Welcome to Warner Music Group's First Quarter Earnings Call for the period ended December 31st 2021. At the request of Warner Music Group, today's call is being recorded for replay purposes. And if you object, you may disconnect anytime. Now, I would like to turn today's call over to your host, Mr. Kareem Chin, Head of Investor Relations. You may begin.

Good morning, everyone. Welcome to Warner Music Group’s fiscal first quarter earnings conference call. Please note that our earnings press release, earnings snapshot, and Form 10-Q we filed this morning will be available on our website. On today's call, we have our CEO, Steve Cooper, and Lou Dickler, our Acting CFO, 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 involves 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.

Thanks, Kareem. Good morning, everyone and thanks for joining us. When we spoke last in mid-November, I indicated to you that we would have a productive end to 2021. The last few months have met those expectations. And as a result, we're off to a great start in fiscal'22. In Q1, our total revenue was $1.6 billion, an all-time high during our 18 years as a stand-alone company. We saw growth over the prior year quarter by 21% and 22% on and as-reported in constant-currency basis, respectively. Adjusted EBITDA was $389 million, an increase of 31% with margin improvement driven by strong revenue growth in both our recorded music and publishing businesses. In Recorded Music, our revenue was nearly $1.4 billion, another 18-year record, an increase of 21% from the prior year quarter. Streaming revenue grew 22%, artist services and physical continued to show impressive recovery with revenue growth of 33% and 14% respectively. Licensing revenue grew 13%. In Publishing, we delivered revenue of $229 million and a growth of 32% over the prior year quarter driven by double-digit increases across all revenue lines while the quarterly revenue and year-over-year growth also represent record highs. I've regularly highlighted our increasing focus on revenue from emerging streaming platforms in areas like social, fitness, and gaming. Until now, we've been reporting this revenue only for recorded music. Going forward, we will report this revenue for recorded music and for publishing on a combined basis. On an annualized basis, this revenue increased from $310 million in Q4 to $325 million in Q1 driven by growth in recorded music and publishing. Our approach to music is all about expanding our universe of opportunities. We are constantly seeking innovative openings to bring more music to more people in more ways and in more places. The agility and imagination with which we maximize the value of our music sets us apart from our competitors. Right now, a lot of money is being thrown at music as a so-called asset class. In this environment, artists, songwriters and tech entrepreneurs have many different options for building their businesses and brands. We're being recognized for our unique position in this growing music ecosystem. Our creative expertise, our global infrastructure, our willingness to experiment, give us our strength, and give us our edge. While taking risk is part of our business, we pride ourselves on taking educated risks across a wide investment portfolio with the financially disciplined, ROI-focused perspective. Toward the end of the calendar year, we completed several strategic acquisitions that reflect our approach. We acquired 300 Entertainment, one of the most influential labels to emerge in the 21st century. It has developed a distinctive identity and a dynamic community of arts. We are honored to welcome to the Warner Music Group Megan Thee Stallion, Young Thug, , Mary J. Blige and many more. 300 shares the independent spirit that's always been part of Warner story, our DNA, and our vision. With this deal Kevin Lyles, who co-founded 300, became the Chairman and CEO of both 300 and our Elektra Music Group. We also acquired the required for rights to David Bowie's entire publishing ADA log in compassing hundreds of songs across this revolutionary six decade period. Three months earlier, we closed a first -- a new licensing deal, David Bowie's recorded music very well. We're now home to this incredible body of work as both of recording