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Warner Music Formalizes Dividend Policy

Sandy Brown

Warner Music Group's(WMG - Cramer's Take - Stockpickr) board formally approved and declared a quarterly dividend Thursday.

The large music company, home to artists such as Madonna and Green Day and well-known music labels, will pay a 13-cent quarterly dividend, representing an aggregate payout of $19.3 million based on outstanding shares.

The dividend, plans for which were previously announced this fall by chairman Edgar Bronfman Jr., is payable Feb. 17, 2006, to stock of record Jan. 18. The company intends to pay regular dividends in an amount not to exceed $80 million per year. The Warner Music Group board will assess the dividend situation on a quarterly basis, on the basis of the state of operations and the financial condition of the company, it said.

Bronfman and private equity partners purchased Warner Music from media conglomerate Time Warner(TWX - Cramer's Take - Stockpickr) last year for $2.6 billion, then sold the company to the public earlier this year.

The Street's reaction at the time was mixed, at best. The music industry has faced a number of challenges ranging from rampant piracy to declining retail sales. But since July, shares are up more than 20% and, as such, Warner Music Group has outperformed the media sector broadly in 2005.

June's Supreme Court ruling against Grokster, a once popular site for illegal digital file swapping, was a major victory for media companies in the fight against piracy and has been a source of encouragement for Bronfman and his peers, who feel that the tables may have turned on theft in the industry.

Bronfman hopes that decision and recent signs of declining piracy will pave the way for more legitimate distribution channels. In the meantime, Warner Music will continue to fight for improved industry pricing as their content is distributed on newer platforms such as Apple(AAPL - Cramer's Take - Stockpickr) iPods and satellite radio.

Early Thursday, Warner Music Group was unchanged at $18.85.

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