Warner Music Group Announces Return of Capital

Cash Generated Through Strong Operating Results and Lower Restructuring Costs

Enhanced Cash Position Enables Company to Fund $350 Million Distribution

Warner Music Group today announced that, based on strong operating results, significant excess liquidity, and the successful implementation of its restructuring program, it plans to provide for a return of capital of up to $350 million from the Company to its shareholders. The return of capital will be funded out of the Company's excess cash balance and not from the incurrence of additional debt.

The Company reported $421 million in cash as of May 31, 2004. This cash balance has grown to $519 million as of August 31, 2004. Before giving effect to the distribution, the Company is currently projecting to have approximately $300 million of cash on hand at November 30, 2004. The Company also reaffirms its previously issued guidance on revenues and adjusted pro forma EBITDA for the year ended November 30, 2004 and on the expected restructuring savings and costs as outlined in the Warner Music Group bondholder call of August 19, 2004.

"As we reported at the end of the second quarter, our profitability and cost saving initiatives are running ahead of plan and in line with previous guidance, restructuring costs are lower than we budgeted, and working capital needs are lower than forecasted," said Edgar Bronfman, Jr., Chairman and CEO of Warner Music Group. "At the time of the acquisition, the Company was capitalized very conservatively given the magnitude of the contemplated restructuring. With the majority of the restructuring completed in April, the Company has been operating successfully with its new management team and leaner organizational structure for quite some time. As Warner Music Group's cash balance continued to build and year-end financials came into focus, we recognized that the Company would substantially exceed our conservative cash estimates at the time of the acquisition. As a result, the Company has significant excess cash on hand."

Bronfman continued: "Warner Music Group will use its excess cash to return $350 million of capital to the equity investors in the Company, pursuant to the terms of the bond indenture. After this distribution, the Company will continue to have substantial liquidity and financial flexibility to fuel future growth."

Warner Music Group also announced that it plans to change its fiscal year-end to September 30 from November 30. The Company's next earnings call will address the four months ended September 30, 2004.

To provide for the return of capital and the year-end change, the Company is currently in the process of seeking an amendment to its credit agreement. The proposed return of capital is permitted by the Company's bond indenture.

About Warner Music Group
Warner Music Group, with its broad roster of new stars and legendary artists, is the world's largest privately held independent music company. The company is home to a collection of the best-known record labels in the music industry including Atlantic, Elektra, Lava, Maverick, Nonesuch, Reprise, Rhino, Sire, Warner Bros. and Word. Warner Music International, a leading company in national and international repertoire operates through 37 affiliates and numerous 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. For more information about Warner Music Group, visit our corporate website at www.wmg.com.

"Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995:

This communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. Words such as "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts" and variations of such words or similar expressions that predict or indicate future events or trends, or that do not relate to historical matters, identify forward-looking 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 could cause actual results to differ materially from our expectations.