artist and songwriter. And in a deal that makes us one of the biggest music distributors in Africa, we acquired a majority stake in Africori, the continent's leading artist development, rights management, and digital distribution company. Last year, Africori reported strong revenue growth across all major guest piece through the generation of hundreds of millions of audio streams and billions of YouTube views. These deals are already producing dividends. Gunna's new album on 300 Entertainment DS4Ever landed at number one on the Billboard 200, giving him his second chart topper. And just a month after our Bowie acquisition, Peloton introduced the David Bowie collection, which makes every release in his catalog available for Peloton users as the soundtrack to their workouts. 300, Bowie and Africori bolster are already incredible roster of artists and songwriters. Our star power was on full display when this year's Grammy nominations were announced. Electric's Brandi Carlile, and Atlantic Silk Sonic, both received multiple nominations. Also landing in the top categories were Atlantic's Ed Sheeran, for song of the year and Warner Records Sweetie for best new artist. In Publishing, we received numerous nominations, including song of the year and best wrap and country songs among many others. We bring original artists and inspiring songwriters of every genre, geography, and generation to the world stage. We're a place where quality and diversity matter. That's the mindset behind our constant, ever-growing flow of great new music. In Q1, we saw the chart topping album, chart topping return album, some stars like Kodak Black and Roddy Ricch, as well as strong carryover performances from Ed Sheeran and Cold Blood. Latin American artists Tiago PZK, and Petro have set social media on fire with hundreds of thousands of TikTok videos having been created from their hit songs. With over 800 million on demand audio and video streams combined, Dua Lipa’s Levitating was the most stream song of 2021 in the U.S. and was the number 1 song of year on billboards year-end singles chart. Atlantic's rising star, Gail, has racked up over 3 million TikTok video creations and half a billion streams from her debut single. South Africa’s CKay continue to hit new peaks with multiple versions of his global smash, Love Nwantiti, which has surpassed 600 million screens, more than triple what I've reported on our last call. Meanwhile, Warner Chappell continued its impressive run, signing key deals with Cardi B and R&B icon Jhené Aiko, and partnering on a new deal with Tim & Danny Music to sign Sam Smith. Warner Chappell Warner Chappell national landed BMI publisher of the year for the fourth consecutive year, and took home CSX publisher of the year accolade. It's second win in three years. Warner Chappell was also number one on billboards year-end Latin publisher chart for the fourth year in a row, and ranked second on billboards year-end at 100 publishers list. Music is no longer linear, transactional or limited by format. It's complex, multifaceted, and interactive. The intersection of virtual social spaces, gaming and music presents enormous opportunities to engage with massive and diverse audiences. We're leaning in and taking control of our future through a series of strategic partnerships, collaborations, and investments. We kicked off the year with collaborations with some of the biggest names in this space. Roblox featured David Guetta in the first-ever DJ set performed by an avatar. On Fortnite, Tones and I, brought hits from her debut chart topping album to the platform Soundwave Series. Meanwhile, Silk Sonic joined the platform's Icon Series, allowing players to express themselves as the Grammy nominated duo with '70s inspired outfits and accessories and to discover music through the new icon radio station. From collectibles to music royalties, Web3 represents an exciting future for the music industry that will help our artists to reach millions upon millions of new fans in interesting and innovative ways. Since our investment in Dapper Labs in 2019, been consistently investing, building, and partnering in Web3 opportunities. We're continuing in this direction at an even faster clip in 2022. In January alone, we launched three important