Welcome to the Warner Music Group’s Fourth Quarter and Fiscal Year 2013 Earnings Call for the period ending September 30, 2013. At the request of Warner Music Group, today’s call is being recorded for replay purposes and if you object, you may disconnect at any time. As a reminder, there will be a question-and-answer session following today’s presentation. (Operator Instructions) Now, I would like to turn today’s call over to your host, Mr. James Steven, Senior Vice President, Communications and Marketing. You may begin.

Good morning, everyone. Welcome to Warner Music Group’s fourth quarter and fiscal year 2013 conference call. Both our earnings press release and the Form 10-K we filed this morning are available on our website. Today, our CEO, Steve Cooper, will update you on our business performance and strategy; and our Executive Vice President and CFO, Brian Roberts, will discuss our financial condition and results, and then both of them will take your questions. Before Steve’s comments, let me remind you that this communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. All forward-looking statements are made as of today and we disclaim any duty to update such statements. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. Investors should not rely on forward-looking statements, because they are subject to a variety of risks, uncertainties and other factors that can cause actual results that differ materially from those expectations. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our earnings press release and our Form 10-K and other SEC filings. We plan to present certain non-GAAP results during this conference call. We have provided schedules reconciling those results to our GAAP results in our earnings press release posted on our website. With that, let me turn it over to Steve Cooper.

