Alex Horne on the secret to his cult show Taskmaster: ‘It must be offbeat but not wacky, off-kilter but not bonkers’ | Taskmaster


Alex Horne is sweltering. Taskmaster, the British panel show in which five comedians complete tasks set by Horne across 10 episodes, is filming its 15th season. It’s an apocalyptically warm summer’s day in Chiswick, west London, at the former groundskeeper’s cottage where many of Horne’s meticulously planned tasks are filmed. Situated beside a busy golf course, under the Heathrow flight path and mere metres from the noisy A316, the location is a soundperson’s nightmare (it was chosen not only for its character, but also because it is close to the Taskmaster director’s house). The furious revving of car engines and the rumble of jets attack the low frequencies; wailing sirens and tinkling golf balls assault the high end. So as not to add to the ambient cacophony, Horne wears a vest which he says helps reduce the rustle picked up by the mic he wears on the black suit that has been his Taskmaster battledress since the series’ debut in 2015. It’s hot work.

Greg Davies – the titular taskmaster, who views the edited footage of contestants’ efforts along with a studio audience, ranking each comic’s performance out of five – refers to his sidekick as “little Alex Horne”. Horne, who is 44, stands at 6ft 2in. But it seems like an apt moniker today, as his trousers bunch schoolboyishly on the grass. When ordering his Marks & Spencer’s machine-washable suit – he owns four identical ones, worn on weekly rotation – he accidentally went for a 37in leg (“How? I don’t think anybody has a 37in leg,” he says). He didn’t bother to return it.

Horne holds his clipboard and whistle, a cross between an Olympic adjudicator and a smirking ringmaster, as the director calls “Action!”. Ivo Graham, a standup comic in his early 30s, emerges blinkingly from the decrepit caravan that serves as one of a half-dozen locations within the poky cottage’s grounds. Graham, with a sense of pantomime, picks up an envelope from the ground, breaks the red wax seal and reads out the task to camera. His ebullient manner immediately dissolves, replaced by a look of cold panic. Horne has asked him to compose a short piece of music – a recurrent task, with variations, across the show’s history. “I have no musical skills,” the comedian mourns.


The panel show is a uniquely British tradition, a format designed to showcase the most valued British characteristic: wit. To ensure each episode is sufficiently amusing, programmes such as Have I Got News for You and Never Mind the Buzzcocks employ teams of writers who supply contestants with prefabricated jokes, to be performed as if they were off-the-cuff remarks. Taskmaster takes a different approach. Contestants read the tasks for the first time on camera. There is no time to contemplate a quip, to consider and discard the first two obvious jokes in favour of something more surprising. Here they must act on high-wire instinct.

Horne often says part of his job as the task-setter is to write the first half of a joke; it’s up to the contestants how they complete the gag. In season two, broadcast in 2016, they were told to “impress the mayor of Chesham”. Richard Osman chose flattery, composing a poem about Chesham’s superiority over neighbouring towns. Doc Brown launched unconvincingly into Tony Bennett’s Rags to Riches. Joe Wilkinson spilled from plastic bags a forest of Calippo ice-lollies, eight cans of lager and £15 in cash. (Katherine Ryan won with a rap.) The viewer has the feeling of eavesdropping on the creative process, which lends the contestant – who we might only know from the sterile stage of, say, Live at the Apollo – authenticity. Each creative choice reveals something profound about the individual’s character or temperament, a trait that they might, in other circumstances, attempt to conceal.

This afternoon, however, it’s difficult to know where to look as a young comic is asked to instantaneously produce a skit that – and one must surely hurl this thought far from one’s mind – will in due course be watched by millions around the world. And yet, it is precisely this invitation for the audience to see the comic in a moment of vulnerability, as they truly are, that has made Taskmaster a phenomenon, one that has begun to profoundly alter the DNA of the British panel show.

Taskmaster Greg Davies with ‘little Alex Horne’. Photograph: Channel 4

The format was born through envy, Horne jokes. In 2009, while he was at home with a new baby, his friend, the poet and comedian Tim Key, won the Perrier award at the Edinburgh fringe. Horne devised a rival award scheme. Every month for a year, he set 20 comedians a task to complete. Then, at the following year’s Edinburgh festival, Horne hosted a show in which he judged the results, scored the contestants, and declared a winner. (The first task was to put the greatest amount of money into Horne’s bank account: Mark Watson deposited £200; no one else gave more than a fiver.)

Horne, who is lanky, meek and a born stooge, felt uncomfortable in the role of arbiter. He has described himself as a natural sidekick. So when his agency, Avalon, suggested the format might work for television, he asked Davies, who is full-bodied, commanding and a born educator – he taught drama in a school before he became known for playing a terrifying head of sixth form in The Inbetweeners – to assume the role of taskmaster. That left Horne to set the tasks and keep the scores (“the tedious part”, Davies says). In the original pitch, the plan was to film the tasks in comedians’ homes. Channel 4 paid for a pilot episode (which sensibly used the Chiswick cottage instead of anyone’s home), then rejected it. “They were worried that there was no script,” Horne says. “And that the cast didn’t change between episodes. And that the comedians didn’t know what they were going to walk into. And that I wasn’t well known.”

Dave, the free-to-air channel owned by UKTV, needed new comedy formats and took the risk. When Frank Skinner, the veteran of the cast, agreed to take part, others felt emboldened to sign up. Taskmaster’s inaugural season benefited from fortuitous timing: the producers secured Romesh Ranganathan and Josh Widdicombe before either was a primetime fixture. The first cohort fully submitted to Horne’s spell. In one task, the comics had to buy “the best gift” for Davies, for which they were given £20. Widdicombe tattooed Davies’s name on his foot – a thrilling act of commitment.

Taskmaster soon gained a reputation among comics for its sympathetic edits. The producers do not shy away from showing a contestant’s failings, but it is never cruel. “For somebody over a certain age who’s had various dealings within television, it’s difficult to let go of control because you’ve been shafted so many times in the past,” Liza Tarbuck told Ed Gamble on the Taskmaster podcast recently. “I see how healing it is for people of a certain age.” Off-camera, too, Horne and his colleagues have cultivated a thoughtful, supportive culture. Josh Widdicombe became a father while shooting. One day he arrived at his dressing room to find a task on the table. The envelope was addressed to his newborn daughter. Widdicombe opened the task and broke down in tears. It read: “Have the best life. Your time starts now.”

Compared with the highly charged, competitive environment of traditional British panel shows, Taskmaster allows everyone to have their turn, minimising the ego battling that can lead to women and less established names being crowded out. The show’s bookers ensure diverse casts (especially in more recent series). Earlier this month, Fern Brady posted on Instagram that her appearance on the show “made me profoundly accepting of my autistic self”. A new kind of show for a new kind of time, Taskmaster remained a niche hit until 2020, when it moved to Channel 4, the network that formerly spurned it. Horne says leaving Dave felt like a breakup. While he still refers to Taskmaster as a “cult show”, it has legions of fans around the world, and clips on YouTube have collectively notched up tens of millions of views. One of the most popular, James Acaster’s Best Taskmaster Moments, includes a classic scene in which Davies escorts Acaster to the rear of the stage for an on-mic telling-off. In 2020, the show took the Bafta for best comedy entertainment, and in 2021, it won best comedy entertainment show at the National Comedy Awards. Nowadays, agents petition the Taskmaster team on behalf of their acts. A spot on the show has become one of the most coveted bookings in British comedy.

‘Please know that talking about yourself is awful and I say all of this with the appropriate amount of shame.’ Photograph: Suki Dhanda/The Guardian

Horne, who was brought up in West Sussex and sings in the Horne Section, a five-piece comedy band that frequently appears on radio, podcasts and panel shows, and has just finished its run as a Channel 4 sitcom, is softly spoken and turbo-apologetic. “Please know that talking about yourself is awful and I say all of this with the appropriate amount of shame,” he says, as we sit down to chat in between tasks. The exaggerated persona he plays on the show – the deferential butler-worm, who appears to take quasi-sexual pleasure in Davies’s big-handed bullying – comes, in part, from Horne being the middle sibling of three, a position he thinks also affected his career choice. “In my band we’re all middle children,” he says. “The older brothers have sensible jobs. We were allowed to do whatever we wanted.”

On car journeys, Horne and his brothers would play number-plate-based games, or pub cricket, where one’s score is equal to the total number of physical legs belonging to the people or animals in a pub’s name. Together, the family watched the quintessential task-based gameshows of the early 90s, such as The Krypton Factor and The Crystal Maze, supplying some of the DNA Horne recognises in Taskmaster’s design. He attended Lancing college, an expensive private school near Shoreham-by-Sea. There, Horne became secretary of a travel society for which he had to deliver a speech once a term. It was the first time he had tried to be funny in public. “It wasn’t all ‘heads-down’ at school, which was helpful,” he says. Still, it was sufficiently heads-down that Horne progressed to Cambridge University.

While the private-school-to-Oxbridge career path can instil in young people a narrow, arguably damaging definition of success, the games Horne designs for Taskmaster accommodate a broad range of proficiencies. His tasks don’t only reward the Olympic superlatives of fastest and strongest. While some are measured objectively (“Don’t blink: longest time wins”), many have subjective solutions (“Make the best music video for a nursery rhyme”), a mixture that levels the field between the athlete and the poet. Moreover, contestants who discover legitimate shortcuts or ingenious cheats are always rewarded. “We really don’t want the young sporty man to run away with it each season,” he says.

Still, Horne is something of a stickler for rules. During filming in the cottage, he wears slippers – not for comfort but because, in the early days, the team agreed to wear them to avoid treading mud or task-related substances through the corridors. He is the only crew member to have stuck to the policy. This character trait juxtaposes pleasingly with the extravagant capriciousness of the taskmaster himself. While in the studio Davies is occasionally bound in his points‑giving by numerical results, more often he is free to judge on whim and instinct. This provides the randomising element that every great game, from poker to golf, requires. Horne considers golf the perfect Taskmaster game: “‘Get this ball into that hole in as few shots as possible. Your time starts now.’ It’s so stupid,” he says.


Horne has designed hundreds of tasks, not only for the television show, but also for the spin-off books and board game. Inspiration for these mini games can strike at any moment, but he usually drafts tasks while driving, or while walking his dog, Loki, around Chesham, Buckinghamshire, where he lives. He is not averse to borrowing, either. “I took the family on a camping trip and the youth leader asked the kids to run across a field while shouting,” Horne explains. “They had to run as far as they could before their breath ran out. I thought, ‘We’ll have that.’” There are no fast rules or guidelines for what makes an idea suitable for Taskmaster. Horne says tasks must loosely be “offbeat but not wacky; off-kilter but not bonkers”. Ideally, there should be 10 ways of approaching the challenge, rather than two or three.

