Warner Music Group (WMG), the world's third-largest music company, has posted disappointing results for the December quarter. The record company of Led Zeppelin and other music legends announced a net loss of $16 million, or 11 cents a share, in the three months ended Dec. 31, compared with a net income of $18 million, or 12 cents, a year earlier.

"2007 was a challenging year for the recorded music industry. Operationally, the WMG team had some notable achievements this year," said Edgar Bronfman, Jr., Warner Music Group's Chairman and CEO. "We recognize that there remains much to be accomplished and are working towards translating these gains into enhanced value for shareholders," Bronfman said.

Most analysts were expecting a profit of more than $10 million but less than that of last year's quarter. Warner Music Group announced that the total revenue of $989 million increased 7 percent from $928 million in the prior-year quarter.

The results included an $18 million impairment charge related to promoter Bulldog Entertainment, which Warner Music purchased in May 2007. Digital sales grew 41 percent, to $141 million, making Apple Inc.’s iTunes Music Store the third-largest U.S. music retailer. This accounted for 14 percent of total revenue, compared with 11 percent a year ago. Music publishing revenue rose 8.3 percent, to $144 million from $133 million.

The Warner Music Group (WMG) was founded in 2003 when Time Warner sold the company to a group of investors led by Edgar Bronfman, Jr., its current chairman and CEO, for $2.6 billion. As of 2006, the WMG and EMI are in talks about a potential merger.

Warner made headlines in December 2007 when it announced they would sell digital music without Digital Rights Management through AmazonMP3, making them the third major label to do so. The music company employs around 4,000 people and ranks third among the United States' "big four" labels, the other three being Sony BMG, EMI, and Universal.