000,000 | 8,000,000 | |||||||
Revolving credit facility outstanding | $ 0 | $ 0 | |||||||
Senior Term Loan Facility due 2023 | Acquisition Corp. | |||||||||
Debt Instrument [Line Items] | |||||||||
Due date of senior secured notes | 2,023 | 2,023 | |||||||
Face or principal amount of debt instrument | $ 1,326,000,000 | $ 1,326,000,000 | |||||||
Unamortized discount | 4,000,000 | 4,000,000 | |||||||
Unamortized deferred financing costs | $ 11,000,000 | $ 12,000,000 | |||||||
5.000% Senior Secured Notes due 2023 | Acquisition Corp. | |||||||||
Debt Instrument [Line Items] | |||||||||
Due date of senior secured notes | 2,023 | 2,023 | |||||||
Interest rate | 5.00% | 5.00% | 5.00% | 5.00% | |||||
Face or principal amount of debt instrument | $ 300,000,000 | $ 300,000,000 | |||||||
Unamortized deferred financing costs | $ 3,000,000 | $ 3,000,000 | |||||||
4.125% Senior Secured Notes due 2024 | Acquisition Corp. | |||||||||
Debt Instrument [Line Items] | |||||||||
Due date of senior secured notes | 2,024 | 2,024 | 2,024 | ||||||
Interest rate | 4.125% | 4.125% | 4.125% | 4.125% | 4.125% | 4.125% | |||
Face or principal amount of debt instrument | $ 354,000,000 | $ 402,000,000 | € 311,000,000 | € 345,000,000 | |||||
Unamortized deferred financing costs | $ 3,000,000 | $ 3,000,000 | |||||||
4.875% Senior Secured Notes due 2024 | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate | 4.875% | 4.875% | 4.875% | ||||||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | |||||||||
Debt Instrument [Line Items] | |||||||||
Due date of senior secured notes | 2,024 | 2,024 | 2,024 | ||||||
Interest rate | 4.875% | 4.875% | 4.875% | 4.875% | 4.875% | ||||
Face or principal amount of debt instrument | $ 30,000,000 | $ 220,000,000 | $ 250,000,000 | ||||||
Unamortized deferred financing costs | $ 3,000,000 | $ 3,000,000 | |||||||
5.500% Senior Notes due 2026 | Acquisition Corp. | |||||||||
Debt Instrument [Line Items] | |||||||||
Due date of senior secured notes | 2,026 | 2,026 | 2,026 | ||||||
Interest rate | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | ||||
Face or principal amount of debt instrument | $ 325,000,000 | $ 325,000,000 | $ 325,000,000 | ||||||
Unamortized deferred financing costs | $ 4,000,000 | $ 5,000,000 | |||||||
3.625% Senior Secured Notes due 2026 | Acquisition Corp. | |||||||||
Debt Instrument [Line Items] | |||||||||
Due date of senior secured notes | 2,026 | 2,026 | |||||||
Interest rate | 3.625% | 3.625% | 3.625% | 3.625% | |||||
Face or principal amount of debt instrument | $ 285,000,000 | € 250,000,000 | |||||||
Unamortized deferred financing costs | $ 4,000,000 | ||||||||
5.625% Senior Secured Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate | 5.625% | 5.625% | 5.625% | ||||||
5.625% Senior Secured Notes | Acquisition Corp. | |||||||||
Debt Instrument [Line Items] | |||||||||
Due date of senior secured notes | 2,022 | 2,022 | 2,022 | ||||||
Interest rate | 5.625% | 5.625% | 5.625% | 5.625% | 5.625% | ||||
Face or principal amount of debt instrument | $ 221,000,000 | $ 248,000,000 | |||||||
Unamortized deferred financing costs | $ 1,000,000 | $ 2,000,000 |
Debt - December 2017 Senior Ter
Debt - December 2017 Senior Term Loan Credit Agreement Amendment - Additional Information (Detail) - USD ($) $ in Millions | May 22, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | |||
Loss on extinguishment of debt | $ (3) | $ (1) | |
December 2017 Senior Term Loan Credit Agreement Amendment | |||
Debt Instrument [Line Items] | |||
Loss on extinguishment of debt | $ (1) |
Debt - New Revolving Credit Agr
Debt - New Revolving Credit Agreement - Additional Information (Detail) - New Revolving Credit Agreement - Revolving Credit Facility $ in Millions | Jan. 31, 2018USD ($) |
Debt Instrument [Line Items] | |
Debt instrument, agreement date | Jan. 31, 2018 |
Credit agreement covenant terms | The Revolving Credit Agreement differs from the Old Revolving Credit Agreement in that it, among other things, reduces the interest rate margin applicable to the loans, extends the maturity date thereunder, provides for the option to increase the commitments under the Company’s then existing revolving credit agreement, provides for greater flexibility to amend and extend the Company’s then existing revolving credit agreement and create additional tranches thereunder, provides for greater flexibility over future amendments, increases the springing financial maintenance covenant to 4.75:1.00 and provides that the covenant shall not be tested unless at the end of a fiscal quarter the outstanding amount of loans and drawings under letters of credit which have not been reimbursed exceeds $54 million and aligns the other negative covenants with those of the Senior Term Loan Credit Agreement. |
Debt instrument, springing financial maintenance covenant | 4.75% |
Maximum | |
Debt Instrument [Line Items] | |
Debt instrument, reimbursed amount | $ 54 |
Debt - March 2018 Senior Term L
Debt - March 2018 Senior Term Loan Credit Agreement Amendment - Additional Information (Detail) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 | Mar. 14, 2018 |
Debt Instrument [Line Items] | |||
Face or principal amount of debt instrument | $ 3,031,000,000 | $ 2,851,000,000 | |
March 2018 Senior Term Loan Credit Agreement Amendment | Acquisition Corp. | |||
Debt Instrument [Line Items] | |||
Face or principal amount of debt instrument | $ 320,000,000 | ||
Revolving credit facility outstanding | $ 1,326,000,000 |
Debt - Notes Offering - Additio
Debt - Notes Offering - Additional Information (Detail) - USD ($) | Mar. 14, 2018 | Dec. 31, 2018 | Sep. 30, 2018 |
Debt Instrument [Line Items] | |||
Face or principal amount of debt instrument | $ 3,031,000,000 | $ 2,851,000,000 | |
5.500% Senior Notes due 2026 | Acquisition Corp. | |||
Debt Instrument [Line Items] | |||