partnerships in the Web3 space. We partnered with one of, the company backed by music legend Quincy Jones. We'll be collaborating to create artist NFTs using their eco -friendly green Web3 platform. We announced the first major music partnership with the Digital's Collectible Platform, Block party. Our initial collaboration is with the Venus superstars . We also became the first major music company to partner with the Sandbox. We'll be working with them to build out WMG land, a space where fans will be able to connect with their favorite artist through virtual experiences in NFT's. We've been talking to you for several quarters now, above our differentiated dynamic range of artist and label services, covering everything from streaming, to merge, to branded content in IRR. The strategy was crystallized late last year when we unveiled WMX, giving this important segment of our business a fresh look and unified approach. WMX brings together a culturally curious audience of music lovers that currently totals more than a quarter of a billion monthly unique visitors. These connections are driven by our wholly-owned media brands, UPROXX, Songkick, and HipHopDX. WMX is right by Comscore among the top five video media companies, for 18 to 34 year-old audiences in the United States. It generates almost 50 billion monthly views on our premium YouTube channels, as well as other streaming and social media platforms. WMX is helping to differentiate us in our mission to attract and amplify original artists by building broader and deeper fan bases. As you all know, there is a growing wave of interest in what companies are doing about important environmental, social, and governance issues. To us, continuing to become a more equitable and sustainable company, there's moral, commercial, and creative imperative. This is something we've been passionate about for many years, and we've taken important steps since we hired Samantha Sims as our head of ESG back in August. Last week, we released our inaugural ESG report, which can be found on our website. The report outlines how we believe we can more effectively address social and environmental challenges our global society is facing. Along with details about our north star DEI commitments, the report also highlights some of our initial accomplishments related to fighting climate change, producing more sustainable products, and other important initiatives. We recently announced the third round of grant recipients from the Warner Music Group, or Blavatnik Family Foundation Social Justice Fund. Since the fund was announced in June 2020, it has pledged $22.5 million to two dozen organizations. It's contributions continue to reflect at the fund strategic pillars, criminal justice reform, education, and arts and culture. While also addressing the intersection of race in gender and equity. We view all these initiatives as long-term commitments to action and accountability and we're excited about the path we're on. Before I pass the mic to Lou, I have some good news about the return of our CFO, Eric Levin. As you are all aware, Eric has been out of medical leave since November and we're happy and excited as he'll be rejoining us as CFO next week. Many, many thanks to Lou for the amazing job that he's been doing as acting CFO, in addition to his important responsibilities as our SVP and Corporate Controller. We couldn't be more enthusiastic about the amazing new music we have in store this year from our talented artists and songwriters. Even so Cardi B, Jack Harlow, Bella Porch, and many, many others are going to be back with really great new music. We're more convinced than ever that Web3 will be one of the next steps in the evolution of the music system. As the global entertainment economy continues to change at light speed. Major music companies are the only ones with the skill sets, the global footprint, and the financial resources to fully support artists and songwriters. At the Warner Music Group, we're unrelenting champions of the incredible work of our artists and songwriters, and fierce advocates for their rights as creators. So, again, thank you to everyone in our company who makes this possible, and thank you to our shareholders for your continued support. With that, I'll hand it over to Lou.