Sometimes we see celebrities acting in ways that cut pleasingly against their public persona. The image of Victoria Coren-Mitchell failing to ride a bicycle is just one of a dozen indelible examples of someone known for their superior intelligence being put in a context that shows them to be lacking. Horne recalls David Baddiel, who haplessly failed at many of the tasks, leaning forward during a break in recording and whispering to Davies: “You know, I am really clever.”

The show is filled with callbacks and sly nods to delight the attentive viewer. Returning props create recurrent themes: ducks, potatoes, pineapples. As in so-called legacy board games, where play sessions leave marks on the board that carry from session to session, so the Taskmaster cottage bears marks and scars from previous seasons. Horne enjoys writing new tasks that riff on old ones, too. “Easter eggs won’t make people laugh,” he says, “but they’re just nice to have, particularly for what it’s fair to say is an audience on the nerdier side.” Extras return (Fred the Swede has a compilation of clips on YouTube that has been viewed almost a million times) and previous contestants, such as Al Murray, who lives close to the cottage, occasionally have cameo roles. These echoes provide a meta texture – yet another novelty in the context of panel shows – that build a sort of comedian cinematic universe.

Today’s compositional task outside the caravan is a two-parter, a classic Horne design trope in which, once the first task is complete, he draws a second envelope from his suit pocket – a follow-up challenge that usually forces the contestant to curse their previous choices. In one memorable example, former Bake Off presenter Mel Giedroyc was presented with a loaf of sliced white bread and an assortment of chocolate bars and sweets, and tasked to make an “exotic” sandwich. Then Horne presented her with a second envelope that instructed her to eat her exotic sandwich. Surveying her teetering creation she said, partly to the film crew, partly to viewers: “Oh, gang.”

Each show ends with a studio task, in which the five comedians compete on stage. This requires a different kind of design from the team. “We’ve definitely had a lower hit rate with those,” Horne admits. When they work, however, these moments can prove the most memorable in the show’s history. In series seven, for example, contestants had to prod the back of the person in front of them with either their finger or a sausage. If the prodded person correctly guessed “sausage” or “finger”, the prodder was eliminated. “I don’t think there are any fixed rules,” he says. “A lot of it is on instinct. But those are fiddly. And we never retake, so if it doesn’t work, it doesn’t work.”

Taskmaster is a popular export. Some countries show the British version, while eight others, including Sweden, New Zealand and Portugal, film their own (the Swedes have a female comedian in Davies’s role). Some of the foreign versions employ a “designers’ room” – a group of task-setting comedians to spread the burden of having to originate so many new ideas for each season – but Horne is reluctant to relinquish control of what is, undeniably, the essence of the show. “Maybe I’m an idiot,” he says, “but I worry you’d lose that sense of authorship. Maybe there’s a little part of me that just worries it would be better.”

Filming Taskmaster with Joe Thomas. Photograph: Avalon/UKTV

Early on, the team attempted to take the show to the US, but changes to the format broke the spell and it was quickly cancelled. “The main problem was it was half the length of the UK version, but with the same number of ad breaks,” he says. “It forced too many changes.” Horne enjoyed the experience of walking out in front of American audiences to a roar of applause, “despite the fact that they had no idea who I was”, but he has no plans for a second shot. Instead, American audiences come to Britain – often flying to London to sit in on the live show recordings at Pinewood. More than 70% of the millions of people who have watched Taskmaster clips on YouTube are American, a fact that has led Avalon to recently launch an on-demand dedicated Taskmaster channel in the US.

The show’s influence is steadily spreading. New shows such as Richard Osman’s House of Games, and David Mitchell’s Outsiders borrow some of the format ideas pioneered by Horne and the team. Osman has said that Taskmaster’s success was what convinced BBC executives to allow the celebrity contestants on House of Games to remain fixed between episodes. Taskmaster’s continued rise is indicative of a sea change in British comedy away from competitive joke contests popularised by Mock the Week and, at a time of routine absurdity in the political sphere, a collapse in the value of satire towards a different kind of authentic, intimate humour. It is a show that invites the viewer, deliciously, to better understand the person behind the persona. (Backstage With Katherine Ryan, a recent Amazon Prime Video series, films the backstage banter and fits of nerves standups experience before sets – another example of the new intimacy of televised comedy.)

While task-setting is Horne’s passion, it’s clear that he also sees his primary role in the show as a facilitator for other comedians – to help promote up-and-comers, or to show old hands in a new light. He shrugs off viewers’ frequent suggestions for non-comedian contestants. “I’d rather see comics not being funny, than non-comics trying to be funny,” he says. “It’d be doing a disservice to the comedy fraternity and sorority because there are so many people who haven’t been on it who I think would be great. I’d rather have, say, Josie Long on than Anneka Rice.”

Fifteen series in, the juggernaut continues to accelerate. “I’d prefer it if Greg and I were the ones to call time on this,” he says, of the prospect of the show ending. “But for now, there’s so much more to do.” His shirt has come untucked – preparation for changing into his civilian clothing (“It’s the same suit, just one size larger,” he jokes.) But first, Horne is summoned to film the final task of the day, the team eager to catch the last of the light. He tucks his shirt in and, after Graham emerges from the house, hands the contestant an envelope and a retractable tape measure. One of the joys of Taskmaster is that while some tasks rely on hours of preparation, others require a single household prop. As Graham opens the envelope, a smile crosses his face. He squints at Horne, then at the tape measure, then back at Horne. “Oh yes,” he says. “Oh yes.”

Taskmaster’s New Year Treat is on Channel 4 at 9pm on 1 January. It will be followed by a new series in 2023.

S.F. Opera fans so devoted they’ve become ‘part of our family’


Opera “superfans” Terri and Bob Ryan are photographed by cast member Jonathan Tetelman outside the stage door after a performance of “La Traviata” at the War Memorial Opera House in San Francisco on Nov. 16. Photo: Scott Strazzante / The Chronicle

Terri and Bob Ryan aren’t just opera fans. The couple’s devotion to the art form is so strong you could say they live an operatic lifestyle.

Before you jump to any conclusions (insert “Tosca” joke here), they don’t sing conversations or make dramatic gestures as if onstage. Instead, the Ryans, both 73, have organized their lives in support of the music they love. In 1995, they even moved from their home near the City College of San Francisco campus to an apartment seven blocks away from the War Memorial Opera House so they could walk to the many performances they see each season. That proximity has also made it easy for them to host singers during their San Francisco Opera fellowships, or while performing in the company’s season.

“Some would call it obsessive,” Bob told The Chronicle. “But we tend to think it’s just the way things should be.”

The Ryans have been married for 50 years and have subscribed to the San Francisco Opera since 1974. They not only attend every production the company mounts, but also see multiple performances, sometimes bringing their own musical scores to follow along. Because of their annual and planned giving, they are also longtime members of the Opera’s Medallion Society and Bel Canto Society for donors. They also regularly attend Opera Parallele in San Francisco, West Edge Opera in Berkeley, West Bay Opera in Palo Alto and Opera San Jose.

Opera “superfans” Bob and Terri Ryan settle into their seats Nov. 16 as they attend “La Traviata” at the War Memorial Opera House. Photo: Scott Strazzante / The Chronicle

“We’ve seen operas in Australia, we’ve seen operas in Canada, we’ve seen operas all around Europe,” Terri said. “San Francisco is certainly up there in the top tier of opera cities.”

If you were to run into them at a performance, the couple might not immediately seem like the archetypal opera patron. Far from the super-wealthy donors often seated in the boxes, Bob is a retired accountant for Pacific Bell (now AT&T) and Terri worked in data processing at Wells Fargo. They are generally casually dressed, and not usually interested in attending galas; although for the first time ever, they attended the Opera Ball in 2022 (in formal wear) for the company’s centenary.

The couple met at Occidental College in Los Angeles and married in 1972: Terri was raised in San Rafael, Bob grew up “all over the Midwest.” Bob’s love for classical music grew after playing violin in his high school orchestra. Early in their marriage, Bob took Terri to see a touring production of “Carmen” at the Metropolitan Opera in New York, but it wasn’t the instant love you might imagine.

Opera “superfans” Terri and Bob Ryan greet cast member Edward Graves outside the stage door after a performance of “La Traviata” at the War Memorial Opera House in San Francisco, on Wednesday, Nov. 16, 2022. Photo: Scott Strazzante / The Chronicle

“At intermission I said to Bob, ‘Is this any good?’ ” Terri remembered. “He said, ‘No! It’s a terrible performance.’ I said, ‘Oh good. I thought I didn’t like opera; it’s just this one I don’t like!’ ”

After moving to the Bay Area in 1973, they began attending the San Francisco Opera, whose performances Terri found much better. In the decades since, the couple have become so enmeshed with the company that in an email, general director Matthew Shilvock called them “exemplars of the community that is keeping great opera on our stage.”

“Terri and Bob define operatic passion,” said Shilvock, who frequently sees them greeting performers at the stage door. “They are part of the rhythm of San Francisco Opera and are there by our side in everything we do. They don’t just enjoy opera; they are a part of our family in making it come to life.”

Soprano Maria Valdes first met Bob and Terri during her time in the Merola program in 2013 and recalled them “introducing themselves to everyone on the program, and taking us to lunches and dinners after the performance.”

The Ryans kept in touch, and when Valdes returned to San Francisco for her Adler Fellowship in 2015, she stayed in one of the couple’s guest rooms.

“After a performance at 10, 11 at night, Bob would come to the stage door and walk me home,” Valdes recalled. She described the couple, who do not have children, as surrogate parents to many singers. (She plans to invite the Ryans to her upcoming wedding.)

Opera “superfans” Bob and Terri Ryan walk through the War Memorial Opera House as they arrive for a November performance of “La Traviata.” Photo: Scott Strazzante / The Chronicle

Tenor Edward Graves lived with the Ryans in 2022. “When I found out I was accepted into the Adlers, it was quite late last year,” Graves said. “They gave me a room, we took all our meals together, and they would never accept a payment.”

Beyond offering housing, the Ryans also shared their vast knowledge of opera, the singers said, but did so without any of the elitism often endemic to classical music fandom.

That’s one of the things that struck me the most about the Ryans: In an art form that can sometimes feel ultra-exclusive, Terri and Bob are friendly, approachable and eager to share what they love. That’s how it should be, they said, for opera to continue to find new audiences.

“There’s visual art, there’s symphonic art, there’s vocal art, there’s stagecraft, there’s drama — there’s every art form represented on that stage,” Terri said. “There’s something for everyone.”

“Opera is about good, basic human emotions: love, hate, revenge, loyalty,” said Bob. “You don’t need to speak the language to figure out a lot of what’s going on onstage.”



Ronky Tonk, Morgan Wallen & Race Issues – Billboard


From its very infancy, one of the attractions of country music has been its respect for the past.