Face or principal amount of debt instrument | $ 325,000,000 | $ 325,000,000 | $ 325,000,000 |
Due date of senior secured notes | 2,026 | 2,026 | 2,026 |
Interest rate | 5.50% | 5.50% | 5.50% |
Debt - Tender Offer and Notes R
Debt - Tender Offer and Notes Redemption - Additional Information (Detail) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Apr. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | Mar. 14, 2018 | |
Debt Instrument [Line Items] | ||||||
Face or principal amount of debt instrument | $ 3,031,000,000 | $ 2,851,000,000 | ||||
Loss on extinguishment of debt | $ (3,000,000) | $ (1,000,000) | ||||
6.750% Senior Notes due 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 6.75% | |||||
Face or principal amount of debt instrument | $ 523,000,000 | |||||
Loss on extinguishment of debt | $ (5,000,000) | $ (23,000,000) | ||||
6.750% Senior Notes due 2022 | Acquisition Corp. | ||||||
Debt Instrument [Line Items] | ||||||
Face or principal amount of debt instrument | 112,000,000 | |||||
Redemption deposit | $ 119,000,000 |
Debt - June 2018 Senior Term Lo
Debt - June 2018 Senior Term Loan Credit Agreement Amendment - Additional Information (Detail) - USD ($) $ in Millions | Jun. 07, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | |||
Loss on extinguishment of debt | $ (3) | $ (1) | |
June 2018 Senior Term Loan Credit Agreement Amendment | |||
Debt Instrument [Line Items] | |||
Loss on extinguishment of debt | $ (2) |
Debt - 3.625% Secured Notes Off
Debt - 3.625% Secured Notes Offering - Additional Information (Detail) | Nov. 05, 2018USD ($) | Oct. 12, 2018EUR (€) | Oct. 09, 2018EUR (€) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018EUR (€) | Oct. 09, 2018USD ($) | Oct. 09, 2018EUR (€) | Sep. 30, 2018EUR (€) | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||||||||||
Aggregate principal amount of debt instrument | $ 3,031,000,000 | $ 2,851,000,000 | ||||||||
3.625% Senior Secured Notes due 2026 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 3.625% | 3.625% | ||||||||
3.625% Senior Secured Notes due 2026 | Acquisition Corp. | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Aggregate principal amount of debt instrument | € | € 250,000,000 | |||||||||
Due date of senior secured notes | 2,026 | 2,026 | ||||||||
Interest rate | 3.625% | 3.625% | 3.625% | 3.625% | 3.625% | |||||
4.125% Senior Secured Notes due 2024 | Acquisition Corp. | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Aggregate principal amount of debt instrument | $ 354,000,000 | $ 402,000,000 | € 311,000,000 | € 345,000,000 | ||||||
Due date of senior secured notes | 2,024 | 2,024 | 2,024 | |||||||
Interest rate | 4.125% | 4.125% | 4.125% | 4.125% | 4.125% | 4.125% | 4.125% | |||
Redemptions of senior notes | € | € 34,500,000 | € 34,500,000 | ||||||||
4.875% Senior Secured Notes due 2024 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 4.875% | 4.875% | 4.875% | |||||||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Aggregate principal amount of debt instrument | $ 220,000,000 | $ 250,000,000 | $ 30,000,000 | |||||||
Due date of senior secured notes | 2,024 | 2,024 | 2,024 | |||||||
Interest rate | 4.875% | 4.875% | 4.875% | 4.875% | 4.875% | 4.875% | ||||
5.625% Senior Secured Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 5.625% | 5.625% | 5.625% | |||||||
5.625% Senior Secured Notes | Acquisition Corp. | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Aggregate principal amount of debt instrument | $ 221,000,000 | $ 248,000,000 | ||||||||
Due date of senior secured notes | 2,022 | 2,022 | 2,022 | |||||||
Interest rate | 5.625% | 5.625% | 5.625% | 5.625% | 5.625% | |||||
Redemptions of senior notes | $ 26,550,000 |
Debt - Partial Redemption of 4.
Debt - Partial Redemption of 4.125% Secured Notes - Additional Information (Detail) € in Thousands, $ in Millions | Oct. 12, 2018USD ($) | Oct. 12, 2018EUR (€) | Oct. 09, 2018EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2018 |
Debt Instrument [Line Items] | ||||||
Loss on extinguishment of debt | $ | $ 3 | $ 1 | ||||
4.125% Senior Secured Notes due 2024 | Acquisition Corp. | ||||||
Debt Instrument [Line Items] | ||||||
Due date of senior secured notes | 2,024 | 2,024 | 2,024 | 2,024 | ||
Redemptions of senior notes | € 34,500 | € 34,500 | ||||
Interest rate | 4.125% | 4.125% | 4.125% | 4.125% | ||
Senior notes redemption price | € 36,170 | |||||
Redemption price, percentage of principal amount redeemed | 103.00% | 103.00% | ||||
Debt instrument remaining outstanding amount | € 310,500 | |||||
Loss on extinguishment of debt | $ | $ 2 | |||||
3.625% Senior Secured Notes due 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 3.625% | |||||
3.625% Senior Secured Notes due 2026 | Acquisition Corp. | ||||||
Debt Instrument [Line Items] | ||||||
Due date of senior secured notes | 2,026 | 2,026 | ||||
Interest rate | 3.625% | 3.625% | 3.625% |
Debt - Open Market Purchase - A
Debt - Open Market Purchase - Additional Information (Detail) - USD ($) | Oct. 09, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 |
Debt Instrument [Line Items] | ||||
Aggregate principal amount of debt instrument | $ 3,031,000,000 | $ 2,851,000,000 | ||
Loss on extinguishment of debt | $ 3,000,000 | $ 1,000,000 | ||
4.875% Senior Secured Notes due 2024 | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 4.875% | 4.875% | ||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount of debt instrument | $ 30,000,000 | $ 220,000,000 | $ 250,000,000 | |
Due date of senior secured notes | 2,024 | 2,024 | 2,024 | |
Interest rate | 4.875% | 4.875% | 4.875% | |
Debt instrument remaining outstanding amount | $ 220,000,000 | |||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | Maximum | ||||
Debt Instrument [Line Items] | ||||
Loss on extinguishment of debt | $ 1,000,000 |
Debt - Partial Redemption of 5.
