Welcome to Warner Music Group's Fourth Quarter and Fiscal Year-end Earnings Call for the period ended September 30, 2016. At the request of Warner Music Group, today's call is being recorded for replay purposes, and if you object, you may disconnect at any time. [Operator Instructions] Now I would like to turn today's call over to your host, Mr. James Steven, Executive Vice President, Communications and Marketing. You may begin.

Good morning, everyone. Welcome to Warner Music Group's Fiscal Fourth Quarter and Year ended September 30, 2016 Conference Call. Both our earnings press release and the Form 10-K we filed this morning are available on our website. Today, our CEO, Steve Cooper, will update you on our business performance and strategy; our Executive Vice President and CFO, Eric Levin, will discuss our financial condition and results; and then we'll take your questions. Before Steve's comments, let me remind you that this communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. All forward-looking statements are made as of today, and we disclaim any duty to update such 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 can cause actual results that differ materially from our expectations. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our earnings press release and Form 10-K and other SEC filings. We plan to present certain non-GAAP results during this conference call. We have provided schedules reconciling these results to our GAAP results in our earnings press release posted on our website. Also, please note that all revenue figures and comparisons discussed today will be presented in constant currency, unless otherwise noted. With that, let me turn it over to Steve.

Good morning, everyone. It was great to see some of you in Europe this past October. We really appreciate your ongoing support, which I hope you'll feel is well founded once I've updated you on our performance today. I'm very, very pleased to say that we had an excellent year, during which we've again proven our ability to deliver sustained growth. For the fiscal year, we grew total revenue by 13%, digital revenue by 24% and OIBDA by 16%. In addition, we generated $342 million from operations. Our fourth quarter was also very strong. We grew total revenue by 13%, digital revenue by 25% and OIBDA by 9%. In fiscal '16, we saw a global double-digit revenue jump in both our Recorded Music and publishing businesses. This came on top of our 6% growth in total revenue for fiscal '15. This fiscal year marked our highest total revenue in 8 years and our highest OIBDA in a decade. In addition, every year since Access took ownership in 2011, we've grown the combined digital and physical revenue in our Recorded Music business. While it's clear that we're benefiting from the macro effect of strong subscription revenue growth, we are also consistently outperforming the industry. Following calendar '15, when we scored the largest global recorded music market share gain of any major music company, we've continued to see the ongoing results of our strategic focus in 2016. For the first half of calendar '16, our 2.5 percentage point jump in U.S. recorded music market share was the best of any major. During the same time period, the U.S. recorded music industry grew about 6% at wholesale, while our U.S. recorded music business grew at more than double that rate. We expect our revenue overperformance to be further highlighted by market share gains…

Thank you, Steve, and good morning, everyone. 2016 was a great year for us. Our formula for financial success is yielding fantastic results. We're driving revenue growth, controlling costs, growing OIBDA, generating stronger cash flow and optimizing our capital structure. Our global team is building our reputation as the most forward-thinking, commercially savvy and artist-friendly music company in the world. While the industry backdrop has been improving, it's unrealistic to expect the recovery to be linear, as the business continues that shift towards streaming. In addition, we know we just enjoyed a year with very strong releases around the world. For us, comparisons in fiscal '17 will be impacted by the 2016 sale of one of our European concert promotion businesses as well as by ongoing PLG-related divestitures. Turning to our fiscal '16 results. Total revenue grew 13% in both the quarter and the fiscal year. Even with a modest currency impact, on an as-reported basis, we grew a very strong 12% for the quarter and 9% for the year. From an OIBDA perspective, certain adjustments are necessary to make the year-over-year comparisons more meaningful. The details are in the press release, but in the quarter, we had a $1 million loss related to asset sales versus $8 million of nonrecurring expenses in the prior year quarter. For the quarter, adjusted OIBDA rose 2.5% to $124 million. The increase was driven by revenue growth. Adjusted OIBDA margin declined 1.4 percentage points to 14.7%. The decline was largely due to higher variable compensation expense and the impact of revenue mix. For the year, adjusted OIBDA grew 7.7% to $501 million, driven by revenue growth, and margin declined 0.3 percentage points to 15.4% due to the same factors that impacted the quarter. In Recorded Music, fourth quarter revenue was up 11%, with…

[Operator Instructions] Your first question comes from the line of Aaron Watts of Deutsche Bank.

