Sony’s Music Segment Reports Nearly 40% Operating Income Gain Last Quarter but Predicts 2020 Income Will Be Down 25%-40% Versus 2019

While many companies such as Eventbrite and Live Nation find ways to reel in from the COVID-19 pandemic, Sony Music has surprisingly posted nearly 40 percent operating income for Q4, which ended on March 31st. The company documented 39.3% gain, with a total operating income of $278.3 million versus the $197.52 million it posted for the 2018 fiscal year.

This gain is likely due top the fact that the COVID-19 pandemic had only begun to shutdown many countries in March, with the company estimating that the pandemic had lost around 1% in revenue due to the pandemic. While music revenue was slightly down 0.6% from $1.99 billion to $1.94 billion, music operations grew by 12.4% to $1.441 billion versus $1.27 billion. This growth was attributed to a 26% increase in streaming revenue.

The last quarter had a number of notable releases including Harry Styles’ Fine Line, Future’s Future Releases, Doja Cat’s Hot Pink, Ozzy Osbourne’s Ordinary Man, Lil Nas X’s 7 EP,  Camila Cabello’s Romance and Khalid’s Free Spirit.

This anomaly however, is not expected to last, especially as the COVID-19 pandemic prevents people from physically going out to buy records. While streaming services are heavily used in countries such as the US, others such as Germany and Japan have lower streaming numbers, meaning that the COVID-19 pandemic can heavily impact revenues from those countries.

In addition, the pandemic is expected to delay some physical releases, while advertising and promotional spending declines. All in all the company projects a 25% to 40% decline this year, compared to 2019 due to the pandemic.

“The release of new music is being delayed primarily because some artists are unable to record songs and music videos,” Sony Corp. CFO Hiroki Totoki said, according to a transcript posted on the company’s website. “The impact of the delays in new music is limited at this time in countries like the U.S. where the proportion of music that is streamed is high. But in countries like Japan and Germany where the proportion of music that is streamed is relatively low, sales of CDs and other packaged media sales are decreasing due to restrictions on going outside.”