Debt - Partial Redemption of 5.625% Secured Notes - Additional Information (Detail) - USD ($) $ in Thousands | Nov. 05, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 |
Debt Instrument [Line Items] | ||||
Loss on extinguishment of debt | $ 3,000 | $ 1,000 | ||
5.625% Senior Secured Notes | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 5.625% | 5.625% | ||
5.625% Senior Secured Notes | Acquisition Corp. | ||||
Debt Instrument [Line Items] | ||||
Due date of senior secured notes | 2,022 | 2,022 | 2,022 | |
Redemptions of senior notes | $ 26,550 | |||
Interest rate | 5.625% | 5.625% | 5.625% | |
Senior notes redemption price | $ 27,380 | |||
Redemption price, percentage of principal amount redeemed | 102.813% | |||
Debt instrument remaining outstanding amount | $ 220,950 | |||
Loss on extinguishment of debt | $ 1,000 |
Debt - Interest Rates - Additio
Debt - Interest Rates - Additional Information (Detail) - Acquisition Corp. | 3 Months Ended |
Dec. 31, 2018 | |
Senior Term Loan Facility due 2020 | |
Debt Instrument [Line Items] | |
Description of variable rate basis | The loans under the Senior Term Loan Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in U.S. dollars in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Term Loan LIBOR”) subject to a zero floor, plus 2.125% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) one-month Term Loan LIBOR, plus 1.00% per annum, plus, in each case, 1.125% per annum. |
Interest rate applicable to overdue principal | 2.00% |
Term loan Base rate plus Election Rate | 1.00% |
London Interbank Offered Rate (LIBOR) | Senior Term Loan Facility due 2020 | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 2.125% |
Base Rate | Senior Term Loan Facility due 2020 | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 1.125% |
Additional Interest rate on other overdue amounts | 2.00% |
Federal Funds Effective Swap Rate | Senior Term Loan Facility due 2020 | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 0.50% |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 0.75% |
Description of variable rate basis | The loans under the Revolving Credit Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in the borrowing currency in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Revolving LIBOR”) subject to a zero floor, plus 1.75% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) the one-month Revolving LIBOR plus 1.0% per annum, plus, in each case, 0.75% per annum. If there is a payment default at any time, then the interest rate applicable to overdue principal will be the rate otherwise applicable to such loan plus 2.0% per annum. |
Interest rate applicable to overdue principal | 2.00% |
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 1.75% |
Revolving Credit Facility | Base Rate | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 1.00% |
Additional Interest rate on other overdue amounts | 2.00% |
Revolving Credit Facility | Federal Funds Effective Swap Rate | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 0.50% |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | |
Debt Instrument [Line Items] | |||
Interest expense, net | $ 36 | $ 36 | |
Weighted-average interest rate of total debt | 4.70% | 4.90% | 4.70% |
Senior Notes | |||
Debt Instrument [Line Items] | |||
Scheduled maturities of long-term debt in 2022 | $ 221 | ||
Scheduled to mature | $ 1,500 | ||
Acquisition Corp. | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Extended maturity date of credit facility | Jan. 31, 2023 | ||
Acquisition Corp. | Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Credit facility maturity date | Nov. 1, 2023 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions | Jul. 29, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Commitments And Contingencies [Line Items] | |||||
Revenues | $ 1,203 | $ 1,045 | |||
Sirius XM | Settled Litigation | |||||
Commitments And Contingencies [Line Items] | |||||
Receipts from plaintiff | $ 210 | ||||
Cash distribution | $ 33 | ||||
Revenues | $ 1 | $ 4 | $ 28 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Contingency [Line Items] | |||||
U.S. federal corporate statutory tax rate | 21.00% | 35.00% | 24.50% | ||
Enacted tax rate | 21.00% | ||||
Tax Act, income tax expense | $ 23,000,000 | ||||
Tax Cuts And Jobs Act Of 2017 Impact Of Global Low Taxed Income Amount | $ 50,000,000 | ||||
Income tax expense | 50,000,000 | $ 52,000,000 | |||
Income withholding taxes and foreign losses uncertain tax positions | 0 | ||||
Tax benefit due to reversal of deferred tax assets valuation allowance | $ 27,000,000 | ||||
Maximum | |||||
Income Tax Contingency [Line Items] | |||||
Reasonably possible decrease in gross unrecognized tax benefits from ongoing audits and settlement | $ 2,000,000 | ||||
Scenario, Plan | |||||
Income Tax Contingency [Line Items] | |||||
U.S. federal corporate statutory tax rate | 21.00% | ||||
Scenario, Forecast | |||||
Income Tax Contingency [Line Items] | |||||
Income tax liability related to Transition Tax | $ 0 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | |
Derivatives Fair Value [Line Items] | |||
Companys hedged interest rate transactions | 4 years | ||
Outstanding hedge contracts | $ 0 | ||
Unrealized deferred losses in comprehensive income related to foreign exchange hedging | $ 2,000,000 | ||
Deferred gains (losses) in comprehensive loss related to foreign exchange hedging | 0 | ||
Deferred (losses) gains on derivative financial instruments | (6,000,000) | $ 1,000,000 | |
Unrealized pre-tax (losses) gains of the company foreign exchange forward contracts | (3,000,000) | 1,000,000 | |
Unrealized pre-tax (losses) gains of the company derivative interest rate | (6,000,000) | $ 0 | |
Interest Rate Swap | |||
Derivatives Fair Value [Line Items] | |||
Outstanding hedge contracts | 320,000,000 | 320,000,000 | |
Deferred (losses) gains on derivative financial instruments | (1,000,000) | $ 3,000,000 | |
Sale | |||
Derivatives Fair Value [Line Items] | |||
Outstanding hedge contracts | 309,000,000 | ||
Purchase | |||
Derivatives Fair Value [Line Items] | |||
Outstanding hedge contracts | $ 178,000,000 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Summary of Amounts Recorded in Consolidated Balance Sheets (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Sep. 30, 2018 | |
Other Current Assets | |||
Derivatives Fair Value [Line Items] | |||
Other assets | [1],[2] | $ 2 | |
Other Noncurrent Assets | |||
Derivatives Fair Value [Line Items] | |||
Other assets | [3] | $ 4 | |
Other Noncurrent Liabilities | |||
Derivatives Fair Value [Line Items] | |||
Other liabilities | [1] | $ 1 | |
[1] | $8 million and $6 million of foreign exchange derivative contracts in asset and liability positions, respectively, and $1 million of interest rate swap in a liability position including non-designated cash flow hedges. | ||
[2] | The fair value of foreign currency forward exchange contracts is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay at their maturity dates for contracts involving the same currencies and maturity dates. | ||
[3] | $4 million of interest rate swap in an asset position. |
