Warner Music Group Corp., the record company of Led Zeppelin, reported a first-quarter loss on costs to close a business it acquired nine months ago. The shares posted a record drop. The net loss of $16 million, or 11 cents a share, in the three months ended Dec. 31, compares with net income of $18 million, or 12 cents, a year earlier, the New York-based company said today in a statement. Excluding the costs to close the acquired unit, earnings of 1 cent a share missed the 12-cent average of seven analysts’ estimates compiled by Bloomberg.

Warner Music, facing an industrywide decline in compact disc sales, bought concert company Bulldog Entertainment in May to try to boost revenue. It shut down the unit at a cost of $18 million. Revenue rose 6.6 percent to $989 million, driven by Josh Groban’s album “Noel” and currency changes. Excluding the changes, sales rose 1 percent, the first increase in six quarters.

“The write-off shows they were entering a business they arguably shouldn’t have gotten into in the first place,” said Chris White, an analyst with Wedbush Morgan Securities in Los Angeles who recommends holding the shares and doesn’t own them. “Revenue growth is still decent but supported by acquisitions that are questionable.”

Warner Music, the world’s third largest record company, tumbled $1.59, or 18 percent, to $7.15 at 10:32 a.m. in New York Stock Exchange composite trading after dropping as much as 19 percent, the most since the company went public in May 2005. The shares had declined 58 percent in the past 12 months before today on concern gains in digital sales won’t make up for the decline in higher-priced CDs.

Not `Standing Still’

Chief Executive Officer Edgar Bronfman is also trying to increase sales by adding merchandising and management services. Warner Music invested $50 million in a joint venture with Frank Sinatra’s family last year to market his music and videos as well as his name and likeness. It also paid about $110 million for a stake in artist management company Front Line Management.

Investments and acquisitions are likely to be smaller this year than in 2007, Chief Financial Officer Michael Fleisher said today on a conference call.

“While we were obviously disappointed with” Bulldog Entertainment, Bronfman said on the call, “we continue to believe that taking prudent risks to expand and enlarge our revenue opportunities is a far better strategy than standing still.”

(The company held a conference call to discuss the results at 8:30 a.m. New York time. For a replay, dial +1-888-566-0618 or +1-203-369-3076.)

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net

Warner Music Group Corp. (NYSE: WMG) today announced an extension of its environmental program to include a “zero landfill waste” and “carbon-neutral” post-Grammy event. The WMG event will be held immediately following the 50th Annual Grammy Awards in Los Angeles on Sunday, February 10, 2008.”Zero waste” entails the elimination of waste in all of its forms (solid waste, emissions, hazardous waste, etc.) through the efficient use of resources and use of environmentally friendly resources.California Gov. Arnold Schwarzenegger said, “California has consistently led the nation in environmental protection and we have learned that we can help our environment while at the same time protecting the economy and our lifestyles. I am very pleased that Warner Music Group, working with city, state and local leaders, has taken this issue to heart and is turning consumption into conservation on the important pop culture stage at this ‘zero waste’ event.”The event will achieve “zero waste” through a variety of green efforts, including: carbon-offsetting the event’s energy usage; use of energy efficient lighting and bio-diesel generators; recycled paper products; use of local farmers’ markets and vendors; eco-friendly soaps and detergents; invitations printed on 100% recycled paper and manufactured with wind power; and composting of paper and food waste, among other efforts.California’s Integrated Waste Management Board, the City of Los Angeles’ Bureau of Sanitation and Athens Services and several local companies and sponsors will partner with WMG.Lyor Cohen, Chairman and CEO of U.S. Recorded Music, Warner Music Group, said, “On an evening when we have so many industry luminaries celebrating our artists’ achievements over the past year, we felt it was equally important to turn the spotlight on the environment and remind others in the industry how they, too, can help promote a more environmentally friendly music business. I also want to thank the City of Los Angeles and all our sponsors who have helped underwrite the event and share our vision for environmental awareness.”Cynthia Ruiz, City of Los Angeles Board of Public Works President, said, “The Department of Public Works is grateful to companies, like Warner Music Group, that do their part in helping the City of Los Angeles become a zero waste city. We hope that everyone — businesses and residents — will join in and help us to achieve this very important goal.”Today’s announcement represents an extension of Warner Music Group’s industry-leading environmental campaign working with key environmental advocacy organizations around the country such as the NRDC and NativeEnergy.In the program’s first phase, WMG converted all CD/DVD products to use 30 percent post-consumer paper packaging; saving nearly 4.7 tons of wood per year. Post-consumer recycled paper is made from wastepaper disposed of by consumers. WMG has also implemented ecologically responsible and efficient paper practices across all of its labels and business units in the United States, including enhanced recycled paper procurement, paper reduction, wastepaper recycling efforts and the conversion of a significant portion of its materials to electronic format, rather than paper. Launched in February 2007, the program was expanded across each of the company’s business units later last year.As part of the program’s second phase, the company undertook a comprehensive review of its greenhouse gas emissions with the goal of developing a program to reduce or offset its “carbon footprint.” Over the past year, the company’s extensive nationwide waste reduction and recycling program has helped save nearly 2,000,000 pounds of solid waste. Together with a number of environmental organizations, WMG is working on carbon dioxide emission reduction as well as the development of an offset program encompassing the company’s complete activities — from new album releases to employees’ daily commuting habits.This marks the second consecutive year that WMG has celebrated this event with an environmentally conscious after-party.About WMGWarner Music Group became the only stand-alone music company to be publicly traded in the United States in May 2005. With its broad roster of new stars and legendary artists, Warner Music Group is home to a collection of the best-known record labels in the music industry including Asylum, Atlantic, Bad Boy, Cordless, East West, Elektra, Lava, Nonesuch, Reprise, Rhino, Roadrunner, Rykodisc, Sire, Warner Bros. and Word. Warner Music International, a leading company in national and international repertoire, operates through numerous international affiliates and licensees in more than 50 countries. Warner Music Group also includes Warner/Chappell Music, one of the world’s leading music publishers, with a catalog of more than one million copyrights worldwide.

Contacts: Amanda Collins 212/275-2213 Email Contact Josh Cramer-Montes 212/275-1375 Email Contact