EMI-WMG Merger Prospects

Talk of a merger between the recorded music divisions of EMI and Warner Music Group to create the third largest recorded music group has been simmering for at least six months. After two failed attempts in the past six years, the logic of a merger continues to be strong and scale is an even more compelling objective given the continued difficult conditions in the recorded music market, despite rising digital sales in line with our forecasts. The question is when, not if and we believe that the time is fast approaching, judging by investment bank and private equity interest in the music publishing assets of each company.

We continue to expect group revenue growth to remain positive in spite of the impact of local loop unbundling