Many of the genre’s early pioneers, including Jimmie Rodgers and The Carter Family, made their mark by leaning on so-called “old-fashioned songs,” nostalgic material drawn from a simpler time, before the mass migration to the city, before the Model T destroyed the horse and buggy, and before racy, decadent jazz had reached its peak.

Of course, music is an art, and artists tend to experiment, so the ongoing major battle in country music is the push and pull between expanding boundaries and hanging on to tradition.

Appropriately in 2022 — which happened to mark the 100th anniversary of the first country recording session — that tug of war between progress and tradition was very much evident.

Musically, the sounds of the past were trendy as the current generation of hit-makers celebrates ’90s country. The genre was full of examples, including three of the top 10 songs on the year-end Country Airplay chart: the Garth Brooks-like drama of Cody Johnson’s “ ’Til You Can’t,” the heartbreak storyline filtered through a Texas troubadour in Scotty McCreery’s “Damn Strait” and the Cole Swindell megahit “She Had Me at Heads Carolina,” which returned the melody of Jo Dee Messina’s debut to regular rotation over two decades after its original chart run.

The rise of ronky tonk — a raw, stripped-down form of country (maybe it should be spelled “rawnky tonk”?) — pushed back against the genre’s 10-year party mode while sounding a little more like country has historically presented itself. It brought a new round of young artists to the forefront, including Bailey Zimmerman, Zach Bryan, Jackson Dean and Nate Smith. And it took place as the Paramount+ series Yellowstone soared, resurrecting the once popular western format and adding to the luster of Lainey Wilson, a new artist whose country authenticity fits with her role in the show.

Yet even as country recycled its past, the format is clearly moving forward at the same time. The ubiquitous presence of Jimmie Allen, the multiple collaborations of BRELAND, Kane Brown’sexperiment with stadium headlining and the introduction of new talents — including Madeline Edwards, Tiera Kennedy, Brittany Spencer, The War and Treaty and Chapel Hart — underscores a very real interest in expanding the genre’s diversity, with Black and biracial women making greater inroads alongside the recent uptick in the format’s Black males.

Not that the progressive edge of country rosters and playlists is a one-issue concern. Frank Ray and Kat + Alex are bringing a long-absent Latino influence to the genre’s mainstream, while other acts continue widening the sound of country, including Americana-leaning Boy Named Banjo, hip-hop-tinged Kidd G, adventurous Sam Williams and piano-based Ingrid Andress.

It’s not just the artistic part of country that moved forward in 2022. Podcasts and streaming continued growing, opening more avenues for songs and artists to emerge. BBR Music Group even assigned dedicated employees to focus on single, sprawling media companies: YouTube manager Aaron Wilder and vp of promotion and marketing/SiriusXM Radio Scotty O’Brien.

Country radio, historically the dominant platform for exposing new music, recognized its diminished role more openly. Several panels at February’s Country Radio Seminar addressed broadcasters’ sluggish approach to music rotations, and Country’s Radio Coach owner John Shomby spearheaded a committee that united multiple industry factions in an attempt to reverse the trend.

CRS was held in person after the pandemic forced a remote version of the seminar in 2021. It wasn’t the only annual event that returned to a physical location: CMA Fest took over Nashville’s downtown again after a two-year absence, though a number of industry members caught COVID-19 during the celebration. 

Nearly every artist was back on the road, too, creating its own set of issues. With some longtime support crew retiring or changing career paths during the pandemic, artists — particularly at the club and theater level — were challenged when trying to book full road teams and transportation. 

The Academy of Country Music became the first major organization to shift its awards show from network TV to a streaming platform, and Viacom shifted the CMT Music Awards for the first time from cable to the CBS broadcast network, revising the schedule in the process as the CMTs moved from the week of CMA Fest to the spring. 

By summer, the new routine left much of the industry’s personnel worn out as they returned to a hyper-active calendar after two years of mostly working at home.

Reigning over it all was Morgan Wallen, whose Dangerous: The Double Album dynamited the previous chart record by extending his No. 1 status on Country Albums to 86 weeks. Despite not fully cleaning up his public image after uttering a racial slur in February 2020, he topped nine different country lists among Billboard’s year-end charts, snared a CMA nomination for entertainer of the year, had the RIAA certify 43 different titles during the calendar year and set a 2023 concert schedule that includes 17 stadiums.

The subject of race is part of the push and pull that the industry will continue to address in the future. Back when those old-fashioned songs first took hold in the 1920s, record executives specifically marketed hillbilly records and race music — as the categories were called at the time — to separate audiences. In short order, the artists were segregated as well. The industry is taking steps to better reach Black audiences and expand the ranks of African American executives. Progress is essential to keep every valuable enterprise alive. 

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Listen to The White Stripes cover ‘Silent Night’


No Christmas season is complete without ‘Silent Night’. The traditional Christmas carol isn’t quite as old as its biblical implications might allude, with composer Franz Gruber (not to be confused with the Die Hard villain of a similar name) in Austria during the early 1800s. That might not seem modern compared to, say, ‘All I Want For Christmas Is You’, but it’s certainly not a traditional hymn as it would seem.

The more biblical edge came from the song’s lyrics, which were originally penned by an honest-to-god priest. Joseph Mohr was a hymn writer by trade, so when his friend Gruber invited him over one night to hear his new composition, Father Mohr was probably the best-qualified man to put lyrics to melody. Mohr composed the words to the song in just a few hours’ time, words that would be translated and echoed for centuries after he and Gruber were gone.

Almost immediately, ‘Silent Night’ became heavily associated with the Christmas season. The song itself is about the traditional birth of Christ, which makes it an appropriate carol for the holiday season. You don’t have to dig very far to find a version that fits your specific tastes, either.

Mariah Carey has a version because, of course, she does, but everyone from the King of Rock and Roll himself, Elvis Presley, to soul icons like Percy Sledge and The Temptations have recorded their own takes. Sinéad O’Connor, Josh Groban, and Nat King Cole all have notable versions of the track, but if your tastes lean more towards garage/punk/blues, then good news: The White Stripes recorded a version of ‘Silent Night’ as well.

Jack White has more than just a passing connection to the track’s religious origins. As the youngest of ten children, White was raised in a Catholic household, with both of his parents working for the Archdiocese of Detroit. White’s initial plan was to become a priest, but when he realised that the church wouldn’t allow him to bring his instruments with him, he baulked and decided to become an upholsterer, then a rock star, instead.

Slight Christian undercurrents could be picked up in The White Stripes’ music, even though White never preached or professed any specific affiliation. In fact, the closest that White ever came to acknowledging his religious background was recording ‘Silent Night’. In 2002, just after wrapping the sessions for Elephant, Jack and Meg White were asked to contribute a song to the Christmas compilation album Surprise Package Volume 2.

White wrote an original, ‘Candy Cane Children’, and the duo decided to put out a full Christmas single under the title Merry Christmas From… The White Stripes. On the B-side, Jack recorded a reading from the Gospel of Matthew while Meg sang an a Cappella version of ‘Silent Night’. At one point, Meg breaks when she can’t remember the words, and as the good son of a Christian that he was, Jack steps in to remind her of the verse.

Check out the reading and the version of ‘Silent Night’ down below.

Prambanan Jazz Festival 2023 to Feature K-Pop Artist Gemini


TEMPO.CO, Yogyakarta – The 2023 Prambanan Jazz Festival is preparing to welcome Gemini, a singer from South Korea, to entertain the young audience who enjoy K-Pop music. The musician, who is famous for his song called ‘Know me’ that went viral on TikTok, will appear on the stage set in Prambanan Temple, Central Java.

The founder of the Prambanan Jazz Festival, Anas Syahrul Alimi, stated the reason for bringing in a K-Pop star was to attract the attention of a younger audience influenced by the Korean Wave. “I have a dream of making a K-Pop festival,” said Anas at a press conference in Yogyakarta, Wednesday, December 21, 2022.

Anas explained that the event does not need to only consist of jazz music, that’s why they would feature a K-Pop artist in the festival. He pointed out several jazz festivals from overseas that did not feature all jazz music genres. There were two to three artists who performed songs outside the genre of jazz.

Not only from South Korea, the festival which will be held at Prambanan Temple, Central Java, will also feature artists from Pakistan and Saudi Arabia. A legendary music group from France, Gipsy King, will also perform at the event.

Gipsy King is known for their music with a touch of traditional flamenco and salsa. The group won a Grammy Award for Best World Music Album in 2014, for their Savor Flamenco album.

The Prambanan Jazz Festival will be held for six days, from July 7-9 and July 14-16 next year. This will be twice as long as the Prambanan Jazz Festival held in previous years which was usually only held for 3 days.

Nine international musicians and 60 national musicians will perform at the Prambanan Jazz. Anas said that with a longer duration, there would be more stage performers, which will also be more diverse to entertain the audience.

Apart from the Gipsy Kings, there will also be a performance by Lucky Chop from New York, United States, Broadway, and swing jazz musician Scott Bradlee, who will perform with Postmodern Jukebox and Bond. Meanwhile, several well-known national musicians include Kahitna, Maliq & D’Essential, and Dewa 19.

Shinta Maharani | Translator: Intern / Imaji Lasahido

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My Mistake: Norwegian band TwoMinutesHate drop explosive sizzler fuXmas – Independent Music – New Music


Dropping an astonishing track to get all moods boosted to maximum capacity, TwoMinutesHate sends our minds into a whole new world of fantasy on the excellent new single fuXmas.

TwoMinutesHate is a Norwegian pop punk band who roars through with music to shake the soul alive with on each of their energetic singles.

TwoMinutesHate’s debut EP Restless, Nervous And Way Too Loud has already earned them a significant amount of airplay on one of Norway’s largest radio channels NRK P13, and even landed them a spot on the soundtrack of the Norwegian comedy Jentetur.” ~ TwoMinutesHate

Bringing that punk heavy Christmas cheer to us all and thundering in with a glorious energy, TwoMinutesHate sound in top form on fuXmas and has that insatiable lip-licking vitality to awaken us all from any sleepy slumber.

fuXmas from Norwegian pop punk band TwoMinutesHate is a hugely motivating track which shall spark so many memories to explode with excitement. Charging through with much velocity and showing us their elevating progression, to thrill our hearts into a happier place.

Listen up on Spotify. See more on IG.

Reviewed by Llewelyn Screen



Dolby Laboratories, Inc. (NYSE:DLB) Q4 2022 Earnings Call Transcript


Dolby Laboratories, Inc. (NYSE:DLB) Q4 2022 Earnings Call Transcript November 17, 2022

Dolby Laboratories, Inc. misses on earnings expectations. Reported EPS is $0.54 EPS, expectations were $0.6.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratories’ Conference Call discussing Fiscal Fourth Quarter Results. During the presentation, all participants will be in a listen-only mode. Afterwards you will be invited to participate in a question-and-answer session. As a reminder, this call is being recorded, Thursday, November 17, 2022. I would now like to turn the conference over to Ashley Schwenoha, Senior Manager, Investor Relations for Dolby Laboratories. Please go ahead, Ashley.