Thank you, Steve. And good morning, everyone. Our Q1 results are highlighted by record high revenue across the board since we became a stand-alone company in 2004. These results were driven by growth in traditional and emerging streaming platforms, as well as continued recovery in physical and artist services, all of which underpin the continued momentum across our business. Before I get into our results, I'd like to highlight an item that affected compatibility this quarter. Q1 includes the benefit of an additional week of operating performance versus the prior year quarter. Due to the timing of our 52/53 week financial calendar, the additional week fell in December 2021. And as a result, this fiscal quarter is a 14-week quarter versus the standard 13-week quarter in the prior year. This additional week primarily benefited our recorded music streaming revenue and will only impact Q1 as all of the subsequent quarters in fiscal '22 are 13 weeks, consistent with the prior-year. Moving now to our results, total revenue increased by over 22% on a constant currency basis and 21% on an as-reported basis, reflecting strong performance in both recorded music and music publishing. Starting this quarter, we will break out streaming revenue for each of recorded music and music publishing and we will report revenue from emerging streaming platforms through Recorded Music and Music Publishing on a combined basis. Total streaming revenue increased 24% driven by growth across both segments. This strong operating performance translated to impressive adjusted OIBDA growth of 26% with margins improving from 21.1% to 22%. Our margin growth is particularly notable given the continued strong recovery in lower-margin revenue lines, such as artist services. Adjusted EBITDA grew 31% with margins improving from 22.2% to 24.1%. Also driven by strong operating performance and the pro forma impact of future cost savings and the transactions we closed in the quarter. You can find the calculations and reconciliations related to adjusted OIBDA and adjusted EBITDA in our press release. Recorded Music revenue grew 21%, underpinned by growth across all revenue lines. Streaming revenue increased by 22%, driven by growth in subscription, ad supported, and emerging streaming platforms. As I noted earlier, these results also benefited from the additional week in December and were partially offset by the impact of a new deal with one of our DSP partners, which began at the start of fiscal 2022. Adjusting for the net impact of the additional week, which was $60 million, and the new DSP deal, which was $28 million, our recorded music streaming revenue would have grown by approximately 18% while this new DSP deal is now consistent with our other major DSP deals. We are seeing a variance relative to the prior deal, which will result in similar impact on year-over-year comparisons that will extend throughout the remainder of fiscal '22. We fully expect to see a normalization of our recording music streaming growth rate commencing in Q1 2023. Artist services and expanded rights revenue, which includes merchandising, grew by over 33%, reflecting an increase in merchandising and concert promotion revenue as touring has resumed. Physical revenue grew by 14%, primarily driven by strong new releases and a worldwide demand for vinyl. Licensing revenue increased by 13% mainly due to higher synchronization and other licensing revenue as businesses continued to recover from COVID disruption. Adjusted OIBDA was $336 million, a 22% increase over the prior year quarter with margins improving to 24.2%. This growth was driven by strong operating performance across all revenue lines. Music Publishing had a record quarter as well posting revenue of $229 million, a growth rate of 32% over the prior year quarter, reflecting double-digit growth across all revenue lines. Digital led the way with revenue growth of over 34% driven by streaming growth of 36% reflecting strength across traditional and emerging platforms. Sync revenue increased over 31% due to higher television, motion picture, and commercial income in the quarter and COVID disruption in the prior year quarter. Growth performance in mechanical revenue increased by 27% as businesses continue to recover from COVID disruption with mechanical benefiting from strong physical sales. Music publishing adjusted OIBDA increased 38% to $55 million, while margin increased 1.1% points to 24%. This increase in adjusted OIBDA margin was primarily due to strong operating performance. As mentioned on our last call, we still expect to see elevated full-year CapEx in the range of $130 million to a $135 million. In Q1, CapEx increased to $34 million as compared to $18 million in the prior-year quarter, mainly due to the investments in IT infrastructure and the expansion of our E and P facilities to address the strong demand in our e-commerce business. Our financial transformation program remains on track and is expected to deliver annualized run rate savings of about $35 million to $40 million once fully implemented starting in fiscal year 2023. Operating cash flow decreased 24% to $129 million from $169 million. The decline was largely driven by continued A&R investment in the timing of working capital. Free cash flow decreased 37% to $95 million from $151 million in the prior year quarter. As of December 31, we had a cash balance of $450 million, total debt of $3.85 billion and net debt of $3.4 billion. Since our IPO, we have continued to actively manage our capital structure, further reducing our weighted average cost of debt from 4% to 3.2% and extending maturities with our nearest maturity date now in 2028. And earlier this morning, we announced that we will be issuing our next quarterly dividend of $0.15 per share. As we look ahead, our business has more growth drivers than ever before, whether in recorded music where we continue to see growth in traditional and emerging streaming, acceleration in safe and the return of artist services in vital and at Warner Chappell now the performance is stabilizing and streaming and Sync are surging. This diversification gives us more confidence than ever that we're well-positioned for continued strong growth. We are truly excited about the steady flow of great new music we have in store and look forward to an amazing remainder of the year. Thank you for joining our call today, and we will now open the call for questions.