I wanted to start with the publishing unit. Can you talk a little bit more about what's driving the top line growth there? And then, I guess also connected to that, how we think about the margin movement in the quarter. Maybe you can quantify the impact of that litigation settlement, how much that was.

Sure. So Aaron, well, first of all, thank you for your question and call. So the top line movements, similar to Recorded Music, is really driven by digital and streaming growth. You see the strong -- as we discussed streaming numbers, we talked about 74% growth this quarter in publishing. So that's really helping drive that. In addition, our market share growth in publishing has been tremendous. And since we put our new management team in, led by Jon Platt, slightly more than a year ago, they've really focused on their kind of high-touch, high-service model, connecting artists that are recording to writers. And so we've really helped drive our market share. So the combination of that plus streaming growth has led to a very strong revenue year. On margin, litigation that we mentioned here really is the conclusion of the Happy Birthday litigation that we've mentioned earlier in the year. And if you extract the Happy Birthday litigation impact this year, overall OIBDA for publishing was up for the year, and actually, they had a strong solid year, both in revenue and in OIBDA. So we think publishing is on a healthy upswing, and we're very confident in that business.

Okay. And on a related note, as you think about margins for the overall business going forward, do you see opportunities for margin expansion? Or is -- some of the mix shift to digital or streaming, is that going to impact your ability to expand the margins going forward?

No, good question. The mix shift in, really, Recorded Music, because Recorded Music, the shift from physical to streaming. So the more our mix moves away from physical, which has the hard good cost, the shipping cost, towards streaming, the more we would expect to see moderate margin improvement over time as we move from a physical cost business to a digital business.

Okay. And last one for me, I figured I would try to ask if there's any upcoming releases you wanted to highlight, any kind of marquee names that could be material as we think about the numbers over the next quarter or 2?

No, Aaron, it's Steve. As is our practice, we don't give advanced notice of music we'll be dropping throughout the year, given the potential for music to show up early or late. It's just not, for -- from our perspective, a wise practice. So that one, you'll just have to keep your fingers crossed and wait.

[Operator Instructions] Your next question comes from the line of Mary Pulitz [ph], Credit Plus [ph].

I hear you on the debt reduction, which, clearly, you're delivering on, but you're also growing EBITDA. I was wondering if you would feel comfortable setting out a target leverage, where you would seek to maintain an average debt level as opposed to keep decreasing debt or you're just happy for it to come down and down?

So thank you, Mary, and we appreciate the question. We don't set a target leverage number, but we do talk about our approach and our philosophy. And so this really is the first year, certainly since Access has owned us, that we've made significant debt repayment and really made a focus of delevering. And we expect, philosophically, to continue the approach, where our approach is to really focus on operational performance, driving OIBDA, driving cash flow, using that opportunistically between reinvesting in the business and continuing to pay down debt, both of which serve to delever by growing our earnings and reducing our net debt. Those remain our top priorities.

And there's not -- I mean, but you wouldn't pay like at 3x, or at some point that'll become [indiscernible].

I would say, although we're comfortable where our leverage is today, we continue to focus on taking steps to delever going forward. So at this point, our strategy is to continue to work it down for the time being.

And there are no further questions in the queue at this time. I'll turn the call back to the presentation team.

Great. Well, listen, everyone. We appreciate your ongoing support. And I hope that all of you have a safe, warm, happy, wonderful holiday season, and we'll talk to you in calendar 2017. So take care. Have a great holiday, and we'll talk to you soon. Bye-bye.

And this concludes today's conference call. You may now disconnect.