Ashley Schwenoha: Good afternoon. Welcome to Dolby Laboratories fourth quarter 2022 earnings conference call. Joining me today are Kevin Yeaman, Dolby Laboratories CEO; Robert Park, CFO; and Maggie O’Donnell, Head of Investor Relations. As a reminder, today’s discussion will include forward-looking statements, including our first quarter and fiscal 2023 outlook and our assumptions underlying that outlook. These statements are subject to risks and uncertainties that may cause actual results to differ materially from the statements made today, including, among other things, the impact of current macroeconomic events, COVID-19, supply chain issues, inflation, changes in consumer spending, and geopolitical instability on our business.

Dolby, Music

Dolby, Music

A discussion of these and additional risks and uncertainties can be found in the earnings press release that we issued today under the section captioned Forward-Looking Statements as well as in the Risk Factors section of our most recent quarterly report on Form 10-K. Dolby assumes no obligation and does not intend to update any forward-looking statements made during this call as a result of new information or future events. During today’s call, we will discuss non-GAAP financial measures. A reconciliation between GAAP and non-GAAP financial measures is available in our earnings press release and in the new Interactive Analyst Center on the Investor Relations section of our website. So, with that introduction behind us, I will now turn the call over to Maggie.

Maggie O’Donnell: Thank you, Ashley, and thanks, everybody, for joining us today. So last quarter, we tried something different with the format, and it seemed to be really well-perceived, so we’re going to try to do the same thing today. I’m going to be leading our conversation with both Kevin and Robert, and then we’re going to turn it over to our analysts for Q&A. So, let’s get started. Kevin, obviously, this is a really dynamic environment. Can you talk about that and how it’s impacting our business?

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Kevin Yeaman: Yes. The past year, and for that matter, the last few years have been a challenging environment. I don’t think that’s news to anybody. It’s a combination of the pandemic, geopolitical issues, supply chain inflation, all of this has come together to create an environment of uncertainty and change. And most of the industries we serve have been significantly impacted by some combination of these factors. As it relates to this quarter, it continues to be a tough environment, and our results did come in lower than what we expected. Since we last talked, the estimates for consumer device shipments have continued to come down across a number of categories, particularly in PC and TV. And transaction cycles are taking longer right now.

We’re in an environment with a lot of challenges that affect not just us, but our partners and our customers. And so our customers, both current and potential continue to be engaged, but we’re seeing some of those engagements taking longer. At the same time, we’ve accomplished a lot over this quarter and over this last year, and we’re making progress in our key focus areas. We continue to strengthen our movies and TV ecosystem. We had significant growth with Dolby Vision and Dolby Atmos in terms of increased content across services and streamed content, and we’ve expanded across all the device categories that people use to enjoy their favorite movie and TV content. We have fantastic momentum across the Dolby Atmos Music ecosystem. We have more artists, more studios on board.

The amount of music and Dolby Atmos continues to expand and we have more ways for people to enjoy that music across streaming services and devices and increasingly their car. And we’re building out our ecosystem for user-generated content, which this is what enables a growing number of consumers to capture and share their memories in Dolby Vision across their favorite platform. So, our strategy has not changed and we’re confident in the opportunity ahead and consumers have a seemingly insatiable demand for entertainment content. We’re hard at work to bring the Dolby experience to all the ways consumers experience that content, whether it’s movies, TV, gaming, sports, music, user-generated content and all the devices that those experiences are enjoyed on.

We also see audio/video content and the ability to interact digitally in audio/video, increasingly become a part of everything we do online. And with Dolby.io, we can improve these experiences and bring Dolby to a far wider range of used cases. So, while there are near-term headwinds, we’re staying focused on what we can control and we’re confident in the opportunity ahead.

Maggie O’Donnell: Great. That’s great context. Let’s talk a little bit about the revenue drivers. So, over the last year, you’ve been talking about revenue drivers in the context of both foundational and Dolby Atmos, Dolby Vision, Dolby Imaging — or sorry, imaging patents. Can you start with foundational?

Kevin Yeaman: Yes. And maybe as a reminder for people who might be new or newer to the story, our foundational audio revenues are made up of our audio codecs and audio patents and these technologies are deeply embedded in the ecosystem for entertainment audio and they’re delivered across a broad diversity of consumer devices. And we’re included on such a significant number of those devices that this part of the business is sensitive to the macroeconomic environment, especially as it relates to consumer device shipments. So, for this year, foundational was down nearly 15% and ended up at roughly 70% of our licensing revenues. And while macro challenges continue to make it difficult to predict the near-term, based on current data points, we’re expecting foundational to be down again in FY 2023.

And — but it’s important to note that these technologies are fundamental to the playback of content, they have been for decades and they will continue to be for years to come. And this is a strong position to be in. We’re going to continue to strengthen it. And once the end markets stabilize, we expect that foundational revenue will continue to be a contributor to our growth.

Maggie O’Donnell: Makes sense. And what about Dolby Atmos, Dolby Vision and imaging patents?

Kevin Yeaman: Revenue from those areas grew roughly 30% versus last year. That is a little bit slower than we expected as of the last call. I said these areas are not as sensitive to the macro environment as foundational. It’s more about getting on more of the devices with these relatively more technologies, more devices that are shipping, but they’re not immune to the macro. The largest growth driver, what drove the 30%, one of the largest growth drivers was movie and TV content. We’ve built this incredible ecosystem of content around Dolby Vision and Dolby Atmos, and that’s led to broad adoption by content services. And so we’re seeing growth in living room devices like TVs, set-top boxes, sound bars and beyond. We also saw strong growth in Dolby Cinema as the box office began to improve from the pandemic lows and we also had a lot of progress beyond that.

We’re — we’ve laid the foundation for new ways to experience Dolby and laying the foundation for new growth in areas like music and automotive, user-generated content with Dolby Vision Capture. We’re always looking for ways to bring Dolby to new experiences. So, the opportunity ahead of us is significant. We are confident that we have the opportunity to double the size of these revenues in the mid-term, and we’re targeting 15% to 25% annual growth over the next three to five years.

Maggie O’Donnell: Got it. So, we’re going to let Robert talk a little bit more about revenue in a few minutes. But first, let’s dive into the three main focus areas that you mentioned at the beginning. First, the movies and TV ecosystem in the living room, there’s music and auto, and there’s also the user-generated content with Dolby Vision Capture. So, can we start with the living room?

Kevin Yeaman: Yes. Well, with movies in TV, like I said earlier, we have very strong adoption across the creative community and great distribution across content services. And all of that means that it’s easier than ever to access your favorite content in Dolby. We firmly established Dolby Vision and Dolby Atmos as the best way to enjoy movies in TV, and we have broad adoption across premium 4K models. And of course, we began to move this deeper into lineups. And that’s what we’re going to be focused on expanding more deeply into lineups like we’ve done with partners such as Sony and VIZIO. It also means pursuing remaining partners, and that includes the house brands, the big box retailers, that makes up part of the market. So, we are also focused on — we’re always looking for ways to become a part of more of the content that people care most about.

And a great example of that is live sports. There’s a few examples of content that bring out more emotion than live sport. And big events can actually drive TV purchases. So, it’s a way to bring Dolby into more living rooms. And so we’re particularly excited that Comcast announced this morning that X1 customers are going to be able to enjoy the World Cup in Dolby Vision.

Maggie O’Donnell: That’s great. That’s huge news. Let’s also let’s move on to the music and auto initiatives, what are you seeing there?

Kevin Yeaman: Well, as is the case with all of our ecosystem, it starts with content. And enthusiasm from artists, the increasing availability of mastering tools and studios means an increasing amount of music available in Dolby. Universal Music Group recently said on its earnings call that 80% of its top streaming artists have tracks available in Dolby Atmos and that makes up nearly half of streamed music consumption. They also said that 90% of consumers surveyed reported that they listen longer when they’re listening in Dolby Atmos. So, once you have the content, then it’s about the availability of the content to the consumer, and we made a lot of progress this year. We added Tencent’s QQ to our roster of streaming partners.

With Apple and Amazon, that means that we now have three of the top five global streaming services in the world. We also added a number of top regional services in markets like South Korea, the Middle East, China. And this quarter, we added Gaana.com, which is a top music streaming service in India. So, it’s that combination of content and availability, what we at Dolby refer to our ecosystem. That’s what creates the value proposition to our device partners. And we continue to see demand signals across all the ways consumers enjoy their music, but especially — we’re especially focused on automotive. And we’ve added more than half a dozen auto partners in just over a year. In just the past couple of weeks, we’ve added Polestar and Lotus at the Paris Auto Show a few weeks ago.

Mercedes was showcasing the Dolby Atmos Music experience and it got great reviews. And just last week, Volvo announced the EX90, which is the soon-to-be released electric SUV will feature Dolby Atmos. So, we’re really excited about all of that. We’re going to stay focused on bringing more streaming services to life, bringing on more auto partners, going deeper into lineups with the partners we’ve brought on board, and that’s what drives growth in this ecosystem. Our goal is to make Dolby Atmos Music the way everyone experiences music all the time.

Maggie O’Donnell: Great. That’s awesome. So, on the third focus area, Dolby Vision Capture. Can you talk about that?

Kevin Yeaman: Yes. What’s exciting about this is enabling consumers to engage with Dolby Vision content on a daily basis. And that that significantly enhances our value across the mobile device ecosystem. It started a couple of years ago when Apple introduced Dolby Vision Capture. And this year, we expanded into Android. We — last quarter, Xiaomi launched the first Android smartphone with Dolby Vision Capture in China. They launched another model with Vision Capture this quarter. And it’s often striking when we look back at our videos that we’ve taken over the years, how sometimes that older content can be a little unfulfilling. It can be washed out. The colors aren’t right. But with Dolby Vision, you get a giant leap in quality.

And you can tell things like — from the light, what time of day it was or what season was it? What was the weather? Everything looks more vivid and just like you remember it. So, this is important to smartphone makers because we all use our phones as these memory capture devices every day and the camera is a major reason that people upgrade their phone. So, we expect to see more adoption of this. And capturing the memories is one thing, well, it’s even more important to sharing them. So, that’s why we’re so excited to see the ecosystem coming together with services. In China, we have services like WeChat, QQ, Bilibili, enabling the sharing of Dolby Vision content so that hundreds of millions of users on these platforms can experience those same vivid memories.

So, this year, look for us to continue to be focused on expanding this Dolby Vision Capture ecosystem with more services and more devices.

Maggie O’Donnell: Got it. So, of course, in addition to those three main focus areas, there are a lot of other things we’re working on. One of those is Dolby.io. Can you talk about that a little bit?

