Warner Music Group F2Q07 (Qtr End 3/31/07) Earnings Call Transcript

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2007-05-08 10:27:12.0

Tags: Warner Music Group Corp.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question is coming from Doug Mitchelson, and please state your company name.

Gerd Hansen - Deutsche Bank

It's Deutsche Bank, however it's [Gerd Hansen] in for Doug Mitchelson. Just a couple of questions. I just wanted to know if there’s been any sort of update on the satellite negotiations. Number two, obviously you guys have a more robust pipeline for the next six months or so. Can you guys surpass EBITDA margin on a year-over-year basis not including restructuring charges? Thanks.

Edgar Bronfman

Hi [Gerald], it's Edgar. I'll take first part. There is no new update on the satellite negotiations. I just would point out of course that the Copyright Royalty Board, which adjudicated the case between the Recorded Music industry and the Webcasters, that same board is adjudicating the dispute between the Recorded Music industry, the potential dispute between the Recorded industry and satellite. So I think it is useful to note that there is no progress or anything else that we can comment on with regard to satellite.

Michael Fleisher

On the release schedule, we do have a more robust release schedule in the back half of the year and are looking forward to putting out that content and selling it to consumers. We don't give guidance. What I can say, as I said in my talk track, we do expect our year-over-year comparisons to get progressively better over the next couple of quarters.

Gerd Hansen - Deutsche Bank

Okay. Thank you.

Operator

Thank you. Our next question comes from Anthony Noto, and please state your company name.

Anthony Noto - Goldman Sachs

Edgar and Michael, three questions. The first one is, could you give us a sense of organic growth on the Recorded Music side? Second question, what percentage of the digital revenue was catalogued and how did that compare to the December quarter? And then the last question, the initiatives within video - my guess is you didn't start this initiative planning yesterday when you made the announcement, but you've probably looked at some sense of the type of product, the new management team will focus on so I was wondering when the first potential time is that we could see revenue contribution from these initiatives? Is it '08? Is it sometime in '07? How far out would that be? Thanks.

Edgar Bronfman

Let me just quickly answer some of your questions and maybe, Michael you can do organic growth on Recorded Music. Catalog represented about 60% of our digital revenue this quarter. And in terms of video, you're right to point out that we've actually been planning this transformation really since, I would say, in earnest since February of ''06 as a management team. So, the initiatives that we're undertaking have been variously implemented and accelerated through that period.

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