Good morning, everyone. Thanks for joining us today. This quarter capped the year of strong progress at Warner Music Group. Looking back I'm very proud of what we accomplished over the last year. Notably, we acquired the Parlophone Label Group, which we have been successfully integrated. We executed well on our digital strategy which is essential as the industry transformation games speed and we maintained our focus on signing and developing artist. As a result, we grew revenue, we gain market share, we expanded our digital presence and we enlarged our global footprint. Moreover, we improved our financial flexibility by lowering our annual interest expense through debt repayments and refinancings even as we increased our total borrowings to finance the PLG acquisition. Looking back over 2013, our most significant accomplishment of the year was the acquisition of PLG. I am very pleased not only that we closed the transaction on July 1, but also that we remained on track with the integration plan we announced following the acquisition. That plan is scheduled to deliver cost savings and other synergies of $70 million over two years. We have made significant progress in growing the combined businesses and strengthening the Parlophone brand through our four key strategic priorities, including making Parlophone a center of excellence in artist signings and development, alongside Atlantic and Warner. Two, implementing an ambitious classical music strategy using the former EMI Classics and Virgin Classics as its foundation, we are innovating around the catalog while continuing to sign top classical artist. Three, leveraging our strength in European operations to expand efforts to signing developed local talent. And four, overhauling our global catalog strategy to capitalize on the great opportunities presented by the combined Warner Music Group PLG catalog. As we make further progress on the integration we will continue to update you. Turning now to our results. As anticipated, due to a light release schedule, the fourth quarter was soft. However, from the revenue perspective, the effects of the release schedule were more than offset by the inclusion of PLG’s revenue in our results. In the fourth quarter, revenue grew by 5% or 7% on a constant currency basis. Adjusted OIBDA declined by 15% to $94 million and operating cash flow declined largely as a result of the expenses related to the PLG acquisition and timing of interest payments. With the combination of focus management and the thoughtful strategy, we were able to limit the impact of the light release schedule and saw only modest erosion in our ex-PLG revenue in the quarter. For the fiscal year our results were stronger. We grew revenue 5% on a constant currency basis. We grew adjusted OIBDA by 10%. We expanded our adjusted OIBDA margin by 1 percentage point to 14% and we generated cash from operations of $159 million. More significantly, for the second consecutive fiscal year, we grew combined worldwide digital and physical revenue in our recording music business. This year combined digital and physical recorded music revenue grew by 3% including PLG. The 7% decline in physical revenue was more than offset by our 15% growth in digital revenue. For the fiscal year, we grew download revenue by 12% and we also saw significantly higher growth, roughly 44% in streaming and subscription services. It appears as if consumers are becoming much more comfortable listening to music via the broad array of free and paid cloud-based access models. As a result, an ever greater percentage of our digital revenue is and will be coming from sources other than dialogues. These sources are Deezer, iHeartRadio, iTunes Radio, Pandora, Sirius XM, Spotify, YouTube and other streaming and subscription operations. There have been several articles over the last few months claiming music industry concern about slower growth in download revenue while growth in streaming and subscription services accelerates. These are new trends and we don't believe they are correlated. More importantly, we see the acceleration in the growth of streaming and subscription services as a great opportunity for the music industry growth, not a cause for concern. Right now, there are about 20 million consumers around the world who use subscription services. And some of the fastest-growing music markets in the world such as Sweden, Norway and the Netherlands are territories where subscription services represent a significant percentage of digital revenue. We believe that building scale in subscription services offers great value to the entire music industry ecosystem including artist, recorded music companies, music publishers and digital music service. We are also working with new and existing digital services to facilitate this scaling of subscription and improve the monetization of audio and video streaming while staying focused on supporting strong growth in the digital download business. We are pleased that Spotify announced yesterday an extension of their offerings, creating the premium mobile service which we believe will help scale their subscriber base. One of the most important streaming categories is digital radio. In September, we announced a landmark partnership with Clear Channel. That partnership, the first wide-ranging strategic alliance between the major music company in Clear Channel will help align the two companies interest in driving the growth of digital radio, increasing radio listenership, breaking new music and creating new marketing opportunities for established and emerging artists. Through this alliance, we are sharing in revenue from all platforms and also gaining unprecedented opportunities to promote the musical of our artist across all of Clear Channel’s multi-platform assets. As noted earlier, we have light release schedule this quarter that will continue to effect the first quarter of fiscal 2014. We also anticipate that our release schedule for this year will be more second half ways. That being said we've had a number of recent and noteworthy successes in signing and developing artists in our recorded music and music publishing business. We are extremely proud of our ability, not only to sign talented artists at all levels of their careers but especially to work with new artists to nurture them and partner with them over the long term as they grow into establish artists. Two great examples of artist development successes this year are Ed Sheeran and Bruno Mars. British singer-songwriter, Ed Sheeran, has had an extraordinary year as recently evidenced by his three sold-out shows at Madison Square Garden. His debut album + has achieved has achieved multi platinum and gold sales in nine countries around the world, including in the U.S. where his single The A Team has also been certified two times platinum and received a prestigious Song of the Year GRAMMY nomination last year. To capital, [Ed] just received the highly coveted best new artist GRAMMY nomination. Bruno Mars had an amazing 2013, including being named as the headliner for the upcoming Pepsi Super Bowl Halftime show on February 2. Excuse me -- His latest single Gorilla from his second album on Unorthodox Jukebox is off to a strong start. This track follows three prior smash singles from the same album, Locked Out Of Heaven and When I Was Your Man, both of which hit number one on Billboard's hot 100 earlier this year and Treasure, which became Bruno’s 14th top 10 single on the hot 100. With the 115 million singles sold worldwide, Bruno continues to make music history. Last week, he was nominated for five Grammy awards including record of the year and song of the year. The Rock Band, Avenged Sevenfold is a prime example of Warner’s nurturing and developing artists over the course of a long career. The band six radio -- sixth studio album, Hail to the King debut at number one on the Billboard 200 album chart in September. It was the second largest sales week for them, just shy of the debut of their last album. It was also the largest week for hard rock album in the U.S. in more than a year. Their album also debut at number one in the U.K., the band’s first time topping the album charts there. In music publishing, we continued to take steps to early manage our business. John Platt has been promoted to President, North America and will oversee all areas of Warner/Chappell’s operations in North America, continuing to report to Cameron Strang. Since John joined Warner/Chappell in September of 2012, he has been responsible for tracking an impressive range in major talent from the latest hit-makers to establish legends including Beyoncé, Jay-Z and his company Roc Nation and producer Mike WiLL Made It. John also oversaw the extension of Warner/Chappell’s partnership with the legendary, Barry Gibb or the Bee Gees. Warner/Chappell recently announced that it signed two of the rock world's most iconic artist to worldwide music publishing agreements. Warner Guns N' Roses guitarist and songwriter/and singer-songwriter, guitarist Dave Mustaine, founder of heavy metal pioneers, Megadeth. After recent, 51st annual ASCAP Country Music Awards, Warner/Chappell was named music publisher of the year for the first time in 17 years. Warner/Chappell also picked up six ASCAP Most Performed Song awards. At the BMI Awards, our songwriters were honored with an outstanding 14 awards across the 11 songs. And after 14th Annual Latin Grammy Awards, our songwriters were honored in an impressive 17 categories. I'm very happy to report that once again, Warner Music group artists and songwriters have been recognized with multiple Grammy Nominations, spanning a wide range of categories. In addition to Bruno Mars and Ed Sheeran who I already mentioned, Warner/Chappell songwriters, Jay-Z and Kendrick Lamar, both had big showings, picking up 97 nominations respectively. Warner Music National received multiple nominations including three for Blake Shelton and one for Hunter Hayes, while Warner/Chappell national’s songwriter Kacey Musgraves received four. Warner Brothers Records three time Grammy winner, Rob Cavallo was nominated once again in the Producer of the Year category. Other Warner artists receiving multiple nominations include Coldplay, Led Zeppelin, Gary Clark Junior, and songwriter, Nate Ruess of the band Fun. We wish all of our nominees the best of luck at the awards in January. We remain confident in our ability to execute on our strategic goals in our recording music and music publishing businesses. That confidence is based on a track record of delivering strong returns on our A&R investments, creatively and thoughtfully expanding our digital business and improving our global scale and managing our costs. I will now turn it over to Brian who will discuss our financials in more detail.