Thank you. . Please stand by while we compile the Q&A roster. Our first question comes from Michael Morris with Guggenheim. Your line is open.

Hi. Thank you. Good morning. I wanted to ask you a couple of questions about your relationships with your largest streaming distribution partners. First, Lou, you referenced that $28 million headwind from the new deal with streaming partner. Can you expand a bit on why this renewal had a negative impact, what it means for your growth for the balance of the year and beyond and what it could mean for renewals with other partners? And then Steve, I'm hoping you can address this. These are public controversy that Spotify is having, the Joe Rogan podcast right now. What the implications can be for Warner Music? I know it's pretty vast topic. There's a lot to cover, but maybe you could share your thoughts on how Spotify carrying something so controversial can impact your relationship with them and the broader concern that's now coming up, that has to do with how much Spotify's compensating music artist with the compensation to the podcast contributors being so high. We'd appreciate your thoughts on that. Thanks, guys.

So Michael, on the first question, with regard to the DSP renewal, this is a short-term financial anomaly. It really understates the strength of streaming that we're seeing at Warner. All the deals we have with our global DSP snow fall within a very tight end, and the oddity of the comparison that we're seeing, and that's created one exist beyond fiscal 2022. We're incredibly confident that traditional -- both traditional and emerging platforms will continue to experience strong growth. And as a result, our 2022 and beyond have changed.

Great. So let me see if I can deal with the Spotify issue or issues that you raised Michael. First of all, just to be clear, Neil Young, Jimmie Nicol, Crosby, Stills & Nash are legendary artists. And as such, they continue to have an amazing impact on culture after more than 50 years of creating wonderful, wonderful music. Our first inclination is to always support our artists and it is good to see that Spotify was responding to this issue in an attempt to resolve it, but they should be the ones that speak about their own positions and there, call it signals. We do trust to be crystal clear. We do business with hundreds of streaming operations around the world not only traditional streamers, but these new emerging business platforms. And we and our artists broadly speaking feel very good about those revenue streams that are generated many on a consumption basis. And we, the Warner Music Group, as I mentioned in my remarks, continue to fight day and night for our artists and songwriters to ensure that they are compensated for their work and is equitable a fashion as possible.

Thanks. Steve, if I could just real briefly, it sounds like you're saying that while you're still very much trying to represent artists and ensure compensation broadly, you're not necessarily highlighting a disparity between different DSPs as compensating better or worse, or fairly or unfairly compared to another? Is that what you're saying there?

No. As Lou mentioned, virtually all of our deals fall within a very tight fan of economics. And when you look at Spotify, they are in the process of building, as Daniel Ek announced several years ago, a podcast business. The economics of that business are different than the economic relationship that we have with Spotify on the music side.

Great. Thank you. Appreciate it.

Sure.

Thank you. Our next question comes from Ben Swinburne with Morgan Stanley. Your line is open.

Hey, good morning. Thanks for the disclosure on the emerging streaming revenues, and looking at that on a total company basis, I'm wondering if you think that revenue base can grow again this fiscal year. I know the timing of those deals are lumpy and then you probably can't be super specific on when you have major renewals, but just if you expect that there is an opportunity to grow that in this fiscal year ahead still. And then for Steve, I think you mentioned Web3 twice in your prepared remarks. I certainly I'm not going to pretend to be a Web3 expert, but we're certainly getting questions from investors about how this could be a risk to any of the existing players in audio label, and DSP s and -- the idea being Web3 and blockchain allows artists and fans to be more directly connected and essentially eliminate or reduce the impact or the profits available to intermediaries, if you will excuse the crude reference. Anyway, I'd love to hear your thoughts. I'm sure you have a view on this as to the role of a label in Web3 music distribution, which is starting to become something that people are focusing more on. Thank you.

Lou, why don't you take the first part and then I'll take the second part.

So since our IPO, we have seen significant growth across emerging streaming platforms in social and fitness. As you mentioned because of the nature of those deals, a lot of them are buyout deals, not consumption-based, the revenue patterns can be at times a bit step as opposed to linear. Obviously as those services mature and they go to consumption model that will convert to a more linear pattern. We are expecting stable growth to continue within emerging streaming platform through the balance of the year. And as we -- Steve mentioned and you alluded to, we do see enormous long-term potential is Web3 scales. And we see opportunities in collectibles entities, another Web3 opportunities.

