Warner Music Group (WMG) CEO Robert Kyncl has announced the company will focus on expanding its in-house distribution capabilities rather than acquiring independent distributors. This strategic decision comes after WMG declined to acquire Believe for approximately $1.8 billion last year.

Kyncl explained at a Morgan Stanley mini-conference that after evaluating numerous distribution companies over the past 18 months, WMG has decided to build rather than buy. The company's technology team has already been developing new features for over a year, which Kyncl believes will lead to more efficient outcomes.

This development follows several significant organizational changes at WMG, including:

• Strategic new hires, notably Ariel Bardin, who will improve technology and digital supply chain
• Closer collaboration between Kyncl and Warner Music Latin America president Alejandro Duque
• Partnership with new Atlantic Music Group CEO Elliot Grainge
• Appointment of Michael Ryan-Southern as EVP of corporate development

Despite the focus on internal development, WMG remains open to strategic acquisitions that could boost growth and earnings. This balanced approach comes as Universal Music Group pursues its acquisition of Downtown Music Holdings, which has raised concerns from European music trade association Impala about market consolidation.

The decision to pass on Believe appears particularly strategic, as Believe is currently involved in a $500 million copyright infringement lawsuit with Universal Music Group, with pre-trial proceedings already underway.

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