Kevin Yeaman: Yes. With Dolby.io, we’ve created a platform that enables developers to create experiences that are highly immersive, and audiovisual content and interactivity are increasingly a part of everything we do online. Dolby.io makes it easy to integrate the Dolby experience into a wide range of use cases that had become a part of our everyday lives. It’s been a little over two years since we launched. We’re continuing to see strong increases in developer engagement that takes the form of developers signing up for the platform and engaging with and working with our APIs. One area we’re seeing a lot of demand is in real-time streaming. So, this is a use case that developers are looking for. So, it’s easy for them to understand.

It’s also easy for them to integrate. And our offerings differentiate it because, of course, it brings very high quality. It can scale to a very high number of users and we have exceptionally low delay times, and that’s what brings the action and the viewer closer together. So, it makes the experience as close to real-time as possible and that’s critical for a number of use cases. We’re also seeing a lot of customers that are starting with or have started with real-time streaming and then expanding to enable our real-time interaction so that the audience can interact with one another. The presenter can interact with the participants and have a conversation that flows very naturally. That’s made possible by things like our audio spatialization, which makes it easier to know where the sounds are coming from.

And with — combined with extremely low latency, you don’t have those delays that can get caused when people are talking over one another. And beyond that, we’re having a lot of conversations with companies and developers who are focused on inventing the next-generation of online immersive experiences. And the audio experience is top of mind. They are creating rich and complex environments that require high-quality audio and spatialization to be realistic to keep people in those experiences. A lot of interest in areas like virtual performance, social events, sports, big company events. Music is also top of mind. And we just talked about the momentum we have in Dolby Atmos Music. And of course, that can come into play in these worlds. But combined with spatialization, it creates the opportunity for events of virtual concert, for instance, then the audience can be having a realistic experience interacting with one another.

If it’s some kind of a social event or a company trade show, if you have background music, the music can be high quality, but you also have the realistic ambient environment. So, early days, but we’re really excited about the opportunities.

Maggie O’Donnell: So, lastly, the macro environment is obviously going to continue to be challenging. How are you planning to manage the business throughout this period?

Kevin Yeaman: Well, we always managed through many economic downturns and many technology transitions. And we’re coming at this from a position of strength given our strong business model, balance sheet, proven ability to generate cash. And we’re planning for it to continue to be a tough environment in the near-term. And so we’re going to be wise with our resources. Our headcount is roughly flat year-over-year. We’ve paused hiring except for the most critical hires and we’ve taken a number of cost savings measures. And on top of that, the management team is regularly reviewing our resource envelope and our resource allocation to make sure that we continue to be aligned to where the opportunities are. And Robert can elaborate on this further.

But we understand what it takes to go through an environment like this and come out the other side strong. For us, the formula starts with, first and foremost, staying true to who we are. Consumers have the seemingly insatiable demand for entertainment content and audiovisual experiences are becoming a pervasive part of everything we do. So, our purpose has never been more relevant, and there’s incredible opportunity to bring more Dolby experiences to more people around the world. And we’re always hard at work reinventing what that means, what it means to have a Dolby experience and bringing those experiences to the content that’s most important to them. We know that to do all this in this kind of environment requires extraordinary focus and that’s why you hear us talking about our key focus areas.

And we’ve just talked about the momentum that we have across movies and TV, music, user-generated content, bringing more developers to IO. So, we’re clear on what our most present opportunities are. We’re going to focus on what we can control, and we’re going to act with urgency to bring more Dolby experiences to more people, and that’s what grows the business.

Maggie O’Donnell: Great. Makes a ton of sense. Thanks, Kevin. And let’s now turn to some of the numbers. Robert, can you walk us through the financials for both the fourth quarter and fiscal year 2022?

Robert Park: Thanks, Maggie. Of course, let’s start with Q4. Total revenue in the fourth quarter was $278 million, which fell short of the total revenue guidance we provided on our last call. This was driven by a couple of factors. Based on what we’re seeing, including data points from industry analysts, there were further declines in consumer device shipments, especially for TVs and PCs compared to when we provided guidance in August. This negatively impacted our current quarter revenue estimate. Last quarter, we mentioned that we were seeing transaction cycles take longer in the environment, particularly in Asia and within mobile, and this had a greater impact than we expected on Q4. Now, as a reminder, our licensing business is based on unit shipments.

In general, we estimate revenues from unit shipments each quarter and trued up the following quarter based on actual reported shipments from our partners. We also have transactions that reflect revenue from units shipped in prior periods, which we call recoveries and transactions where the customer will commit to minimum volumes for a given period where all or a portion of the revenue is recognized upfront. These transactions are all related to unit shipments. The only difference is the timing and amount of revenue in any given quarter. Our partners remain actively engaged and we expect these transactions to close, but the process is taking longer. Now, let’s get into the Q4 details. Q4 revenue was down 2% year-over-year, driven primarily by lower unit shipments in PC, broadcast, CE and gaming.

This was partially offset by growth in Dolby Atmos, Dolby Vision, and imaging patents as well as an increase in products and services revenue, driven by improvements in the cinema industry. Q4 revenue comprised of $249 million in licensing revenue and $29 million in products and services revenue. Now, to our full year results. Fiscal year 2022 revenues were $1.25 billion compared to $1.28 billion in fiscal year 2021, resulting in a year-over-year decline of 2%. Within that, licensing revenue was $1.16 billion, while products and services revenue was $89 million. Fiscal year 2022 licensing revenue was $1.16 billion, down 4% year-over-year. Foundational audio made up roughly 70% of our licensing revenue in fiscal year 2022. Revenue for foundational audio declined about 15% year-over-year, primarily as a result of lower device shipments, especially in areas like broadcast, gaming, and auto and lower recoveries in broadcast and mobile.

We also had a tough comp against the higher-than-normal true-up in fiscal year 2021. Dolby Atmos, Dolby Vision, and imaging patents were about 30% of total licensing revenue. This portion of our licensing revenue grew roughly 30% in fiscal year 2022 compared to nearly 20% growth in fiscal 2021, driven by higher adoption and new licensees as well as increased box office, which positively impacted Dolby Cinema. Now, let’s get into the end markets. Broadcast represented about 37% of total licensing in fiscal year 2022. Full year broadcast revenues declined by $42 million or negative 9% on a year-over-year basis, driven by lower TV unit shipments and lower recoveries, both impacting primarily foundational audio. This was partially offset by growth in Dolby Vision and Dolby Atmos, and TVs and set-top boxes.

In Q4, broadcast revenues declined year-over-year, driven by lower unit shipments, partially offset by increases in Dolby Vision and Dolby Atmos. Mobile represented about 21% of total licensing in fiscal year 2022. Full year mobile revenues declined by $22 million or negative 9% on a year-over-year basis as the prior year benefited from timing of deals, including recoveries, partially offset by increases in Dolby Atmos, Dolby Vision, and imaging patents. Q4 mobile revenues were down year-over-year, driven by lower unit shipments. Consumer Electronics represented about 16% of total licensing in fiscal year 2022. Full year CE revenues increased by $4 million or 2% on a year-over-year basis, driven by growth in Dolby Atmos, Dolby Vision, partially offset by lower units.

Q4 CE revenues were down year-over-year, driven by lower recoveries and lower unit shipments, partially offset by growth from Dolby Vision, Dolby Atmos, and imaging patents. PC represented about 13% of total licensing in fiscal year 2022. Full year PC revenues increased by $9 million or 6%, driven by Dolby Atmos, Dolby Vision, and imaging patents and higher recoveries compared to fiscal year 2021. This is partially offset by lower PC shipments, primarily in the back half of the year. Q4 PC revenues are down year-over-year, driven by lower unit shipments, partially offset by growth in Dolby Vision, Dolby Atmos, and imaging patents. Other markets represented about 13% of total licensing in fiscal year 2022. Other markets were flat year-over-year, driven by improvements in Dolby Cinema, offset by unit declines in gaming and auto.

Q4 other markets declined driven by lower gaming units and true-ups. Beyond licensing, our products and services revenue were $89 million in fiscal year 2022 compared to $67 million in fiscal year 2021. The year-over-year increase was primarily driven by higher product sales as a result of improvements in cinema industry, and we also saw revenue growth from Dolby.io. Total non-GAAP gross margin in the fourth quarter was 87% compared to 90% in the fourth quarter of fiscal year 2021. Gross margins came in lower, driven by a higher mix of products revenue. Non-GAAP operating expenses in the fourth quarter were $182 million compared to $190 million in the fourth quarter of fiscal year 2021. Operating expenses were below the low end of our guidance for Q4, driven by lower variable incentive compensation expenses.

Non-GAAP operating income for Q4 was $60 million or 22% of revenue compared to 23% of revenue in Q4 of last year. Non-GAAP income tax in Q4 was within our range of guidance at 18% compared to 12.7% in last year’s Q4. The year-over-year increase was primarily driven by the mix of our income between different tax jurisdictions and lower discrete benefits. Net income on a non-GAAP basis in the fourth quarter was $53 million or $0.54 per share per diluted share compared to $60 million or $0.58 per diluted share in Q4 of 2021. On a full year basis, non-GAAP operating income was $376 million or 30% of revenue compared to $451 million or 35% in fiscal 2021. Full year net income on a non-GAAP basis was $320 million or $3.14 per diluted share compared to $383 million or $3.66 per diluted share in fiscal 2021.

During the fourth quarter, we generated $51 million in cash from operations compared to $110 million generated in last year’s fourth quarter. We ended the fourth quarter with just over $900 million in cash and investments. During the fourth quarter, we bought back about 2.9 million shares of our common stock and ended the quarter with about $361 million the stock repurchase authorization available going forward. We announced — also announced today a cash dividend of $0.27 per share, an increase of $0.02 or 8% compared to the prior quarter. The dividend will be payable on December 8th, 2022 to shareholders of record on November 30th, 2022.

Maggie O’Donnell: All right. So, before you get into the numbers for fiscal year 2023, how are you thinking about guidance going forward?

Robert Park: I’d start by saying We are continuing to operate in a challenging and uncertain environment. Not only is the world still dealing with repercussions from the pandemic, but there has also been supply chain imbalances, geopolitical instability, high inflation, and monetary tightening to address it, and the list goes on. Our customers and partners are similarly impacted by the uncertainty in the environment and as a result, we are seeing this impact not only unit shipments, but the timing of some transactions as we discussed earlier. Many companies who stopped giving guidance during the pandemic are still not providing guidance. All of this is to say that our visibility is limited and predicting what will happen in the next year is difficult.

