WARNER MUSIC GROUP CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

This Annual Report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act, and Section 21E of the Exchange Act. Actual results and the timing of
events could differ materially from those projected in forward-looking
statements due to a number of factors, including those described under "Item 1A.
Risk Factors" and elsewhere in this Annual Report. See "Special Note Regarding
Forward-Looking Statements."

You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report.

INTRODUCTION

The Company is the direct parent of Holdings, which is the direct parent of Acquisition Corp. Acquisition Corp. is one of the world's major music entertainment companies.

The Company and Holdings are holding companies that conduct substantially all of
their business operations through their subsidiaries. The terms "we," "us,"
"our," "ours" and the "Company" refer collectively to Warner Music Group Corp.
and its consolidated subsidiaries, except where otherwise indicated.

Management's discussion and analysis of financial condition and results of
operations ("MD&A") is provided as a supplement to the consolidated financial
statements and related notes thereto included elsewhere herein to help provide
an understanding of our financial condition, changes in financial condition and
results of our operations. MD&A is organized as follows:

•Business overview. This section provides a general description of our business,
as well as a discussion of factors that we believe are important in
understanding our results of operations and comparability and in anticipating
future trends.

•Results of operations. This section provides an analysis of our results of
operations for the fiscal years ended September 30, 2022, September 30, 2021 and
September 30, 2020. This analysis is presented on both a consolidated and
segment basis.

•Financial condition and liquidity. This section provides an analysis of our
cash flows for the fiscal years ended September 30, 2022, September 30, 2021 and
September 30, 2020, as well as a discussion of our financial condition and
liquidity as of September 30, 2022. The discussion of our financial condition
and liquidity includes recent debt financings and a summary of the key debt
covenant compliance measures under our debt agreements.

•Critical accounting policies and estimates. This section identifies those
accounting policies that are considered important to the Company's results of
operations and financial condition, require significant judgment and involve
significant management estimates. The Company's significant accounting policies,
including those considered to be critical accounting policies, are summarized in
Note 2 to the accompanying consolidated financial statements.

Use of OIBDA

We evaluate our operating performance based on several factors, including our
primary financial measure of operating income (loss) before non-cash
depreciation of tangible assets and non-cash amortization of intangible assets
("OIBDA"). We consider OIBDA to be an important indicator of the operational
strengths and performance of our businesses. However, a limitation of the use of
OIBDA as a performance measure is that it does not reflect the periodic costs of
certain capitalized tangible and intangible assets used in generating revenues
in our businesses. Accordingly, OIBDA should be considered in addition to, not
as a substitute for, operating income (loss), net income (loss) attributable to
Warner Music Group Corp. and other measures of financial performance reported in
accordance with United States generally accepted accounting principles ("U.S.
GAAP"). In addition, our definition of OIBDA may differ from similarly titled
measures used by other companies. A reconciliation of consolidated OIBDA to
operating income (loss) and net income (loss) attributable to Warner Music Group
Corp. is provided in our "Results of Operations."
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Use of Constant Currency

As exchange rates are an important factor in understanding period to period
comparisons, we believe the presentation of revenue and OIBDA on a
constant-currency basis in addition to reported results helps improve the
ability to understand our operating results and evaluate our performance in
comparison to prior periods. Constant-currency information compares revenue and
OIBDA between periods as if exchange rates had remained constant period over
period. We use revenue on a constant-currency basis as one measure to evaluate
our performance. We calculate constant currency by calculating prior-year
revenue using current-year foreign currency exchange rates. We generally refer
to such amounts calculated on a constant-currency basis as "excluding the impact
of foreign currency exchange rates." This revenue should be considered in
addition to, not as a substitute for, revenue reported in accordance with U.S.
GAAP. Revenue on a constant-currency basis, as we present it, may not be
comparable to similarly titled measures used by other companies and are not a
measure of performance presented in accordance with U.S. GAAP.

BUSINESS OVERVIEW

We are one of the world's leading music entertainment companies. Our renowned
family of iconic record labels, including Atlantic Records, Warner Records,
Elektra Records and Parlophone Records, is home to many of the world's most
popular and influential recording artists. In addition, Warner Chappell Music,
our global music publishing business, boasts an extraordinary catalog that
includes timeless standards and contemporary hits, representing works by over
100,000 songwriters and composers, with a global collection of more than one
million musical compositions. We classify our business interests into two
fundamental operations: Recorded Music and Music Publishing. A brief description
of each of those operations is presented below.