Thank you, Steve and good morning everybody. I wanted to first take a moment to add some additional color on the PLG integration process. From a financing operating standpoint, we are on schedule with our plan and in the short-term, we have owned the business. We have already rolled off many of the transition services agreements with Universal Music Group. We’ve identified key personnel and finalized organizational charts in all territories where we acquired businesses and we finalized real estate plans in all acquired territories. We carefully track our overall integration costs and as mentioned, we are making solid progress on the integration. We will provide further updates as appropriate. Let me discuss the results for the quarter and fiscal year. As Steve mentioned, our revenue results for the quarter reflect our acquisition of PLG. On a constant currency basis, revenue grew 7%. Excluding PLG, our revenue declined 1%, the result of our anticipated light release schedule. Additionally, we faced very tough comparison in Japan, when the prior year quarter, strong releases from local superstars, Kobukuro, Tatsuro Yamashita, and Superfly, which represented three of our top five sellers worldwide. For the fiscal year, constant currency revenue grew by 5% and excluding PLG, our revenue grew 3%. From an OIBDA perspective, certain adjustments are necessary to make the year-over-year comparisons more meaningful. We’ve highlighted these in our press release, but let me walk you through them. In the quarter, we had $39 million of transaction expenses related to the acquisition of PLG, which included professional fees and $11 million paid to Access under the Access Warner Music Group management agreement and $19 million in expenses related to the integration of the businesses. Also in the prior year quarter, we had $8 million in fees related to the regulatory review, following the sale of EMI Music to Universal Music Group. Backing up these items, adjusted OIBDA for the quarter declined by 15% to $94 million and adjusted OIBDA margin contracted by three percentage points to 12%. PLG didn't have a meaningful effect on OIBDA impact in the quarter. For the fiscal year, adjusted OIBDA grew 10% and adjusted OIBDA margin expanded one percentage point to 14%. In recorded music, we delivered 10% revenue growth in the quarter on a constant currency basis, excluding PLG revenue was flat. Digital revenue grew 18% or 8%, excluding PLG. And as Steve mentioned, the increase in digital revenue was driven by a significant growth in streaming and subscription revenue. We also had growth in digital download revenue. Recorded music licensing revenue grew by $10 million in the quarter, of which $8 million was from PLG. Artist services and expanded rights revenue was up $26 million, $5 million of which was from PLG. The strength in artist services and expanded rights was due to the increase in tours operated by our European concert promotion businesses, including those from Hughes, Kesha and Green Day as well as improved merchandising revenue. As a result, artist services and expanded rights revenue represented 14% of recorded music revenue as compared to 11% in the prior year quarter. For the fiscal year on a constant currency basis, recorded music revenue grew 7% or 4% excluding PLG. Recorded music adjusted OIBDA fell 10% to $70 million in the quarter, and adjusted OIBDA margin declined by two percentage points to 11%. The margin attraction was largely related to two factors, revenue declined in Japan which is a higher-margin territory and as well as overall growth and lower margin concert promotion and merchandising revenue. For the fiscal year, adjusted OIBDA grew 17% and adjusted OIBDA margin expanded two percentage points to 14%, largely as a result of the continued shift to higher-margin digital revenue. Music publishing revenue, which was obviously not impacted by the PLG acquisition, was down 5% or $6 million this quarter. Mechanical revenue continued to decline due to the recorded music business, industries, digital transition, while performance revenue and synchronization revenue were also slightly lower and digital revenues was flat. No single revenue component declined significantly from a dollar perspective. OIBDA declined in line with revenue and OIBDA margin held flat. For the fiscal year, constant currency music publishing revenue slipped 2%, while OIBDA grew 1% and OIBDA margin expanded one percentage point to 29%. As you all know, we were active in the leveraged finance markets over the fiscal year, starting with our November 2012 refinancing to our May 2013 term loan amendment to our term loan pay down and bonds redemptions in May and June and our term loan draw in July to close PLG. We have successfully lowered our blended costs of debt to just under, 7%. As a result, interest expense amounted to $203 million this year, compared to $225 million in fiscal 2012, even with the increase in debt related to the PLG acquisition. Free cash flow in the quarter and for the fiscal year was impacted by the $765 million in cash we used to acquire PLG. Even with the acquisition, our cash balance was $155 million at September 30th and that compares to a $102 million as of June 30th and $302 million at the start of the fiscal year. I wanted to remind you that December quarter, the first quarter of our fiscal year is traditionally a negative working capital quarter due to normal operating activity, as we begin to execute against our fiscal year operating plan. Our fiscal 2014 first quarter is further burdened by PLG integration expenses. We remain keenly focused on cash management and are committed to delivering solid free cash flow in the quarters and ahead for the whole of the fiscal year. For fiscal 2013, CapEx came in at $34 million. We expect a meaningful increase in 2014 as we continue invest in long-term upgrade store, IT infrastructure. We locate our corporate headquarters to 1633, Broadway and consolidate our U.K. offices and continue to integrate PLG. With these and other initiatives, we remained focused on delivering further efficiency throughout the organization. We remain confident and we are very well positioned for the future. Thanks to our continued investment in our core competencies in A&R, marketing and promotion, our expanding and evolving digital footprints, our improved global scale and our careful cost management. With that operator, please open the line questions for questions.