With this as the backdrop, I’ll be providing a high-level scenario for FY 2023. Based on what we are seeing right now, including data points from industry analysts, we are expecting declines in consumer device shipments, particularly for TVs in North America and Europe, and globally for PC and CE. This mostly impacts our foundational audio revenue, which we project will decline mid-single-digits during the year. As Kevin said earlier, we are targeting 15% to 25% growth in Dolby Vision, Dolby Atmos, and imaging patents, and we expect this to be driven by growth in the broadcast, mobile, and other markets. We assume this will more than offset the declines in foundational audio that we are expecting. With these assumptions, we are projecting total revenue for fiscal year 2023 to grow low single-digits year-over-year.

Within this, we anticipate licensing revenue to be up low single-digits with products and services revenue expected to grow high single-digits. Now, let’s talk about OpEx. For the full year, we are currently anticipating non-GAAP operating expenses to increase roughly 2% compared to prior year. We will see growth from our annual merit increases and normalization of incentive compensation for employees compared to fiscal year 2022, which came in significantly below 100%. We are also seeing inflationary pressure in some other areas, and increased travel expenses. This is mostly offset by cost-saving measures such as organizational adjustments and reductions in infrastructure costs. We will continue to limit hiring to the most critical roles, while focusing our investments on the areas that have the largest impact toward our long-term opportunities.

This would result in operating margins of roughly 30% on a non-GAAP basis for the year. We will continue to be disciplined with our spend, review our resource envelope and allocation on a regular basis, and make adjustments as the year progresses. We anticipate that non-GAAP earnings per share could grow at a slightly higher rate than revenue.

Maggie O’Donnell: Great. Thanks for the full year context and perspective, how about Q1?

Robert Park: Well, let me reiterate that volatility from this economic environment has made forecasting more challenging in the near-term, and that includes visibility into Q1. In addition, revenue lumpiness from timing of deals is more acute in the quarters than on the full year. That said, based on what we are seeing right now, we see Q1 revenue ranging from $300 million to $330 million. Within that, licensing revenue is estimated to range from $280 million to $305 million, while products and services is projected to range from $20 million to $25 million. Compared to Q1 of last year, we expect lower unit declines in TV and PC and lower recoveries. At the same time, we continue to see growth from Dolby Vision and Dolby Atmos.

Non-GAAP gross margin is estimated to be 90% plus or minus. Operating expenses in Q1 on a non-GAAP basis are estimated to range from $180 million to $190 million. Our effective tax rate for Q1 is projected to range from 19% to 21% on a non-GAAP basis. This is higher than fiscal year 2022 as we are forecasting lower benefit from foreign tax credits. We also benefited from discrete items in fiscal year 2022 that are not included in fiscal 2023. We anticipate the full year tax rate will be in a similar range. So, based on a combination of the factors I just covered, we estimate that non-GAAP Q1 diluted earnings per share could range from $0.76 to $0.91. Let me restate Q1 revenue range is $300 million to $330 million.

Maggie O’Donnell: All right. Robert, do you have any closing remarks?

Robert Park: Yes, Maggie. It remains a tough environment and while the near-term is uncertain, we are well-positioned for growth in the long-term. Dolby has a durable business model, a strong balance sheet, and healthy cash flows, even with today’s tough market conditions. Our foundational audio technologies are broadly penetrated across a wide variety of content and devices. And much of the opportunity lays ahead, with Dolby Atmos, Dolby Vision, and imaging patents as we continue to expand further into new use-cases like live sports, user generated content, and auto. We are also excited about Dolby.io as a long-term growth factor as it greatly expands our addressable market. All of this give us confidence in our ability to drive revenue and earnings growth into the future.

Maggie O’Donnell: Great. All right. That wraps up my portion. Let’s turn it over to the operator and our analysts for some Q&A.

To continue reading the Q&A session, please click here.

Justė Janulytė – Unanime (World Première, first version)


One of my personal highlights of this year’s Huddersfield Festival was the performance of Justė Janulytė‘s 2020 work for 8 trumpets, Unanime. Composed for Marco Blaauw’s Monochrome Project, the piece exists in two versions: the first, with a single climax, lasts 15 minutes; the second, with two climaxes (one muted, one open) lasts 26 minutes. Janulytė’s output is typified by states of timbral-behavioural homogeneity – for this reason she describes her work as “monochrome” – in which the music continually teeters at a liminal point between stasis and flux. As such, a word like Unanime (unanimous) could well be applied to her work as a whole.

There are only two moments in Unanime that exhibit true clarity, the first of which is right at the start, as the trumpets put together a chord downwards, one note at a time. Yet as soon as the last note is added, that liminal quality manifests immediately. The chord bobs and hovers, undulating in the air, one moment diminished, the next major, or minor, or a 7th, or a flattened 9th, or something in between each of these and counltess other possibilities. This is harmony turned liquid, the inner arrangement of notes always flowing, all traces of certainty disappearing the same instant their existence is mooted.

The main change that takes place, and it’s subtle, is a slow alteration in the extent of the mutes, modifying their timbre slightly, sounding more shrill or nasal, tightening the texture so that it sounds more taut. At the same time, certain individual tones appear to protrude ever so slightly from the main textural body – though, as with everything else in the piece, the possibility that these could simply be imaginary is entirely plausible. Though ostensibly relaxing, the fact is that in Janulytė’s music neither the ear nor the brain is ever able to rest, slipping around over a surface that never quite comes into focus, remaining just beyond our power to resolve.

The other fact – which, considering how much of a constant conundrum the piece is, is quite remarkable – is that Unanime is stunningly beautiful. Both in terms of its internal process as well as its mesmeric external effect, this is music that could continue ad infinitum. As such, it makes sense that Janulytė (at trumpeter Marco Blaauw’s suggestion) subsequently made a second, longer version of the piece. Yet equally, almost any duration, even a shorter one, would work just as well, i think. Unlike process music (which Unanime definitely isn’t) or ambient music (which Unanime could be) it needs almost no time at all to start conjuring up its complex, illusory soundworld.

At its conclusion, the piece doesn’t exactly resolve but does finally arrive at its second moment of clarity, focusing the pitches into a perfect fifth. Perhaps it’s an effect caused by the previous 15 minutes’ aural conditioning, but i can’t hear it as a resolution. Its stability feels non-existent, poised to waver or slide or flow into something new even as it comes to an end. Even when the sound stops, the puzzle remains.

The world première of Unanime took place at the 2020 Wittener Tage für neue Kammermusik, performed by the Monochrome Project.


Programme note

In this piece the trumpet octet is treated as a single body, like the organ of different pipes sharing the same breath, the same soul.

—Justė Janulytė


Dustin Lynch Spreads Holiday Cheer With Hometown Benefit Show And Pays It Forward In “Somethin’ That Makes You Smile” Music Video | News


Country music star Dustin Lynch has returned home for the holidays to give back to his community. 

The “Party Mode” singer previously paid it forward with his seventh annual benefit concert at Tullahoma High School in Tullahoma, TN. The country powerhouse pulled from his award-winning catalog and performed tracks inspired by his hometown, such as “Small Town Boy” and platinum-selling hit “Ridin’ Roads.” 

The interactive show also featured songwriters Hunter Phelps, Jordan Minton, and Jordan Reynolds. In the midst of the set, the country crooner joined forces with his long-time collaborators to deliver his latest ballad, “Wood On The Fire.”  

The musical charity event raised well over $30K for a handful of nonprofits – The Shepherd’s House, Tullahoma Sports Council Inc, and Hands-On Science Center. Lynch highly encouraged concert-goers to bring presents for the Tullahoma Fire Department Toy Drive. Before the heartwarming affair, the hitmaker fled to Nashville’s Phillip’s Toymart to gather a “Santa-sized” bag of gifts to donate to their initiative. 

Lynch recently (Dec. 22) dropped a touching video to his track “Somethin’ That Makes You Smile.” The uplifting single lives on his fifth studio album, “Blue In The Sky.” The release showcases his small acts of kindness and how he lent a helping hand around Music City. 

“It’s been a wonderful 2022,” declared Lynch. “I was thinking, ‘How do we cap this year off?’ We decided, you know what? Let’s give back a little bit. We’re at Phillips Toymart in Nashville, TN, and we’re gonna buy a ton of toys, load the truck up, and drive around Nashville. Head down to Tullahoma, bring some toys to kids that maybe can use it,” he added in the video. 

While spreading joy, he made a surprise appearance at Seacrest Studio in Monroe Carell Jr. Children’s Hospital at Vanderbilt. The clip captures Lynch making a difference through music and bringing happiness to the sick. 

“Y’all have been so good to me this year, I wanted to give back and spread some joy this holiday season,” shared Lynch on Instagram. “Hope y’all enjoy this as much as we enjoyed making it. Happy Holidays Y’all.” 

While many country music fans flocked to the comments to thank the vocalist for his generous contributions, A-listers in the genre told Lynch to give them a buzz the next time he dedicates his time. 

“Hollar at me next time, I would’ve helped,” said Jelly Roll. “What a wonderful blessing you are! I absolutely love this song. Thank you for all you do and for the wonderful music you share with us,” gushed a follower. “It Ain’t Hard to cheer for this guy,” added Graham Bunn.  

The singer-songwriter, with a heart of gold, had a whirlwind of a year. Lynch’s duet “Thinking ‘About You” featuring MacKenzie Porter brought his career to new heights and made history by being the longest-running single on the Billboard Country Airplay chart.

 The promising artist won’t be stopping anytime soon, as he plans to kick off 2023 at Luke Bryan’s Crash My Playa music festival and will embark on Kane Brown’s Drunk Or Dreaming Tour in the spring. For tickets and upcoming appearances, visit dustinlynchmusic.com. 



Warner Music Group Corp. (NASDAQ:WMG) Q4 2022 Earnings Call Transcript


Warner Music Group Corp. (NASDAQ:WMG) Q4 2022 Earnings Call Transcript November 22, 2022

Warner Music Group Corp. beats earnings expectations. Reported EPS is $0.28, expectations were $0.13.

Operator: Good morning, and welcome to Warner Music Group’s fourth quarter earnings call for the period and fiscal year ended September 30, 2022. At the request of Warner Music Group, today’s call is being recorded for replay purposes, and if you object, you may disconnect at any time. Now, I would like to turn today’s call over to your host, Mr. Kareem Chin, Head of Investor Relations. You may begin.

Kareem Chin: Good morning, everyone. Welcome to Warner Music Group’s fiscal fourth quarter and full year earnings conference call. Please note that our earnings press release, earnings snapshot, and the Form 10-Q we filed this morning will be available on our website. On today’s call, we have our CEO, Steve Cooper; and our CFO, Eric Levin, who will take you through our results, and then we will answer your questions. Before our prepared remarks, I’d like to refer you to the second slide of the earnings snapshot to remind you that this communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. We plan to present certain non-GAAP results during this conference call and in our earnings snapshot slides, and have provided schedules reconciling these results to our GAAP results in our earnings press release.