Great. Before I address Web3, let me just say that we've been very consistent with respect to traditional streaming, both in mature markets and in emerging markets. We still see tremendous potential for growth. When you look at the subscriptions relative to the smart device population, when you look at the nascent trend of raising prices that are sticking all of these put us on markers that say these areas will continue to enjoy very, very nice growth for the foreseeable future. We see the slim opportunities albeit as new points out. In many of these emerging models, they have -- at least at the moment, they lean more towards buyouts in consumption. But we continue to see new models coming to market every day. We continue to see those models that have been in the market for a year or two continue to grow. And so we are confident that on what we would now describe as the more traditional side to the business that long-term sustained growth is in our view quite profitable. With respect to Web3, which is a broad way of talking about blockchain, crypto, NFT is a form of crypto and so on, we see not only the beginning of interactive models coming to the surface and beginning to engage fandom around the world, but we think there are going to be more opportunities than we can even imagine as I'm sitting here in my kitchen today. I will say this, I think that the emergence of Web3 is going to further amplify the importance of music labels and publishers. This is an area between models that will emerge, the technology of blockchain, the perils of navigating crypto, the skill sets required to deal with distributed autonomous organizations will require organizations like us that have the financial resources, the intellectual capital, by that I mean the specific skill sets, and the global footprint to be able to help our artists and songwriters not only navigate through this brave new world or brave new universe, but navigate successfully in order to optimize their presence inside the world of Web3 and to optimize their revenue options and their revenue alternatives inside of Web3. So I think labels and publishers will be more important than they are today as the world becomes more and more complex. I don't believe that when I look at individual artist managers -- their agents, that they will be able to be as successful as they can be, unless they navigate these move but very interesting waters with Warner Music and others like us.

Thank you, guys.

Thank you.

Thank you. Our next question comes from Ben Maral with RBC Capital Markets. Your line is open.

Hi. Good morning. Thanks for taking my questions. One on capital allocation and one on margins if I could. First, you've clearly been very active in investing to sustain or if not accelerate our growth through strategic acquisitions. Historically, you've been very consistent with your capital allocation philosophy, financial discipline and ROI -focused, but I'm just trying to better understand if the new deals are indicative of a greater focus on M&A and maybe willingness to deploy capital as we move ahead particularly as we might be at the cusp of a pretty massive step function increase in free cash flow over the next few years. And second, EBITDA margins continue to be a bright spot, up almost 200 basis points year-over-year to over 24% despite the meaningful recovery and lower-margin revenue streams. Can you just help us think about the puts and takes as you track towards a mid-20% range? It seems like you might get there well ahead of expectations, but would, of course, appreciate your perspectives, and I'm not sure if recent M&A is accretive or dilutive to margins? Thanks.

Lou, why don't I take the capital allocation and then you can take the margins. Thanks for your questions by the way. With respect to capital allocation, our philosophy remains the same albeit it gets refined at the edges from time to time. We still look first to reinvest in the business and that reinvestment in the business falls into several pockets. One is to invest in identifying new artists, new songwriters, their songs and their music, and we will continue to invest assertively in our core business to ensure a constant and ever-growing flow of new artists and new music. We are also investing heavily in our internal infrastructures because we are committed to be, and we are well on our way by being an immersive, tech enabled 21st Century digital company. And in order to achieve that goal, we have to provide our organization with the appropriate tools whether it's the self-serving, well organized data oceans, whether it'd be robotics, whether it be the digitization of processes, we have to have those tools to reach our goals and to enhance and support the decision-making of our people that already utilize good judgment, financial discipline, and are accountable for these choices. So our internal capital allocation remain the same. Externally, we will continue to look for opportunities where we believe that between the opportunity, what we have to pay, the desire that the immediately accretive, and our long-term ability to grow those acquisitions. We will continue also in that area to be quite assertive with respect to investing in these technologies, some of which we discussed in our prepared remarks. We are committed to be on the leading edge of change within our segment of the music ecosystem. And if you look at our investment strategy, we intend to be first at point a, first at point B, first at point C because we want to create our future. We don't want to follow somebody else into it, and that philosophy is also going to continue to prevail. Lou, why don't you cover the margin issue.

From a margin perspective, obviously we did see some margin expansion as we move through COVID. And as I mentioned in the prepared remarks, is that lower-margin revenue returned. We did see some margin compression in the period, although we're still able to deliver strong margin for the quarter, an increase in margin year-over-year. Long term, we expect the revenue mix and the continued growth in streaming, including emerging streaming platforms to contribute nicely to margin expansion. We also have the cost-savings initiatives we've talked about around fit and otherwise, which will drive margin improvement. We obviously did too material deals at the end of December with 300 Entertainment and David Bowie Publishing Catalog. We think there's a lot of growth potential within those assets and also some operating efficiencies because this closed laden in the quarter, we're not seeing the impact of those within the quarter in the December. But obviously, when we get to March, we'll start to see that flow through. And because those are accretive deals, they will help margin expansion nicely.