Derivative Financial Instrume_5
Derivative Financial Instruments - Summary of Amounts Recorded in Consolidated Balance Sheets (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Sep. 30, 2018 |
Derivatives Fair Value [Line Items] | ||
Foreign exchange derivative contracts in asset | $ 8 | |
Foreign exchange derivative contracts in liability | 6 | |
Interest Rate Swap | ||
Derivatives Fair Value [Line Items] | ||
Foreign exchange derivative contracts in asset | $ 4 | |
Foreign exchange derivative contracts in liability | $ 1 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 3 Months Ended |
Dec. 31, 2018Operations | |
Segment Reporting [Abstract] | |
Number of fundamental operations | 2 |
Segment Information - Schedule
Segment Information - Schedule of Segment Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 1,203 | $ 1,045 |
Operating income | 147 | 90 |
Amortization of intangible assets | 54 | 53 |
Depreciation of property, plant and equipment | 14 | 12 |
OIBDA | 215 | 155 |
Operating Segments | Recorded Music | ||
Segment Reporting Information [Line Items] | ||
Revenues | 1,041 | 904 |
Operating income | 163 | 129 |
Amortization of intangible assets | 38 | 36 |
Depreciation of property, plant and equipment | 10 | 8 |
OIBDA | 211 | 173 |
Operating Segments | Music Publishing | ||
Segment Reporting Information [Line Items] | ||
Revenues | 165 | 143 |
Operating income | 22 | (1) |
Amortization of intangible assets | 16 | 17 |
Depreciation of property, plant and equipment | 1 | 1 |
OIBDA | 39 | 17 |
Corporate Expenses and Eliminations | ||
Segment Reporting Information [Line Items] | ||
Revenues | (3) | (2) |
Operating income | (38) | (38) |
Depreciation of property, plant and equipment | 3 | 3 |
OIBDA | $ (35) | $ (35) |
Additional Financial Informat_2
Additional Financial Information - Additional Information (Detail) - USD ($) $ in Thousands | Dec. 20, 2018 | Aug. 07, 2018 | May 07, 2018 | Jan. 08, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Supplemental Cash Flow Information [Abstract] | ||||||
Accrued interest paid | $ 42,000 | $ 51,000 | ||||
Income taxes paid net of refunds | $ 7,000 | $ 8,000 | ||||
Special cash dividends | $ 31,250 | $ 500,000 | $ 300,000 | $ 125,000 | ||
Special cash dividends payable, date to be paid | Jan. 4, 2019 | Aug. 10, 2018 | May 11, 2018 | Jan. 12, 2018 | ||
Special cash dividends payable, date of record | Dec. 31, 2018 | Aug. 7, 2018 | May 7, 2018 | Jan. 11, 2018 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value of Financial Instruments (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Sep. 30, 2018 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Total | $ 29 | $ (4) | |
Level 2 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Total | 36 | 4 | |
Level 3 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Total | (7) | (8) | |
Other Current Assets | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Foreign Currency Forward Exchange Contracts | [1],[2] | 2 | |
Other Current Assets | Level 2 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Foreign Currency Forward Exchange Contracts | [2] | 2 | |
Other Current Liabilities | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | [3] | (1) | (2) |
Other Current Liabilities | Level 3 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | [3] | (1) | (2) |
Other Noncurrent Assets | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Foreign Currency Forward Exchange Contracts | [4] | 4 | |
Interest rate swap | [5] | 4 | |
Equity Method Investment | [6] | 35 | |
Other Noncurrent Assets | Level 2 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Interest rate swap | [5] | 4 | |
Equity Method Investment | [6] | 35 | |
Other Non-Current Liabilities | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Foreign Currency Forward Exchange Contracts | [1] | (1) | |
Contractual Obligations | [3] | (6) | (6) |
Interest rate swap | [5] | (1) | |
Other Non-Current Liabilities | Level 2 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Interest rate swap | [5] | (1) | |
Other Non-Current Liabilities | Level 3 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | [3] | $ (6) | $ (6) |
[1] | $8 million and $6 million of foreign exchange derivative contracts in asset and liability positions, respectively, and $1 million of interest rate swap in a liability position including non-designated cash flow hedges. | ||
[2] | The fair value of foreign currency forward exchange contracts is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay at their maturity dates for contracts involving the same currencies and maturity dates. | ||
[3] | This represents purchase obligations and contingent consideration related to the Company’s various acquisitions. This is based on a probability weighted performance approach and it is adjusted to fair value on a recurring basis and any adjustments are included as a component of operating income in the statement of operations. These amounts were mainly calculated using unobservable inputs such as future earnings performance of the Company’s various acquisitions and the expected timing of the payment | ||
[4] | $4 million of interest rate swap in an asset position. | ||
[5] | The fair value of the interest rate swap is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay as of December 31, 2018 for contracts involving the same attributes and maturity dates. | ||
[6] | The fair value of equity method investment represents an equity method investment acquired during the three months December 31, 2018 whereby the Company has elected the fair value option under ASC 825 – Financial Instruments. The valuation is based upon quoted prices in active markets and model-based valuation techniques to determine fair value |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Net Liabilities Classified as Level 3 (Detail) - Level 3 $ in Millions | 3 Months Ended |
Dec. 31, 2018USD ($) | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |
Balance at September 30, 2018 | $ (8) |
Payments | 1 |
Balance at December 31, 2018 | $ (7) |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Sep. 30, 2018 |
Level 2 measurement | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Debt instrument, fair value disclosure | $ 2,972 | $ 2,862 |
Guarantor and Non-Guarantor S_3
Guarantor and Non-Guarantor Subsidiaries Financial Information - Additional Information (Detail) | Nov. 05, 2018 | Oct. 12, 2018 | Oct. 09, 2018 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
5.625% Senior Secured Notes due 2022 | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Interest rate | 5.625% | 5.625% | ||||
5.625% Senior Secured Notes due 2022 | Acquisition Corp. | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Interest rate | 5.625% | 5.625% | 5.625% | |||
Due date of Senior Secured Notes | 2,022 | 2,022 | 2,022 | |||
5.00% Senior Secured Notes due 2023 | Acquisition Corp. | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Interest rate | 5.00% | |||||
Due date of Senior Secured Notes | 2,023 | |||||
4.125% Senior Secured Notes due 2024 | Acquisition Corp. | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Interest rate | 4.125% | 4.125% | 4.125% | 4.125% | ||
