Warner Music Group is moving to offload its European merchandise business, EMP, less than eight years after acquiring the company for $180 million. The decision, disclosed in a recent SEC filing, signals a strategic shift for WMG as it focuses on its core music assets and continues a broader cost-cutting initiative led by CEO Robert Kyncl.
The filing reveals that WMG signed a non-binding letter of intent to sell EMP, which operates within the company’s Recorded Music segment. EMP has subsequently been classified as “held for sale,” with a targeted closing date in the second quarter of fiscal 2026 – calendar Q1 2026. This timeline represents a delay from previous projections, which anticipated a completion in calendar Q4 2025, as noted in WMG’s 2025 annual report.
The move comes after WMG recognized impairment charges totaling $79 million in its fiscal year 2025 annual report, followed by an additional $9 million write-down in the quarter ending December 31, 2025. These charges, triggered by an unspecified “triggering event,” suggest a reassessment of EMP’s value within the WMG portfolio.
Founded in Germany in 1986, EMP has grown into a significant e-retailer specializing in merchandise for rock and metal fans. Its catalog includes products from iconic artists like Metallica, Nirvana, and Twenty One Pilots, as well as licensed goods from Disney, Marvel, Star Wars, Nintendo, and PlayStation. The company also carries alternative fashion brands like Vans.
The decision to divest EMP aligns with Kyncl’s broader strategic plan to reduce annual costs by $300 million. This plan, announced in July, involves $200 million in savings through layoffs and related costs, and an additional $100 million through reductions in SG&A expenses. The sale of non-core assets like EMP is a key component of achieving these savings.
This isn’t the first instance of WMG streamlining its operations under Kyncl’s leadership. In February 2024, the company sold its owned and operated media properties, including UPROXX and HipHopDX, deeming them outside of its “core responsibilities to our roster.” The sale of EMP further reinforces this focus on music-related businesses.
The classification of EMP as a “non-core” asset is particularly telling. It suggests that WMG views the merchandise business as a distraction from its primary focus on music creation, distribution, and artist services. While EMP has established itself as a prominent player in the music merchandise market, it appears WMG believes the capital and resources allocated to the business could be better utilized elsewhere.
The timing of this decision also reflects a broader trend within the music industry, where companies are increasingly scrutinizing their investments and prioritizing profitability. The shift towards streaming has fundamentally altered the revenue landscape, forcing labels to adapt and find new ways to generate income. For WMG, this means doubling down on its core music assets and shedding businesses that don’t directly contribute to its primary objectives.
While WMG has not disclosed potential buyers or expected sale proceeds for EMP, the divestiture is likely to attract interest from private equity firms and other companies specializing in e-commerce and branded merchandise. The European market for music merchandise remains robust, and EMP’s established brand and customer base could make it an attractive acquisition target.
WMG’s recent financial performance provides a backdrop to these strategic moves. The company reported revenues of $1.84 billion in calendar Q4, a 7.1% increase year-over-year at constant currency. Recorded music revenues climbed 6.6% to $1.48 billion. These positive results demonstrate the strength of WMG’s core music business and provide a solid foundation for its ongoing restructuring efforts.
The sale of EMP represents a significant step in WMG’s efforts to streamline its operations and focus on its core competencies. As the music industry continues to evolve, companies like WMG must remain agile and adaptable to thrive. The divestiture of EMP signals a clear commitment to this principle, as WMG prioritizes its music assets and positions itself for long-term success.