That's great. Thank you, both.

Thank you.

Thank you. Our next question comes from Kannan Venkateshwar with Barclays. Your line is open.

Thank you. Lou, on the new revenue streams; thanks for the clarity on the publishing side of the business. But if you could just break them down a bit to help us understand if it grew sequentially on the same basis that it was measured last quarter as well? That would be helpful to understand how the underlying trends are.

Yeah, the --

Sorry. Go ahead.

The expansion -- the growth in emerging streaming sequentially included both growth in Recorded Music and Music Publishing.

Got it. That's helpful. And then in terms of the impact, the $28 million impact on the DSP side, it sounded like it's because of restructuring these deals on account of podcasts on the role they're playing. I mean, correct me if I'm wrong, but does that also mean the contribution margin impact going forward may be different compared to the overall contribution margin of the business as a whole. So if you can just help us understand the EBITDA impact of that revenue stream that will be useful as well. And I have one follow-up with Steve.

On the DSP item, the 28 that you've quoted it was unrelated to the impact of podcasting. It was tied to the deal that we had with that specific DSP. We obviously can't discuss specific terms of deals, but we'll reiterate that it was a unique situation. And as Steve had said the economics are now operating within a very narrow band. And just as a reminder, we will lapse this when we get to Q1 in 2023 on a comparable basis. So we'll see the growth rate return to a more normalized level reflecting the underlying resumption of business.

Got it. And I guess more broadly when you think about these new revenue streams. You mentioned these are buyout deals right now and they might move to consumption-based models over time and that drives growth of course. But as of now, when some of these platforms, like Peloton being an example or Facebook being an example, when there's some kind of a growth impact on these assets, does that have any correlation to the kind of revenues we see from these assets or because they are buyouts, I mean, they're largely isolated from these impacts? Thanks.

Yes. The buyout deals that we do, the economics of this deal should approximate usage on the services. To the extent we shift to a consumption-based model, the revenue recognition might be more linear but we should still see an improvement in economics regardless of the method with which we're paid and how they report to us.

Got it. Thank you.

Thank you. Our next question comes from Vijay Jayant, Evercore ISI. Your line is open.

Hi, it's for Vijay. I just had two questions. Can you share any color about what you're seeing in terms of paid music subscription growth across the industry based on internal data you see and maybe how its growth currently pacing versus pre - COVID levels? And my second question was, over the past few quarters, there's been a lot of music assets between catalogs and NB labels that have come to the market, how do you evaluate potential assets, you may want to buy and maybe specifically kind of what made the two assets you purchased compelling versus some of the other assets that came to the market over that time frame.

Lou, why don't I take the second and then you can take the first? We look at deals all the time, David (ph). We have a steady, steady flow. When we evaluate deals, we look at what the asking price is. And we look at what we know we can do with that organization of those assets once we get our hands on them. We are not financial buyers. We buy because we are operators and we know how to take these organizations or assets and activate them in ways that are different than the ways they are currently being activated. So when we look at any particular asset, we are able to determine for lack of a better word, how much headroom we have by way of enhancing the performance of those assets. Where we see assets that don't have headroom and have these wild asking prices, we take a pass when we see assets going concern or catalog and we evaluate how they have been managed versus how they could be managed. And we conclude that there is substantial headroom. And we can align what we pay with the appropriate return on investment we buy, but we pass on for more deals obviously, than we choose to close on. Because we're not inclined to get into options and prove that we have the biggest checkbook in town. We are inclined solely to buy at the right price for the right reasons and take and supercharge the assets that we close on. That's how we have operated for the last decade. That's how we continue to operate as we go forward. We invest, we don't speculate.