(Operator Instructions) Our first question is from Aaron Watts from Deutsche Bank. Aaron Watts - Deutsche Bank Good morning guys.

Good morning Aaron.

Hi Aaron. Aaron Watts - Deutsche Bank So you give us some good color on some of the negative impacts that hit your EBITDA margins in the quarter. You mentioned Japan, I think, Universal side of that as a weaker area too. How should we think about that, kind of for 2014, your fiscal first quarter, second quarter, is there going to be a continued drag on the margins a little bit. And then also do you imagine that PLG will contribute to EBITDA as well, I think, I heard you say that it did not in the quarter, we’re talking about here?

Yeah, so Aaron, just for that -- the last part of that, in the quarter PLG did not contribute to EBITDA, although it contributed to top line. In the quarter, we were still working through the transition process with Universal music on transitional services agreement. We came off of those for the most part pretty late in the quarter. So the impact of that carrying through had PLG delivering really no substantial point to impact in the quarter. As far as fiscal 2014 is concerned and what we think about, how our results are going to play out, especially with Japan, we do see that as a continuing issue in 2014. It’s going to have an impact on the overall business from a revenue and margin perspective. And we also, I think, Steve said, we had a light release schedule in Q4. We see that even now continuing a little bit into our Q1. So that is actually going to impact where we’ll shows sort of our Q1 results as well from our revenue and OIBDA perspective. Aaron Watts - Deutsche Bank Okay. And obviously seeing some nice bump on the recorded music site with some digital revenues, when do you think we start to see the benefit of that line item for publishing?

I think, publishing revenues from the digital perspective, we’re also seeing the impact of the transition to subscription services business in the aggregate as well. There is definitely a delay as between how recorded music sees it and music publishing sees it. And there could be as much as an 18-month gap between the collection of those streaming and subscription service dollars in some of the European societies and the distribution of those two, our publishing companies and others as they voted that process. So, I think, you are going to continue to see growth in publishing in 2014 and beyond as that leg starts to catch up. Aaron Watts - Deutsche Bank Okay, that’s helpful. And Steve, as you've kind of thought about with what you have seen conversion for some of these streaming services from free usage to people actually paying to use and in light of Spotify launching a free service? How do you think about, what you need to see from these services in terms of people actually paying for the service versus using it free and what that means for Warner Music?