Due date of Senior Secured Notes | 2,024 | 2,024 | 2,024 | |||
4.875% Senior Secured Notes due 2024 | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Interest rate | 4.875% | 4.875% | ||||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Interest rate | 4.875% | 4.875% | 4.875% | |||
Due date of Senior Secured Notes | 2,024 | 2,024 | 2,024 | |||
5.50% Senior Notes due 2026 | Acquisition Corp. | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Interest rate | 5.50% | |||||
Due date of Senior Secured Notes | 2,026 | |||||
3.625% Senior Secured Notes due 2026 | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Interest rate | 3.625% | |||||
3.625% Senior Secured Notes due 2026 | Acquisition Corp. | ||||||
Condensed Financial Statements Captions [Line Items] | ||||||
Interest rate | 3.625% | 3.625% | 3.625% | |||
Due date of Senior Secured Notes | 2,026 | 2,026 |
Guarantor and Non-Guarantor S_4
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Balance Sheet Unaudited (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 |
Current assets: | ||||
Cash and equivalents | $ 548 | $ 514 | ||
Accounts receivable, net | 789 | 447 | ||
Inventories | 66 | 42 | ||
Royalty advances expected to be recouped within one year | 136 | 123 | ||
Prepaid and other current assets | 53 | 50 | ||
Total current assets | 1,592 | 1,176 | ||
Royalty advances expected to be recouped after one year | 166 | 153 | ||
Property, plant and equipment, net | 268 | 229 | ||
Goodwill | 1,793 | 1,692 | ||
Intangible assets subject to amortization, net | 1,839 | 1,851 | ||
Intangible assets not subject to amortization | 153 | 154 | ||
Deferred tax assets, net | 10 | 11 | ||
Other assets | 125 | 78 | ||
Total assets | 5,946 | 5,344 | ||
Current liabilities: | ||||
Accounts payable | 179 | 281 | ||
Accrued royalties | 1,551 | 1,396 | ||
Accrued liabilities | 495 | 423 | ||
Accrued interest | 24 | 31 | ||
Deferred revenue | 182 | 208 | ||
Other current liabilities | 162 | 34 | ||
Total current liabilities | 2,593 | 2,373 | ||
Long-term debt | 2,998 | 2,819 | ||
Deferred tax liabilities, net | 219 | 165 | ||
Other noncurrent liabilities | 275 | 307 | ||
Total liabilities | 6,085 | 5,664 | ||
Total Warner Music Group Corp. (deficit) equity | (162) | (334) | ||
Noncontrolling interest | 23 | 14 | ||
Total equity | (139) | (320) | $ 321 | $ 308 |
Total liabilities and equity | 5,946 | 5,344 | ||
Reportable Legal Entities | Guarantor Subsidiaries | ||||
Current assets: | ||||
Cash and equivalents | 233 | 169 | ||
Accounts receivable, net | 345 | 262 | ||
Inventories | 16 | 18 | ||
Royalty advances expected to be recouped within one year | 85 | 79 | ||
Prepaid and other current assets | 16 | 15 | ||
Total current assets | 695 | 543 | ||
Due from (to) parent companies | (307) | (214) | ||
Investments in and advances to consolidated subsidiaries | 2,196 | 2,192 | ||
Royalty advances expected to be recouped after one year | 103 | 93 | ||
Property, plant and equipment, net | 168 | 155 | ||
Goodwill | 1,370 | 1,370 | ||
Intangible assets subject to amortization, net | 940 | 956 | ||
Intangible assets not subject to amortization | 71 | 71 | ||
Other assets | 94 | 55 | ||
Total assets | 5,330 | 5,221 | ||
Current liabilities: | ||||
Accounts payable | 103 | 200 | ||
Accrued royalties | 794 | 869 | ||
Accrued liabilities | 256 | 195 | ||
Deferred revenue | 99 | 94 | ||
Other current liabilities | 49 | 2 | ||
Total current liabilities | 1,301 | 1,360 | ||
Deferred tax liabilities, net | 27 | 3 | ||
Other noncurrent liabilities | 163 | 197 | ||
Total liabilities | 1,491 | 1,560 | ||
Total Warner Music Group Corp. (deficit) equity | 3,835 | 3,656 | ||
Noncontrolling interest | 4 | 5 | ||
Total equity | 3,839 | 3,661 | ||
Total liabilities and equity | 5,330 | 5,221 | ||
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||
Current assets: | ||||
Cash and equivalents | 309 | 345 | ||
Accounts receivable, net | 444 | 185 | ||
Inventories | 50 | 24 | ||
Royalty advances expected to be recouped within one year | 51 | 44 | ||
Prepaid and other current assets | 37 | 35 | ||
Total current assets | 891 | 633 | ||
Due from (to) parent companies | (166) | (274) | ||
Royalty advances expected to be recouped after one year | 63 | 60 | ||
Property, plant and equipment, net | 100 | 74 | ||
Goodwill | 423 | 322 | ||
Intangible assets subject to amortization, net | 899 | 895 | ||
Intangible assets not subject to amortization | 82 | 83 | ||
Deferred tax assets, net | 10 | 11 | ||
Other assets | 25 | 11 | ||
Total assets | 2,327 | 1,815 | ||
Current liabilities: | ||||
Accounts payable | 76 | 81 | ||
Accrued royalties | 757 | 527 | ||
Accrued liabilities | 239 | 228 | ||
Deferred revenue | 83 | 114 | ||
Other current liabilities | 113 | 32 | ||
Total current liabilities | 1,268 | 982 | ||
Deferred tax liabilities, net | 192 | 162 | ||
Other noncurrent liabilities | 108 | 108 | ||
Total liabilities | 1,568 | 1,252 | ||
Total Warner Music Group Corp. (deficit) equity | 740 | 554 | ||
Noncontrolling interest | 19 | 9 | ||
Total equity | 759 | 563 | ||
Total liabilities and equity | 2,327 | 1,815 | ||
Reportable Legal Entities | Warner Music Group Corp. | ||||
Current assets: | ||||
Investments in and advances to consolidated subsidiaries | 739 | 675 | ||
Total assets | 739 | 675 | ||
Current liabilities: | ||||
Total Warner Music Group Corp. (deficit) equity | 739 | 675 | ||
Total equity | 739 | 675 | ||
Total liabilities and equity | 739 | 675 | ||
Reportable Legal Entities | WMG Acquisition Corp. | ||||
Current assets: | ||||
Cash and equivalents | 6 | |||
Total current assets | 6 | |||
Due from (to) parent companies | 473 | 488 | ||
Investments in and advances to consolidated subsidiaries | 2,240 | 2,018 | ||
Other assets | 6 | 12 | ||
Total assets | 2,725 | 2,518 | ||
Current liabilities: | ||||
Accrued interest | 24 | 31 | ||
Total current liabilities | 24 | 31 | ||
Long-term debt | 2,998 | 2,819 | ||
Other noncurrent liabilities | 4 | 2 | ||
Total liabilities | 3,026 | 2,852 | ||
Total Warner Music Group Corp. (deficit) equity | (301) | (334) | ||
Total equity | (301) | (334) | ||
Total liabilities and equity | 2,725 | 2,518 | ||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | ||||
Current assets: | ||||
Cash and equivalents | 548 | 514 | ||
Accounts receivable, net | 789 | 447 | ||
Inventories | 66 | 42 | ||
Royalty advances expected to be recouped within one year | 136 | 123 | ||
Prepaid and other current assets | 53 | 50 | ||
Total current assets | 1,592 | 1,176 | ||
Royalty advances expected to be recouped after one year | 166 | 153 | ||
Property, plant and equipment, net | 268 | 229 | ||
Goodwill | 1,793 | 1,692 | ||
Intangible assets subject to amortization, net | 1,839 | 1,851 | ||
Intangible assets not subject to amortization | 153 | 154 | ||
Deferred tax assets, net | 10 | 11 | ||
Other assets | 125 | 78 | ||
Total assets | 5,946 | 5,344 | ||
Current liabilities: | ||||
Accounts payable | 179 | 281 | ||
Accrued royalties | 1,551 | 1,396 | ||
Accrued liabilities | 495 | 423 | ||
Accrued interest | 24 | 31 | ||
Deferred revenue | 182 | 208 | ||