Components of Our Operating Results

Recorded Music Operations

Our Recorded Music business primarily consists of the discovery and development
of recording artists and the related marketing, promotion, distribution, sale
and licensing of music created by such recording artists. We play an integral
role in virtually all aspects of the recorded music value chain from discovering
and developing talent to producing, distributing and selling music to marketing
and promoting recording artists and their music.

In the United States, our Recorded Music business is conducted principally
through our major record labels-Atlantic Records and Warner Records. In October
2018, we launched Elektra Music Group in the United States as a standalone label
group, which comprises the Elektra, Fueled by Ramen and Roadrunner labels, and
in December 2021, we acquired 300 Entertainment and subsequently launched 300
Elektra Entertainment, or 3EE, a frontline label group that brings together the
multi-genre power of 300 Entertainment and Elektra Music Group. Our Recorded
Music business also includes Rhino Entertainment, a division that specializes in
marketing our recorded music catalog through compilations, reissuances of
previously released music and video titles and releasing previously unreleased
material from our vault. We also conduct our Recorded Music business through a
collection of additional record labels including Asylum, Big Beat, Canvasback,
East West, Erato, FFRR, Nonesuch, Parlophone, Reprise, Sire, Spinnin' Records,
Warner Classics and Warner Music Nashville.

Outside the United States, our Recorded Music business is conducted in more than
70 countries through various subsidiaries, affiliates and non-affiliated
licensees. Internationally, we engage in the same activities as in the United
States: discovering and signing artists and distributing, selling, marketing and
promoting their music. In most cases, we also market, promote, distribute and
sell the music of those recording artists for whom our domestic record labels
have international rights. In certain smaller markets, we license the right to
distribute and sell our music to non-affiliated third-party record labels.

Our Recorded Music business' operations include WMX, a next generation services
division that connects artists with fans and amplifies brands in creative,
immersive, and engaging ways. This division includes a rebranded WEA commercial
services & marketing network (formerly Warner-Elektra-Atlantic Corporation, or
WEA Corp.), which markets, distributes and sells music and video products to
retailers and wholesale distributors, as well as acting as the Company's media
and creative content arm. Our business' distribution operations also includes
ADA, which markets, distributes and sells the products of independent labels to
retail and wholesale distributors; and various distribution centers and ventures
operated internationally.

In addition to our music being sold in physical retail outlets, our music is
also sold in physical form to online physical retailers, such as amazon.com,
barnesandnoble.com and bestbuy.com, and distributed in digital form to an
expanded universe of digital partners, including streaming services such as
those of Amazon, Apple, Deezer, SoundCloud, Spotify, Tencent Music and YouTube,
radio services such as iHeart Radio and SiriusXM and other download services.

We have integrated the marketing of digital content into all aspects of our
business, including A&R and distribution. Our business development executives
work closely with A&R departments to ensure that while music is being produced,
digital assets are also created with all distribution channels in mind,
including streaming services, social networking sites, online portals and music-
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centered destinations. We also work side-by-side with our online and mobile
partners to test new concepts. We believe existing and new digital businesses
will be a significant source of growth and will provide new opportunities to
successfully monetize our assets and create new revenue streams. The proportion
of digital revenues attributable to each distribution channel varies by region
and proportions may change as the introduction of new technologies continues. As
one of the world's largest music entertainment companies, we believe we are well
positioned to take advantage of growth in digital distribution and emerging
technologies to maximize the value of our assets.

We have diversified our revenues beyond our traditional businesses by entering
into expanded-rights deals with recording artists in order to partner with such
artists in other aspects of their careers. Under these agreements, we provide
services to and participate in recording artists' activities outside the
traditional recorded music business such as touring, merchandising and
sponsorships. We have built and acquired artist services capabilities and
platforms for marketing and distributing this broader set of music-related
rights and participating more widely in the monetization of the artist brands we
help create. We believe that entering into expanded-rights deals and enhancing
our artist services capabilities in areas such as merchandising, VIP ticketing,
fan clubs, concert promotion and management has permitted us to diversify
revenue streams and capitalize on other revenue opportunities. This provides for
improved long-term relationships with our recording artists and allows us to
more effectively connect recording artists and fans.