Well, let me create a couple distinctions, Aaron. First of all, just so everybody understands, while this service maybe free to consumers, the music industry does collect revenues. We are paid either on a per play basis or percentage that of ad revenue, based upon whatever the contractual relationships are with those streaming services. What we have seen is that, after certain amounts of time and based upon the friction levels between the free and subscription services, there is a fairly strong conversion rate within the first, as I would call, six to 12 months. The free experience at least in our view gives the consumer seeking access to literally something approximating 100% of the world’s recorded music library. The opportunity to exploring become familiar with the service and we are at least happy today to see that for many of these services, there is a nice conversion rate during that time period when the consumers are on the premium experienced. I think that in the long-term based upon how these services scale and how they expand their ad revenue will ultimately, I hope, create for at least the industry some degree of indifference is to whether or not it is free, Aaron, or whether or not it’s subscription, but only time will tell in our calendar. Aaron Watts - Deutsche Bank Okay. All right. Now that’s helpful perspective. And last one from me and I appreciate you taking all these. Obviously, 2013 was a busy year for you guys on kind of the acquisition front? As you think about the coming 12 months, are there any areas you feel Warner Music needs to go out there and be acquisitive to help fill in kind of gaps or areas you want to be stronger or have more scale in? And maybe do you see kind of the pipeline of assets that might be available more on the publishing side versus the recording side, just your kind of general thoughts on the M&A outlook?

Well, if you keep it a secret, we will probably acquire Universal Music. That was a joke, Aaron. That was a joke. Listen, we are always looking in both -- on both sides of our business, both recorded music and music publishing for what we believe to be solid opportunities to acquire outstanding assets or businesses and we will continue to do that. We allocate capital every year to make acquisitions, as you know last year on the publishing side we acquired the publishing rights to both Lionsgate and Miramax. We continue to look for those types of opportunities not only in the U.S. and the U.K., but worldwide. The same is true on the recorded music side. If we see opportunities to acquire assets or operations that we believe are of high quality and we can successfully integrate into our operation, we will pursue them. We know that over time to meet our goals that we have to grow not only organically but through M&A and that will continue to be one of our strategies Aaron. Aaron Watts - Deutsche Bank Okay. Great. Thanks again for the time.

Sure.

(Operator instructions) The next question is from Doug Wooden from DDJ Capital.

Yes. Hi. I just wanted to maybe get a little bit of clarification on the Parlophone contribution on revenues. When I go through constant currency reported, it looks like PLG contributed sort of $40 million to $60 million, but from some of the disclosures for the full year I would have expected it to be more, today if the different seasonality or am I just missing something on this?

So, you are right on the number for the quarter for PLG and PLG as a company going through the acquisition process, really had a very light release schedule coming into what would have been their first fiscal quarter, because if you call, no, in their second fiscal quarter, excuse me, their March 31 year end. So, it’s really not related to seasonality or business but more related to the acquisition or divestures if you will of the business just related to operating activity.

Got you. Got you. Okay. And then if you could maybe clarify…

Just to be clear, it was only one quarter of activity there, right. So it’s just, that’s the only thing that was in our results.

Right. Right. No. That’s helpful. And then, I guess, lastly you mentioned that there wasn’t any margin contribution in the quarter? Could you maybe just run through why that it is, transition services, I am a little bit unclear?

It didn’t contribute at an OIBDA margin. It contributes some at a gross margin perspective, given the revenue. But given that it was one quarter, the expenses that we brought on when we acquired PLG, not just from transitional services agreements, which we had in place with Universal around certain aspects of that operation as we moved them off of their core EMI systems, Universal systems onto our systems. But also you have to remember that this was a European based acquisition, so in going through and achieving cost savings around certain elements of that business, you have to go through a process by which you deal with restructuring plans and alike in the quarter before we can achieve those cost savings. So we had the burden of those costs in the first quarter and for the most part. As I said earlier, we came off of the large transaction services agreements that we had with Universal and in our fiscal first quarter we have executed substantially against the savings plans around restructuring plans.

Would you be open to disclosing those expenses for this quarter and going forward?

Well, I think, overall we’ve say that, we are going to end up with costs against our $70 million worth of savings that are roughly two times that number in the aggregate.

Okay. Okay. We will figure out the timing. No. That’s helpful. Okay. Great. Thank you.

Thank you.

There are no further questions.

Listen, I hope everyone has a wonderful and safe holiday season. I want to thank all of our investors for your support this last year and for your continuing support. So have a wonderful holiday and we look forward to chatting with you in 2014. Bye-bye.

That concludes today's conference. Please disconnect at this time.