And then just on streaming subscriber growth question, we like the fundamentals of streaming, we think they're very strong. We're confident in the long-term growth of streaming platforms and subscription. When you look at penetration across both emerging and developed markets, there's tremendous opportunity for further penetration that will drive growth. So we think that there's a lot of room here and we're coming about the long-term growth of the business. You know, the other thing that obviously has been talked about, and Spotify has released some information around their ARPU. We obviously have internal metrics around ARPU. We've seen some increases in ARPU and obviously to the extent that there's pricing increases that would further benefit us.

Thank you. Our next question comes from Bazinet with Citi. Your line is open.

Thanks. I think it's about two years ago when you guys spoke about your view of monetization on the ad-supported streaming services. You felt like maybe you weren't getting paid a fair level. And I just wondered, in the intervening two years, do you feel like these ad-supported services have sort of harmonized or where you feel like you're getting paid appropriate level -- appropriate compensation for an ad-supported stream? Or is there still potential to rectify that? Thanks.

Well, we're doing several things. Number one, where we believe rates are inadequate, we continue to negotiate for what we believe to be appropriate splits. But more importantly, with WMX, we have unified our approach to the ad markets. We have been able to consolidate across all of our businesses as a result of that unification, an approach that brings our entire portfolio of artists and music to potential advertisers. And we have been able to -- on a global basis and in organizationally, we're able to match better match the needs of the advertisers with the treasure chest that we have in our portfolio of music. So I have every expectation that the goals that we are setting internally for the growth of our ad revenue and the growth of our ad presence will be that by taking this laser-like approach to the market. So I think on both sides, a through negotiating specific deals, but more importantly through the reorganization of WEA into WMX. I'm confident we'll see a very nice return on that reorganization in that laser like focus on the ad market.

And can I just ask one follow-up? When you see the reorganization of WMX, it's essentially just putting more of your talent under one umbrella and selling it holistically. Is that the nature of your reorganization?

It is essentially creating a centralized service that deals as the interface between ad buyer's needs and how we can satisfy those needs. This is now a worldwide service that is coordinated and focused through a highly motivated, highly skilled, centralized organization.

Thank you.

Thank you. Our last question from Matthew Thornton with Truist Securities. Your line is open.

Hey, good morning, Steve. Good morning, Lou. Maybe two if I could, I guess just coming back to the renewed deal with the digital partner, the $28 million without getting into specifics, is there any benefit that you're getting from the renewed deal? Maybe there's promotion or whatever it might be or is this really just -- this particular DSP was a little bit outside of the band and they're being brought inside the band. I'm just curious if there's any benefit to Warner. Yeah, maybe on the other side from this deal. And then just secondly, can you talk a little bit about linearity for the year? Obviously, the first quarter is off to a good start. But when you think about the content slate for the year or investments you're making, anything you'd call out as we think about linearity for the year. And Lou, hand-in-hand with that, I don't know if you have any thoughts or estimates on what you expect currency headwind to be for the year versus maybe organic contribution to revenue growth for the year. Thanks, guys.

So,

Yeah, go ahead, Lou. Go ahead.

I was just going to answer the first question quickly on the deal. It was outside of the band and now it's inside the band. So that's the answer to that one, and we obviously don't talk about specifics. Steve, over to you.

When we look at the rest of the year, we think we've established nice momentum. We believe that, as mentioned in the remarks, we've got a lot of great music coming. And while I can't draw an arc, a line, or a curve for use to what that's going to translate to, I am feeling comfortable that we will deliver what we've historically committed to deliver this year.

Thank you.

Thank you.

Thank you. And I would now like to turn the call back over to Steve Cooper for closing remarks.

Thanks again today, everyone, for your time. We appreciate you joining us on these calls and it's always -- we appreciate your ongoing support. We will talk in a few months, and hopefully, my confidence in our momentum will be born out. Anyway, I hope everyone enjoys the balance of the Lunar New Year. Have a wonderful Valentine’s Day. Have a wonderful rest of the winter and stay safe. Thanks, everybody. Bye-bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.