Other current liabilities | 162 | 34 | ||
Total current liabilities | 2,593 | 2,373 | ||
Long-term debt | 2,998 | 2,819 | ||
Deferred tax liabilities, net | 219 | 165 | ||
Other noncurrent liabilities | 275 | 307 | ||
Total liabilities | 6,085 | 5,664 | ||
Total Warner Music Group Corp. (deficit) equity | (162) | (334) | ||
Noncontrolling interest | 23 | 14 | ||
Total equity | (139) | (320) | ||
Total liabilities and equity | 5,946 | 5,344 | ||
Reportable Legal Entities | WMG Holdings Corp. | ||||
Current assets: | ||||
Investments in and advances to consolidated subsidiaries | 739 | 675 | ||
Total assets | 739 | 675 | ||
Current liabilities: | ||||
Total Warner Music Group Corp. (deficit) equity | 739 | 675 | ||
Total equity | 739 | 675 | ||
Total liabilities and equity | 739 | 675 | ||
Eliminations | ||||
Current assets: | ||||
Investments in and advances to consolidated subsidiaries | (1,478) | (1,350) | ||
Total assets | (1,478) | (1,350) | ||
Current liabilities: | ||||
Total Warner Music Group Corp. (deficit) equity | (1,478) | (1,350) | ||
Total equity | (1,478) | (1,350) | ||
Total liabilities and equity | (1,478) | (1,350) | ||
Eliminations | WMG Acquisition Corp. | ||||
Current assets: | ||||
Investments in and advances to consolidated subsidiaries | (4,436) | (4,210) | ||
Total assets | (4,436) | (4,210) | ||
Current liabilities: | ||||
Total Warner Music Group Corp. (deficit) equity | (4,436) | (4,210) | ||
Total equity | (4,436) | (4,210) | ||
Total liabilities and equity | $ (4,436) | $ (4,210) |
Guarantor and Non-Guarantor S_5
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Operations Unaudited (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Condensed Income Statements Captions [Line Items] | |||
Revenue | $ 1,203 | $ 1,045 | |
Costs and expenses: | |||
Cost of revenue | (626) | (569) | |
Selling, general and administrative expenses | [1] | (376) | (333) |
Amortization of intangible assets | (54) | (53) | |
Total costs and expenses | (1,056) | (955) | |
Operating income | 147 | 90 | |
Loss on extinguishment of debt | (3) | (1) | |
Interest (expense) income, net | (36) | (36) | |
Equity gains from equity method investments | 1 | ||
Other (expense) income, net | 28 | 3 | |
Income before income taxes | 136 | 57 | |
Income tax expense | (50) | (52) | |
Net income | 86 | 5 | |
Less: Income attributable to noncontrolling interest | (1) | ||
Net income attributable to Warner Music Group Corp. | 86 | 4 | |
Reportable Legal Entities | Guarantor Subsidiaries | |||
Condensed Income Statements Captions [Line Items] | |||
Revenue | 481 | 547 | |
Costs and expenses: | |||
Cost of revenue | (223) | (257) | |
Selling, general and administrative expenses | (189) | (235) | |
Amortization of intangible assets | (25) | (24) | |
Total costs and expenses | (437) | (516) | |
Operating income | 44 | 31 | |
Interest (expense) income, net | 1 | 1 | |
Equity gains from equity method investments | 109 | 44 | |
Other (expense) income, net | 19 | 9 | |
Income before income taxes | 173 | 85 | |
Income tax expense | (45) | (51) | |
Net income | 128 | 34 | |
Net income attributable to Warner Music Group Corp. | 128 | 34 | |
Reportable Legal Entities | Non-Guarantor Subsidiaries | |||
Condensed Income Statements Captions [Line Items] | |||
Revenue | 854 | 621 | |
Costs and expenses: | |||
Cost of revenue | (505) | (393) | |
Selling, general and administrative expenses | (217) | (138) | |
Amortization of intangible assets | (29) | (29) | |
Total costs and expenses | (751) | (560) | |
Operating income | 103 | 61 | |
Interest (expense) income, net | (6) | (8) | |
Other (expense) income, net | 11 | (2) | |
Income before income taxes | 108 | 51 | |
Income tax expense | (24) | (10) | |
Net income | 84 | 41 | |
Less: Income attributable to noncontrolling interest | (1) | ||
Net income attributable to Warner Music Group Corp. | 84 | 40 | |
Reportable Legal Entities | Warner Music Group Corp. | |||
Costs and expenses: | |||
Equity gains from equity method investments | 86 | 4 | |
Income before income taxes | 86 | 4 | |
Net income | 86 | 4 | |
Net income attributable to Warner Music Group Corp. | 86 | 4 | |
Reportable Legal Entities | WMG Acquisition Corp. | |||
Costs and expenses: | |||
Loss on extinguishment of debt | (3) | (1) | |
Interest (expense) income, net | (31) | (29) | |
Equity gains from equity method investments | 172 | 90 | |
Other (expense) income, net | (2) | (4) | |
Income before income taxes | 136 | 56 | |
Income tax expense | (50) | (52) | |
Net income | 86 | 4 | |
Net income attributable to Warner Music Group Corp. | 86 | 4 | |
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | |||
Condensed Income Statements Captions [Line Items] | |||
Revenue | 1,203 | 1,045 | |
Costs and expenses: | |||
Cost of revenue | (626) | (569) | |
Selling, general and administrative expenses | (376) | (333) | |
Amortization of intangible assets | (54) | (53) | |
Total costs and expenses | (1,056) | (955) | |
Operating income | 147 | 90 | |
Loss on extinguishment of debt | (3) | (1) | |
Interest (expense) income, net | (36) | (36) | |
Equity gains from equity method investments | 1 | ||
Other (expense) income, net | 28 | 3 | |
Income before income taxes | 136 | 57 | |
Income tax expense | (50) | (52) | |
Net income | 86 | 5 | |
Less: Income attributable to noncontrolling interest | (1) | ||
Net income attributable to Warner Music Group Corp. | 86 | 4 | |
Reportable Legal Entities | WMG Holdings Corp. | |||
Costs and expenses: | |||
Equity gains from equity method investments | 86 | 4 | |
Income before income taxes | 86 | 4 | |
Net income | 86 | 4 | |
Net income attributable to Warner Music Group Corp. | 86 | 4 | |
Eliminations | |||
Costs and expenses: | |||
Equity gains from equity method investments | (172) | (8) | |
Income before income taxes | (172) | (8) | |
Net income | (172) | (8) | |
Net income attributable to Warner Music Group Corp. | (172) | (8) | |
Eliminations | WMG Acquisition Corp. | |||
Condensed Income Statements Captions [Line Items] | |||
Revenue | (132) | (123) | |
Costs and expenses: | |||
Cost of revenue | 102 | 81 | |
Selling, general and administrative expenses | 30 | 40 | |
Total costs and expenses | 132 | 121 | |
Operating income | (2) | ||
Equity gains from equity method investments | (281) | (133) | |
Income before income taxes | (281) | (135) | |
Income tax expense | 69 | 61 | |
Net income | (212) | (74) | |
Net income attributable to Warner Music Group Corp. | $ (212) | $ (74) | |
[1] | (a) Includes depreciation expense of: |
Guarantor and Non-Guarantor S_6
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Comprehensive Income Unaudited (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Condensed Statement Of Income Captions [Line Items] | ||
Net income | $ 86 | $ 5 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency adjustment | (16) | 9 |
Deferred (losses) gains on derivative financial instruments | (6) | 1 |
Other comprehensive (loss) income, net of tax | (22) | 10 |
Total comprehensive income | 64 | 15 |
Less: Income attributable to noncontrolling interest | (1) | |
