Warner Music Group Corp. posted flat revenue in the quarter through December as growing digital music sales help counter the long-term decline of CD sales.
Digital music sales have helped shield Warner Music's revenue from declines in three of the past four quarters.
But the privately-held company said its digital future will be put in jeopardy if the planned acquisition of rival EMI by Universal Music Group and Sony/ATV goes ahead.
Chief Executive Stephen Cooper told analysts Thursday that the purchase of EMI for $4.1 billion would "significantly impair" Warner's ability to compete. The company has argued the deal would impart a dominant market share to Universal in recorded music and Sony/ATV in publishing.
The transaction, if approved, would harm "consumers, industry employees, recording artists, songwriters ... and our emerging digital services," he said.
Cooper said the company will continue to lobby against the deal with regulators. It was announced in November.
Warner Music on Thursday reported revenue of $779 million in the October-December quarter, almost unchanged from $778 million in the last three months of 2010.
Digital revenue grew 17 percent to $219 million.
The company's net loss deepened to $26 million from $18 million, due to higher interest costs after being taken private in a debt-financed deal by billionaire Len Blavatnik's Access Industries in July.
Operating profits were also affected by the $3 million it spent on its own bid for EMI, as well as $7 million in severance charges.
Major sellers in the period included Michael Buble's "Christmas" album, as well as releases from Nickelback, Bruno Mars and The Black Keys.
The company has been run since August by Cooper, a turnaround expert who has helped lead companies as diverse as movie studio Metro-Goldwyn-Mayer, Krispy Kreme Doughnuts and Enron.
Edgar Bronfman Jr., the longtime chief executive who was part of the ownership group that bought Warner Music in 2004, stepped down as CEO in August and quit as chairman of the board last month. He remains a board member.