All of these materials are posted on our website. Also, please note that all revenue figures and comparisons discussed today will be presented in constant currency, unless otherwise noted. All forward-looking statements are made as of today and we disclaim any duty to update such statements. Our expectations, beliefs, and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that can cause actual results to differ materially from our expectations. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our filings with the SEC.

And with that, I’ll turn it over to Steve.

Photo by Marcela Laskoski on Unsplash

Steve Cooper: Thanks, Kareem. Good morning, everyone, and thanks for joining us. As you may know, I’ll be stepping down as CEO in January, so this is my last earnings call. I’ll have more to say about our leadership transition later, but let’s start by talking about what’s happening today. It’s no secret that we’ve been challenged on multiple fronts as we navigated the tumultuous macro environment. This includes financial volatility, rising interest rates, inflation, declines in online advertising spend, and currency headwinds. In addition, we’ve been navigating the complexities created by the pandemic and dealing with the impact of the war in Ukraine. Despite all these challenges, I’m pleased to say that we’ve had a very successful quarter.

Our total revenue in Q4 was $1.5 billion, representing year-over-year growth of 16%. Adjusted EBITDA also increased 16% to $276 million, with a margin of 18.4% compared to 17.2% in the prior year quarter. These results were driven by growth across all revenue lines, as well as the benefit from settling certain copyright infringement cases, as we discussed on our last earnings call. Recorded music revenue was $1.24 billion, an increase of 13%. Streaming revenue grew 10.4% when adjusted for the one-time impact of the DSP renewal we’ve been discussing since Q1. I’d like to remind everyone that Q4 was the final quarter impacted by this renewal. Q4’s uptick in subscription streaming growth, and the benefit from emerging streaming platform deal renewals, more than offset the decline in ad-supported revenue.

Artist services continued to recover in Q4, increasing by 33%, while licensing and physical were up by 38% and 6%, respectively. Publishing had another impressive quarter, with revenue of $254 million, reflecting exceptional growth of 32% plus. Digital and performance revenue stood out, growing 39% and 48%, respectively. As I look back on the last two and a half years since going public, it’s clear that we haven’t for a single day operated in a normal environment. So, it’s gratifying to report that our businesses continued to shine during fiscal ’22. For the full year, we delivered total revenue growth of 16% and adjusted OIBDA growth of 18%. Excluding one-time items, adjusted OIBDA grew 22%. We converted 65% of our adjusted OIBDA to operating cash flow for fiscal ’22, well in excess of the expectation we discussed last quarter of 50% to 60%.

As we look ahead, there’s tremendous momentum in both the short and long-term. I’ve consistently told you that streaming revenue would continue to have significant runway, that we would have price increases and ongoing subscriber growth, and that emerging platforms would continue to expand. We’re now seeing all these come to fruition. Most significantly, Apple and Deezer recently announced price increases. Making these announcements in the current economic environment, shows that music subscription services offer amazing value to consumers. Music remains undervalued, but we’re optimistic that there will be other increases to come. We’re also encouraged by reports of subscriber growth. Developed markets continue to grow in the double digits, while emerging markets are growing at higher percentages.

With global smartphone penetration expected to increase meaningfully in the coming years, our conviction in streaming growth remains strong. Finally, the revenue growth curve of emerging streaming platforms continues to outpace more established formats. These new platforms are all heavily reliant on music. And as engagement continues to grow, we expect monetization to follow suit. In our recent deal with Meta, our annualized revenue from this category reached $370 million this quarter. We look forward to the continued evolution of our deals as these platforms harness the power of user-generated content, not just for music discovery, but for marketing and monetization. You’ve often heard me reference the four key pillars of our long-term strategy, music, globalization, innovation, and people.

So, I’d like to talk about how these pillars have shaped our culture over the last decade and how they continue to drive our results. Let’s start with the music. What distinguishes the Warner Music Group is our ability to identify and sign original artists at the beginning of their careers and develop them into the world’s most recognizable superstars. We discovered many of our biggest names like Ed Sheeran, Cardi B, Dua Lipa, Bruno Mars, and Anita, when they were just starting out. Q4 exemplified the impact of our multi-pronged approach. We had great carryover success from our key artists like Ed, Dua, and Silk Sonic. Newly minted superstars, Jack Harlow and Zach Bryan, had multimillion selling albums released in Q3. And Lizzo’s phenomenal singles were a precursor for her chart-topping album, Special, released in Q4.

We’ve also proved once again that music can come from anywhere and resonate everywhere. Not only do we develop Anglo blockbusters, but also superstars within their domestic regions. Local chart toppers, like Japan’s Aimyon, and South Korea’s Twice, and international superstars like France’s David Guetta, Argentina’s Paulo Londra, and Nigeria’s Burna Boy. In addition, given the growing consumption of catalog music, we placed even more emphasis on spotlighting our legendary artists. Recent highlights include great looks for Kate Bush, Fleetwood Mac, and Led Zeppelin. As we broadened and deepened our artist roster, and prioritized a global approach to domestic music, our revenue composition has evolved. A decade ago, our top five artists generated over 15% of our recorded music physical and digital revenue.

In 2022, they generated just over 5%. Our momentum will continue with a strong release slate in Q1, including new music from Paramore, Aya Nakamura, Cardi B, Peter Fox, Roddy Ricch, Joel Corry, and more. I should also mention our outstanding showing in the Grammy nominations announced last week. Recorded music picked up more than 80 nods, which included half of the album of the year contenders. Our top nominees were Elektra’s Brandi Carlile with seven, and six each for Atlantic’s Lizzo, and 300’s Mary J. Blige. We also had three best new artist nominations for Anita, Omar Apollo, and Molly Tuttle. And Warner Chappell had a great showing, highlighted by nominations for The Dream and Amy Allen in the brand-new category of songwriter of the Year.

Warner Chappell is also performing very well, delivering on its strategy of diversifying revenue streams, while providing wider opportunities for songwriters globally. Here are a few recent highlights. In the US, Daniel Caesar took home Song of the Year for Peaches at the 2022 BMI R&B and Hip Hop Awards. We signed pop sensation, Lauren Spencer-Smith, and breakout punk rock band, the Linda Lindas. We renewed our deal with eight-time Grammy Award winner, Chris Stapleton, and we entered into a license renewal with China-based social platform, Kuaishou, for our catalog across multiple Asia PAC countries. We constantly work to enhance the value of our songwriters’ catalogs. Our teams proactively find needle-moving placements to their music, which distinguishes us from passive right holders.

One recent example of this is the placement of George Michael’s Freedom, covered by Warner superstar Dua Lipa, in a Yves Saint Laurent campaign that launched in August. There’s been a lot of debate over the value of major labels and publishers in a world where artisan songwriters have any number of distribution alternatives. While distribution has been democratized, talent never will be. Genuine talent is rare and difficult to find, but discovery is just the beginning. True long-term success requires significant resources, including financial investment, global infrastructure, creative expertise, and the skills to navigate the changing tech landscape. It’s that combination, genuine talent backed by our considerable resources and skills, that builds careers for the long haul.

Over and over again, artists and songwriters not only stay, but grow their relationships with us in this fiercely competitive market. That’s when we know we’re on the right track. 10 years ago, we were an Anglocentric company. Today, we’re a truly global music entertainment company, operating in over 70 countries. The key to our successful global expansion has been in identifying markets on the brink of ignition. We’ve customized for each new territory market and presence-building strategies. A couple of examples from the past decade are, the 2014 acquisition of Gold Typhoon in China, and the critical mass we’ve built in MENA, the world’s fastest-growing market, through our investments in Qanawat, (indiscernible), and Rotana. We see Eastern Europe as a new and important growth area for music.

Consumption in the region, which has a population of some 160 million people, grew 20% in 2021. Seizing on this opportunity, we’ve made moves to grow our presence. Examples include, our recently announced investments in Grupa Step, and BIG Idea in Poland, Mascom Records in Serbia, and the launch of OUT OF ORDER, a new label that will elevate artists in Eastern Europe and other emerging markets. The expansion of our global footprint has been further complemented by entering into partnerships with more than 200 streaming services around the world. In the music entertainment business, new technologies and business innovations they’ve driven, have often been met with fear rather than excitement. But today, we see tech as providing us with incredible opportunities to enhance the world of music.

We’ve consistently been a first mover in investing across the digital landscape. Our early embracive streaming made us the first major to report it as our largest source of recorded music revenue back in 2016. Around that time, we also began our revenue diversification efforts. Since then, we’ve partnered with nearly every major social platform, including Instagram, Facebook, Snap, Twitch, TikTok, and most recently, Pinterest. In many cases, we were the first major to do so. These deals are empowering our artists to scale their communities, encouraging fans to share user-generated content, and delivering significant incremental value. We were also the first major to aggressively pursue opportunities in the Metaverse. While our work in Web3 space has accelerated over the last 12 months, our efforts started back in 2019 when we invested in leading blockchain company, Dapper Labs.

Our partnerships with Roblox, Fortnite, and Wave, have created innovative opportunities for virtual world-building, concerts, and other forums. This has allowed us to work with artists like Twenty One Pilots and Charli XCX, in pioneering new forms of fan engagement. Through our deal with Sandbox, we were the first major to plant a flag and build on virtual real estate. WMG Land, our current working title, is now Live in the Sandbox, and Atlantic’s Sueco, was the first artist to become part of the experience. I’m very proud of the progress we’ve made over the past 10 years. We’ve moved way beyond thinking in terms of singles, albums, and videos. We help artists create all forms of rich, immersive interactions with their music in both the real and virtual worlds.

As I look out on the next 10 years, I believe we’re at the doorstep of a new golden age of music. As the ecosystem becomes more complex and exciting new business models emerge, our role as the connective tissue between artists and fans, will only become more prominent and more important. Finally, our people are the driving force that will always take our company to the next level. Last month, we announced that Julie Greenwald had been elevated to Chair and CEO of the newly created Atlantic Music Group. Julie’s been with the company for 18 years, and it’s industry mavericks like her that are the backbone of our success. We’ve enhanced our focus around important areas like ESG and diversity. Last year, we hired a head of ESG and established an executive oversight committee.

On February 1 of €˜22, we released our first annual ESG report detailing our commitment to sustainability, equity, and social impact. Our second annual report will be published this coming January. In 2020, we hired a Global Head of Diversity, Equity, and Inclusion. We’ve since established global North Star commitments and launched our DE&I Institute. And we created the $100 million Warning Music Group Blavatnik Family Foundation Social Justice Fund, that invests in organizations and advances community initiatives around the globe. To date, the fund has already committed over $24 million in grants. On November 1, we published the Protect Black Art Open Letter in the New York Times and the Atlanta Journal Constitution. The letter urges legislators across the US to end the racially discriminatory practice of treating rap lyrics as criminal confession.