Comprehensive income attributable to Warner Music Group Corp. | 64 | 14 |
Reportable Legal Entities | Guarantor Subsidiaries | ||
Condensed Statement Of Income Captions [Line Items] | ||
Net income | 128 | 34 |
Other comprehensive (loss) income, net of tax: | ||
Total comprehensive income | 128 | 34 |
Comprehensive income attributable to Warner Music Group Corp. | 128 | 34 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||
Condensed Statement Of Income Captions [Line Items] | ||
Net income | 84 | 41 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency adjustment | 16 | (9) |
Deferred (losses) gains on derivative financial instruments | (2) | (1) |
Other comprehensive (loss) income, net of tax | 14 | (10) |
Total comprehensive income | 98 | 31 |
Less: Income attributable to noncontrolling interest | (1) | |
Comprehensive income attributable to Warner Music Group Corp. | 98 | 30 |
Reportable Legal Entities | Warner Music Group Corp. | ||
Condensed Statement Of Income Captions [Line Items] | ||
Net income | 86 | 4 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency adjustment | (16) | 9 |
Deferred (losses) gains on derivative financial instruments | (6) | 1 |
Other comprehensive (loss) income, net of tax | (22) | 10 |
Total comprehensive income | 64 | 14 |
Comprehensive income attributable to Warner Music Group Corp. | 64 | 14 |
Reportable Legal Entities | WMG Acquisition Corp. | ||
Condensed Statement Of Income Captions [Line Items] | ||
Net income | 86 | 4 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency adjustment | (16) | 9 |
Deferred (losses) gains on derivative financial instruments | (6) | 1 |
Other comprehensive (loss) income, net of tax | (22) | 10 |
Total comprehensive income | 64 | 14 |
Comprehensive income attributable to Warner Music Group Corp. | 64 | 14 |
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | ||
Condensed Statement Of Income Captions [Line Items] | ||
Net income | 86 | 5 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency adjustment | (16) | 9 |
Deferred (losses) gains on derivative financial instruments | (6) | 1 |
Other comprehensive (loss) income, net of tax | (22) | 10 |
Total comprehensive income | 64 | 15 |
Less: Income attributable to noncontrolling interest | (1) | |
Comprehensive income attributable to Warner Music Group Corp. | 64 | 14 |
Reportable Legal Entities | WMG Holdings Corp. | ||
Condensed Statement Of Income Captions [Line Items] | ||
Net income | 86 | 4 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency adjustment | (16) | 9 |
Deferred (losses) gains on derivative financial instruments | (6) | 1 |
Other comprehensive (loss) income, net of tax | (22) | 10 |
Total comprehensive income | 64 | 14 |
Less: Income attributable to noncontrolling interest | 64 | |
Comprehensive income attributable to Warner Music Group Corp. | 128 | 14 |
Eliminations | ||
Condensed Statement Of Income Captions [Line Items] | ||
Net income | (172) | (8) |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency adjustment | 32 | (18) |
Deferred (losses) gains on derivative financial instruments | 12 | (2) |
Other comprehensive (loss) income, net of tax | 44 | (20) |
Total comprehensive income | (128) | (28) |
Comprehensive income attributable to Warner Music Group Corp. | (128) | (28) |
Eliminations | WMG Acquisition Corp. | ||
Condensed Statement Of Income Captions [Line Items] | ||
Net income | (212) | (74) |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency adjustment | (16) | 9 |
Deferred (losses) gains on derivative financial instruments | 2 | 1 |
Other comprehensive (loss) income, net of tax | (14) | 10 |
Total comprehensive income | (226) | (64) |
Comprehensive income attributable to Warner Music Group Corp. | $ (226) | $ (64) |
Guarantor and Non-Guarantor S_7
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Cash Flows Unaudited (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | ||
Net income | $ 86 | $ 5 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 68 | 65 |
Unrealized (gains) losses and remeasurement of foreign denominated loans | (13) | 5 |
Deferred income taxes | 11 | 42 |
Loss on extinguishment of debt | 3 | 1 |
Net gain on divestitures and investments | (15) | (7) |
Non-cash interest expense | 2 | 1 |
Equity-based compensation expense | 12 | 18 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (88) | (93) |
Inventories | 13 | 2 |
Royalty advances | (28) | (5) |
Accounts payable and accrued liabilities | (92) | (23) |
Royalty payables | 92 | 141 |
Accrued interest | (7) | (16) |
Deferred revenue | (5) | (3) |
Other balance sheet changes | 53 | 3 |
Net cash provided by operating activities | 92 | 136 |
Cash flows from investing activities | ||
Acquisition of music publishing rights, net | (5) | (1) |
Capital expenditures | (26) | (16) |
Investments and acquisitions of businesses, net | (207) | (1) |
Proceeds from the sale of investments | 12 | |
Net cash used in investing activities | (238) | (6) |
Cash flows from financing activities | ||
Call premiums paid on and redemption deposit for early redemption of debt | (2) | |
Deferred financing costs paid | (4) | (1) |
Distribution to noncontrolling interest holder | (2) | (2) |
Net cash provided by (used in) financing activities | 182 | (3) |
Effect of exchange rate changes on cash and equivalents | (2) | 2 |
Net increase in cash and equivalents | 34 | 129 |
Cash and equivalents at beginning of period | 514 | 647 |
Cash and equivalents at end of period | 548 | 776 |
3.625% Senior Secured Notes due 2026 | ||
Cash flows from financing activities | ||
Proceeds from issuance of Acquisition Corp | 287 | |
4.125% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | (40) | |
4.875% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | (30) | |
5.625% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | (27) | |
Reportable Legal Entities | Guarantor Subsidiaries | ||
Cash flows from operating activities | ||
Net income | 128 | 34 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 34 | 32 |
Unrealized (gains) losses and remeasurement of foreign denominated loans | (4) | 1 |
Net gain on divestitures and investments | (15) | (7) |
Equity-based compensation expense | 12 | 18 |
Equity gains, including distributions | (109) | (43) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3) | (33) |
Inventories | 2 | |
Royalty advances | (15) | 5 |
Accounts payable and accrued liabilities | 64 | 65 |
Royalty payables | (91) | 59 |
Deferred revenue | 3 | 17 |
Other balance sheet changes | 24 | 37 |
Net cash provided by operating activities | 30 | 185 |
Cash flows from investing activities | ||
Acquisition of music publishing rights, net | (4) | |
Capital expenditures | (22) | (13) |
Investments and acquisitions of businesses, net | (23) | (1) |
Proceeds from the sale of investments | 12 | |
Net cash used in investing activities | (49) | (2) |
Cash flows from financing activities | ||
Distribution to noncontrolling interest holder | (1) | |
Change in due to (from) issuer | 84 | (95) |
Net cash provided by (used in) financing activities | 83 | (95) |
Net increase in cash and equivalents | 64 | 88 |
