Warner Music Stock Collapse

[Refugee]

Warner Music Stock Collapse

As of 10:30 Friday morning, Edgar Bronfman Jr's. Warner Music Group stock has collapsed. It's currently selling at around $7.50. The stock reached its 52 week low earlier Friday morning at $7.26. A year ago, WMG was at $27.

Even if WMG manages to finish a little higher by the end of Friday, the fact remains that nearly every day of this bear market notches them a little lower. If and when the stock price drops below $7, one wonders how much more primary financiers Thomas Lee and company can take it.

What's wrong with Warner Music Group? It's not downloading. It's lack of music, no artists, no signings, no development of new artists, as well as wildly overpaid executives and bad business deals.

For example, a $30 million investment in Sean "Diddy" Combs' Bad Boy Entertainment (http://www.foxnews.com/story/0,2933,309859,00.html#) has turned up nothing of value. And another multimillion dollar investment, in a private luxury concert business this summer in the Hamptons, was a bust.

At the same time, WMG has been hit by defections. Madonna has left for Live Nation after 25 years with WMG. The company could no longer afford her. The Eagles, whose entire career was spent with the old Warner Music, now have their own label with Wal-Mart. They sold 711,000 copies of their new album this year.

Warner also passed on the "Hairspray" soundtrack, which turned out to be a hit for New Line Cinema (http://www.foxnews.com/story/0,2933,309859,00.html#). And those are just the big public embarrassments. The smaller ones, the ones we don't know about, are probably even more alarming.

[Athena]

The also won't allow downloading of songs that don't have DRM. I just read that in Rolling Stone in an article about the new Amazon MP3 downloading service. Warner doesn't have a deal with Amazon to offer their music.

[Echosoftom]

I can't say that it doesn't make me snicker just a bit to read this. Musicians have been warning them for years that this house of cards was going to fall.

[agirl]

They brought it upon themselves.

[surfnburn]

Yep, I agree. So does all their shareholders! It's sad when business management practices stagnate and fail. Someone should have been looking at new ways to adapt to the changing market; that's their job! Where are the artists? Who thought that Hampton's thing was a viable market??? Things are set up so that executives are paid well even if they screw up. They don't even have to try and they're financially rewarded. WTF? The market is the acid test. It won't lie.

[nurktwin]

it all comes down to greed. as far as artists go, these companies think they can go out on the street everyday and get a struggling artist and sign them to a contract that doesn't pay shit and hope for a million seller and pocket all the money. if the cd hits big, the artist really only makes money by going on tour, not cd sales, the company does. once the artists learn that they deserve more and ask for it, the company turns them down and goes back on the street to find another poor artist that will sign anything. and the cycle goes on and on, til they don't have any established artists and the stock takes a dive. big time artists now record in their own studios, have their own label and just have to have someone distribute the finished product to stores. the record companies have put themselves out of business because of their greed. this is happening more and more everyday, take any usa company. get the parts made in china or anywhere they can and only pay the workers there 30 cents a day and then bring it back here and sell it for even more than it was when it was made in the usa. take a look, who's the real communist, china or the usa government? we can't do anything with cuba that's 90 miles away and get a cigar because they are communist. but george bush said we can work with china, 1/2 way around they world because 'they are our friends'!!!! wtf.