Signatories included companies such as Universal, Sony Music, Spotify, and TikTok, organizations such as the ACLU, Color of Change, the Recording Academy, and the RIAA, and artists such as Alicia Keys, Coldplay, Drake, Megan the Stallion, and Post Malone, among many others. I’m pleased to see us creating new opportunities in our local communities using our resources to express our values and taking a stand on important issues. At the end of September, we announced that Robert Kyncl will become CEO during January ’23, and then CEO on February 1. As an entrepreneurial leader, Robert has an impressive track record of championing change at companies like YouTube and Netflix. He’s a pioneer of the creator economy, whose command of technology will enable us to unlock new opportunities for our company, our artists, and our songwriters.

I have the utmost confidence that he’ll build upon our strong foundation and bring us into a new era of how music lives in the world. With that, I’ll turn it over to Eric.

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Eric Levin: Thank you, Steve, and good morning, everyone. Against a backdrop of currency fluctuations, the weak ad market, inflation, and war, our 2022 results truly highlight the resilience and diversified nature of our business. Despite the many macro challenges, we delivered double-digit growth for Q4 and the full year across a number of key metrics, including, total revenue on a constant currency basis, adjusted OIBDA, and operating cash flow, which, as Steve mentioned, exceeded our full year expectations. Let me provide some detail on our results in Q4. Total revenue grew 16%, reflecting growth across recorded music and music publishing. I want to note that our revenue includes the benefit from settling certain copyright infringement cases, as we discussed on our last earnings call.

The $38 million impact is reflected in downloads and other digital revenue. Adjusted OIBDA increased 32.5%, with a margin of 17.7%, compared to 15.5% in the prior year quarter. These increases were primarily due to strong operating performance, as well as $29 million from the copyright settlement. Adjusted OIBDA and margin growth were impacted by foreign exchange rates, as well as two one-time items. These were the copyright settlement I just mentioned, and the impact of a DSP renewal we’ve been discussing since our earnings call since Q1. Excluding these items, constant currency adjusted OIBDA grew 33%, and margin would have increased 200 basis points. Adjusted EBITDA increased 16.5%, with margins increasing from 17.2% to 18.4%. You can find our adjusted EBITDA reconciliation in our earnings press release.

Recorded music revenue grew 13.1%. Streaming revenue increased 5%, reflecting continued growth in subscription streaming, and a recent deal with Meta, partially offset by the market-related slowdown in ad-supported revenue, and the impact of the DSP renewal. Adjusting for the DSP renewal, which had a $38 million impact in the quarter, streaming revenue grew by 10.4%. This growth was highlighted by subscription streaming growth in the low teens, a sequential improvement from Q3. However, ad-supported streaming revenue, which does not include revenue from emerging streaming platforms, saw increasing pressure and declined by high single digits. Adjusting for the impacts of the DSP renewal and the copyright settlement, recorded music revenue grew by 14.2%.

Artist services and expanded rights revenue increased by 33%, driven by merchandising and concert promotion. Physical revenue also increased, with growth of 6%, primarily driven by higher sales of final products and strong performance in Japan. Licensing revenue grew by 38% due to higher broadcast fees, synchronization, and other activity. Recorded music adjusted OIBDA increased by 20%, with margin improving from 17.2% in the prior quarter to 18.2%, primarily due to strong operating performance, as well as a $15 million impact from the copyright settlement. Excluding the one-time items detailed earlier, adjusted OIBDA grew 26% on a constant currency basis, and margin improvement would have been approximately 170 basis points. Music publishing continues to deliver impressive results, hosting 32% growth.

Digital revenue grew 39%, reflecting solid momentum in streaming, which increased 37%. Digital revenue includes a $7 million benefit in downloads and other digital revenue from the copyright settlement. Excluding this benefit, digital revenue increased 33%. Performance revenue increased by 48%, as revenue from bars, restaurants, concerts, and live events, continued to grow. We saw particularly strong recovery in Brazil, UK, Germany, and the US. Sync and mechanical revenue both increased by over 8%. Music publishing adjusted OIBDA increased 33% to $60 million, with margin increasing modestly. Excluding the impact of the copyright settlement, adjusted OIBDA would have increased 31% on a constant currency basis, and margin would have increased 50 basis points.

Moving to our full year results, total revenue grew 16%, driven by double-digit growth in both recorded music and music publishing. This translated to a healthy adjusted OIBDA growth of 18%, with a margin of 19.4%, up from 19.1% in the prior year. Excluding one-time items, the details of which can be found in our earnings press release, constant currency adjusted OIBDA increased 21.6%, and margin increased 70 basis points to 18.6%. Full year adjusted EBITDA increased 9.7%, with margin decreasing from 20.6% to 20.2%. Recorded music revenue increased by 13.6% or 15.2% when normalized for one-time items. Within recorded music, streaming revenue grew 9.5% or 13.5% on a normalized basis. Adjusted OIBDA increased by 12%, with margin declining by 30 basis points to 21.1%.

Excluding the one-time items, adjusted OIBDA increased 17% on a constant currency basis, with margin increasing 30 basis points to 20.4%. Music publishing revenue increased by 30% or 27% when normalized for one-time items. Adjusted OIBDA increased by 35%, with margin increasing from 23.4% to 24.3%. Excluding the one-time items, adjusted OIBDA increased 32% on a constant currency basis, with margin increasing 100 basis points. In line with our expectations, Q4 CapEx increased to $38 million as compared to $35 million in the prior year quarter, mainly due to investments in IT infrastructure. I want to note that our financial transformation program has encountered a delay as a result of the disruption of COVID-19. In addition, the size and scale of this global system implementation, requires us to invest more time performing the rigorous system testing and data validation to ensure go live readiness.

We expect the program to meaningfully roll out in 2024 and expand globally in the following couple of years. The program is still expected to deliver annualized run rate savings of $35 million to $40 million once fully implemented. However, the delay will result in a reduction in pro forma impact of cost savings that we account for in our adjusted EBITDA reconciliation in fiscal €˜22 and ’23. We saw very strong operating and free cash flow growth and conversion in Q4. Operating cash flow increased 78% to $406 million, from $228 million in the prior year quarter. Free cash flow increases 91% to $368 million, from $193 million in the prior year quarter. For the full year, operating cash flow increased 16% to $742 million, and free cash flow increased 11% to $607 million.

We delivered operating cash flow conversion, calculated as the ratio of operating cash flow to adjusted OIBDA of 65% for the full year. This was well above our expectation of 50% to 60% that we discussed last quarter. The over-delivery was largely driven by our strong operating performance in Q4, higher recruitments, and the timing of A&R investment and deal renewals. I want to emphasize that some of our Q4 over-delivery was the impact of timing. While we believe that our targets are reasonable, we view them as a multiyear period, and there will be lumpiness in working capital that will impact our operating cash flow to adjusted OIBDA conversion rates from quarter to quarter. As of September 30, we have a cash balance of $584 million, total debt of $3.7 billion, and net debt of $3.1 billion.

Our weighted average cost of debt is 3.5%, and our nearest maturity date is in 2028. Fiscal €˜23 is already off to a very solid start, even as the challenging macro environment persists. While there is still softness in the online ad market, we believe it is a temporary dislocation, and that we will be well positioned to capitalize on the inevitable recovery. We are excited about the recent price increases announced by several of our digital partners, as well as the opportunity for more to come. The runway for streaming growth remains strong as global penetration continues to increase, and the next wave of emerging opportunities take shape. Music is no longer reliant on any one format or distribution channel. It is an essential part of every form of entertainment.

The momentum in the music entertainment business is strong, and we continue to position ourselves for long-term success and growth. We’re excited about the next chapter, and we look forward to having Robert on board to lead us into new frontiers. Finally, Steve. Steve, and I, have been doing these calls together for the past eight years. It’s been a true joy to share the mic with him. On behalf of everyone at the company, I want to thank Steve for an amazing decade of growth and success. He’s led this company brilliantly through an era of incredible change, both in our industry and the world at large. Steve, thank you so much. And thank you to everyone for joining us today. We’ll now open the call for questions.

Q&A Session

Follow Warner Music Group Corp. (NASDAQ:WMG)

Operator: Our first question comes from the line of Benjamin Swinburne with Morgan Stanley. Your line is no open.

Benjamin Swinburne: Thank you. Good morning. A couple of questions. Maybe just to start with, Steve, stepping back, you’ve been there and watched the industry go from declining to growing during your tenure as CEO. When you step back and think about your time at Warner Music, what’s been the biggest change for the industry, the company, the one you think will have the biggest impact as we all look forward over the next five to 10 years?

Steve Cooper: Well, thanks for the question, Ben. Happy Thanksgiving. I think the easy answer is streaming, but at least what I believe at Warner, it’s really been for us a shift in our mindset, and that shift has been driven by our evolution from an Anglo-American music company to a global music entertainment platform, from thinking about our business in terms of rigid formats, to really moving to offering fans access to unlimited, ubiquitous music in every way, shape, and form in the real land and the virtual worlds. We moved from a narrow set of artists deals to expanding our definitions of artists and partnerships and offering much broader suites of services. And the mind shift has really been built on a foundation of running Warner as one company and one team with a common set of goals.

And I think that, at least for us, that as the ecosystem becomes more and more complex, that by having that mind shift, and by working as one team, that that connected tissue that we provide between artists and fans, and what we do to move the value of music to its appropriate place, will just become more and more apparent as time goes by. And I’m happy to say that with my colleagues, I played a part in creating that mind shift, and I’m very confident that we will continue to embrace, adapt and adopt, adapt and adopt, as the world of music continues to evolve.

Benjamin Swinburne: Thank you, Steven. All the best in the next chapter for you. Eric, could you just help us think about the emerging streaming opportunity in fiscal €˜23? Obviously, you’re always at work trying to get music valued appropriately, but I think it’s potentially a busy year for you in terms of contract renewals. And in particular, given what’s happening with YouTube and ad-supported streaming, TikTok is one of kind of paramount import for your business because they seem to be taking share from YouTube and others. So, could you just help frame sort of the year ahead on the emerging streaming front of what we should be focused on, on our end?

Eric Levin: Sure. So, thanks, Ben, and nice hearing from you. So, again, don’t want to get into specific deals, but broadly the category. So, you’re right, Ben. So, in fiscal €˜21, we had a series of deals that we did or renewed. And generally, we do deals in two to three-year cycles. So, €˜23, we would expect to be the start of that process. Broadly, that category consists of more and more licenses, with growing consumption. We see that category as a growing category for the long, long term to come. Each deal and each contract will be negotiated individually. Some of the companies within that category have been highly successful and scaled, and others have had more challenges. So, each deal will meet where that partner is, but it’s our objective deal by deal to get the full and appropriate value of music, and we’ll be negotiating for each deal assertively to make sure each deal is valued properly.