Cash and equivalents at beginning of period | 169 | 347 |
Cash and equivalents at end of period | 233 | 435 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||
Cash flows from operating activities | ||
Net income | 84 | 41 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 34 | 33 |
Unrealized (gains) losses and remeasurement of foreign denominated loans | (2) | |
Deferred income taxes | 11 | 42 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (85) | (60) |
Inventories | 11 | 2 |
Royalty advances | (13) | (10) |
Accounts payable and accrued liabilities | (86) | (29) |
Royalty payables | 183 | 82 |
Deferred revenue | (8) | (20) |
Other balance sheet changes | 25 | (34) |
Net cash provided by operating activities | 156 | 45 |
Cash flows from investing activities | ||
Acquisition of music publishing rights, net | (1) | (1) |
Capital expenditures | (4) | (3) |
Investments and acquisitions of businesses, net | (184) | |
Net cash used in investing activities | (189) | (4) |
Cash flows from financing activities | ||
Distribution to noncontrolling interest holder | (1) | (2) |
Net cash provided by (used in) financing activities | (1) | (2) |
Effect of exchange rate changes on cash and equivalents | (2) | 2 |
Net increase in cash and equivalents | (36) | 41 |
Cash and equivalents at beginning of period | 345 | 300 |
Cash and equivalents at end of period | 309 | 341 |
Reportable Legal Entities | Warner Music Group Corp. | ||
Cash flows from operating activities | ||
Net income | 86 | 4 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Equity gains, including distributions | (86) | (4) |
Reportable Legal Entities | WMG Acquisition Corp. | ||
Cash flows from operating activities | ||
Net income | 86 | 4 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Unrealized (gains) losses and remeasurement of foreign denominated loans | (10) | 6 |
Loss on extinguishment of debt | 3 | 1 |
Non-cash interest expense | 2 | 1 |
Equity gains, including distributions | (172) | (90) |
Changes in operating assets and liabilities: | ||
Accrued interest | (7) | (16) |
Other balance sheet changes | 4 | |
Net cash provided by operating activities | (94) | (94) |
Cash flows from investing activities | ||
Advances from issuer | (84) | 95 |
Net cash used in investing activities | (84) | 95 |
Cash flows from financing activities | ||
Call premiums paid on and redemption deposit for early redemption of debt | (2) | |
Deferred financing costs paid | (4) | (1) |
Net cash provided by (used in) financing activities | 184 | (1) |
Net increase in cash and equivalents | 6 | |
Cash and equivalents at end of period | 6 | |
Reportable Legal Entities | WMG Acquisition Corp. | 3.625% Senior Secured Notes due 2026 | ||
Cash flows from financing activities | ||
Proceeds from issuance of Acquisition Corp | 287 | |
Reportable Legal Entities | WMG Acquisition Corp. | 4.125% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | (40) | |
Reportable Legal Entities | WMG Acquisition Corp. | 4.875% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | (30) | |
Reportable Legal Entities | WMG Acquisition Corp. | 5.625% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | (27) | |
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | ||
Cash flows from operating activities | ||
Net income | 86 | 5 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 68 | 65 |
Unrealized (gains) losses and remeasurement of foreign denominated loans | (13) | 5 |
Deferred income taxes | 11 | 42 |
Loss on extinguishment of debt | 3 | 1 |
Net gain on divestitures and investments | (15) | (7) |
Non-cash interest expense | 2 | 1 |
Equity-based compensation expense | 12 | 18 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (88) | (93) |
Inventories | 13 | 2 |
Royalty advances | (28) | (5) |
Accounts payable and accrued liabilities | (92) | (23) |
Royalty payables | 92 | 141 |
Accrued interest | (7) | (16) |
Deferred revenue | (5) | (3) |
Other balance sheet changes | 53 | 3 |
Net cash provided by operating activities | 92 | 136 |
Cash flows from investing activities | ||
Acquisition of music publishing rights, net | (5) | (1) |
Capital expenditures | (26) | (16) |
Investments and acquisitions of businesses, net | (207) | (1) |
Proceeds from the sale of investments | 12 | |
Net cash used in investing activities | (238) | (6) |
Cash flows from financing activities | ||
Call premiums paid on and redemption deposit for early redemption of debt | (2) | |
Deferred financing costs paid | (4) | (1) |
Distribution to noncontrolling interest holder | (2) | (2) |
Net cash provided by (used in) financing activities | 182 | (3) |
Effect of exchange rate changes on cash and equivalents | (2) | 2 |
Net increase in cash and equivalents | 34 | 129 |
Cash and equivalents at beginning of period | 514 | 647 |
Cash and equivalents at end of period | 548 | 776 |
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 3.625% Senior Secured Notes due 2026 | ||
Cash flows from financing activities | ||
Proceeds from issuance of Acquisition Corp | 287 | |
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 4.125% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | (40) | |
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 4.875% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | (30) | |
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 5.625% Senior Secured Notes | ||
Cash flows from financing activities | ||
Repayment of Senior Secured Notes | (27) | |
Reportable Legal Entities | WMG Holdings Corp. | ||
Cash flows from operating activities | ||
Net income | 86 | 4 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Equity gains, including distributions | (86) | (4) |
Eliminations | ||
Cash flows from operating activities | ||
Net income | (172) | (8) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Equity gains, including distributions | 172 | 8 |
Eliminations | WMG Acquisition Corp. | ||
Cash flows from operating activities | ||
Net income | (212) | (74) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Unrealized (gains) losses and remeasurement of foreign denominated loans | 1 | |
Equity gains, including distributions | 281 | 133 |
Changes in operating assets and liabilities: | ||
Accounts payable and accrued liabilities | (70) | (59) |
Cash flows from investing activities | ||
Advances from issuer | 84 | (95) |
Net cash used in investing activities | 84 | (95) |
Cash flows from financing activities | ||
Change in due to (from) issuer | (84) | 95 |
Net cash provided by (used in) financing activities | $ (84) | $ 95 |
Guarantor and Non-Guarantor S_8
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Cash Flows (Parenthetical) Unaudited (Detail) | Dec. 31, 2018 |
3.625% Senior Secured Notes due 2026 | |
Condensed Cash Flow Statements Captions [Line Items] | |
Interest rate | 3.625% |
4.125% Senior Secured Notes | |
Condensed Cash Flow Statements Captions [Line Items] | |
Interest rate | 4.125% |
4.875% Senior Secured Notes | |
Condensed Cash Flow Statements Captions [Line Items] | |
Interest rate | 4.875% |
5.625% Senior Secured Notes | |
Condensed Cash Flow Statements Captions [Line Items] | |
Interest rate | 5.625% |