NEW YORK (CelebrityAccess MediaWire) — Warner Music Group's stock caught an updraft from hot air generated by a positive report by Merrill Lynch on Friday when they changed their position on the label from sell to buy, suggesting that the sell-off of the label stock had been "overdone."
Not so fast, says another analyst Pali Research's outspoken Rich Greenfield. A posting last Friday lambasted the firm for what Greenfield considers to be wasteful spending.
Warner was bought out by a consortium of private equity in 2004, a group that included people like Edgar Bronfman Jr., Tom H. Lee and some of more bandied names in private equity deals such as Bain Capital. The latest flurry of analysis and counter-analysis however seems to have been sparked by the quiet acquisition of promoter Bulldog Entertainment, which made a splash last summer with their Hamptons Social concert series which provided concert experiences for the very well-heeled.
Warner's acquisition of the company was very quiet. According to Greenfield, they didn't announce it but he discovered that Bulldog was listed as a Warner subsidiary in an SEC filing since last August. Greenfield found the deal particularly troubling, because he suspects Bulldog has been losing money hand-over-fist.
"WMG needs to be slashing costs and investing in it’s A&R efforts, not ‘partying’ with the Hamptons’ crowd on the company’s bill, as if the recorded music biz was vibrant." said Greenfield.
Warner Music declined to comment on the acquisition. – CelebrityAccess Staff Writers