Recorded Music revenues are derived from four main sources:

•Digital: the rightsholder receives revenues with respect to streaming and download services;

•Physical: the rightsholder receives revenues with respect to sales of physical products such as vinyl, CDs and DVDs;

•Artist services and expanded-rights: the rightsholder receives revenues with
respect to our artist services businesses and our participation in expanded
rights, including advertising, merchandising such as direct-to-consumer sales,
touring, concert promotion, ticketing, sponsorship, fan clubs, artist websites,
social publishing, and artist and brand management; and

•Licensing: the rightsholder receives royalties or fees for the right to use
sound recordings in combination with visual images such as in films or
television programs, television commercials and video games; the rightsholder
also receives royalties if sound recordings are performed publicly through
broadcast of music on television, radio and cable, and in public spaces such as
shops, workplaces, restaurants, bars and clubs.

The principal costs associated with our Recorded Music business are as follows:

•A&R costs: the costs associated with (i) paying royalties to recording artists,
producers, songwriters, other copyright holders and trade unions; (ii) signing
and developing recording artists; and (iii) creating master recordings in the
studio;

•Product costs: the costs to manufacture, package and distribute products to
wholesale and retail distribution outlets, the royalty costs associated with
distributing products of independent labels to wholesale and retail distribution
outlets, as well as the costs related to our artist services business;

•Selling and marketing expenses: the costs associated with the promotion and marketing of recording artists and music, including costs to produce music videos for promotional purposes and artist tour support; and

•General and administrative expenses: the costs associated with general overhead and other administrative expenses.

Music Publishing Operations

While Recorded Music is focused on marketing, promoting, distributing and
licensing a particular recording of a musical composition, Music Publishing is
an intellectual property business focused on generating revenue from uses of the
musical composition itself. In return for promoting, placing, marketing and
administering the creative output of a songwriter, or engaging in those
activities for other rightsholders, our Music Publishing business shares the
revenues generated from use of the musical compositions with the songwriter or
other rightsholders.

The operations of our Music Publishing business are conducted principally
through Warner Chappell Music, our global music publishing company headquartered
in Los Angeles, with operations in over 70 countries through various
subsidiaries, affiliates, and non-affiliated licensees and sub-publishers. We
own or control rights to more than one million musical compositions, including
numerous pop hits, American standards, folk songs and motion picture and
theatrical compositions. Assembled over decades, our award-winning catalog
includes over 100,000 songwriters and composers and a diverse range of genres
including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin,
folk, blues, symphonic, soul, Broadway, electronic, alternative and gospel.
Warner Chappell Music also administers the music and soundtracks of several
third-party television and film producers and studios. We have an extensive
production music catalog collectively branded as Warner Chappell Production
Music.
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Music Publishing revenues are derived from five main sources:

•Digital: the rightsholder receives revenues with respect to musical compositions embodied in recordings distributed in streaming services, download services, digital performance and other digital music services;

•Performance: the rightsholder receives revenues if the musical composition is
performed publicly through broadcast of music on television, radio and cable and
in retail locations (e.g., bars and restaurants), live performance at a concert
or other venue (e.g., arena concerts and nightclubs), and performance of music
in staged theatrical productions;

•Mechanical: the rightsholder receives revenues with respect to musical compositions embodied in recordings sold in any physical format or configuration such as vinyl, CDs and DVDs;

•Synchronization: the rightsholder receives revenues for the right to use the musical composition in combination with visual images such as in films or television programs, television commercials and video games as well as from other uses such as in toys or novelty items and merchandise; and

•Other: the rightsholder receives revenues for use in sheet music and other uses.

The principal costs associated with our Music Publishing business are as follows:

•A&R costs: the costs associated with (i) paying royalties to songwriters,
co-publishers and other copyright holders in connection with income generated
from the uses of their works and (ii) signing and developing songwriters; and

•Selling and marketing, general overhead and other administrative expenses: the costs associated with selling and marketing, general overhead and other administrative expenses.

Recent Events and Factors Affecting Results of Operations and Comparability

Fiscal Year End

The Company maintains a 52-53 week fiscal year ending on the last Friday in each
reporting period. The fiscal year ended September 30, 2022 includes 53 weeks,
and both fiscal years ended September 30, 2021 and 2020 included 52 weeks. The
additional week in fiscal year 2022 fell in the fiscal quarter ended December
31, 2021. Accordingly, the results of operations for the fiscal year ended
September 30, 2022 reflect 53 weeks compared to 52 weeks for both fiscal years
ended September 30, 2021 and 2020. Starting with the 2023 fiscal year, the
Company will transition to a reporting calendar in which the reporting periods
end on the last day of the calendar quarter. The Company's fiscal year will
begin on October 1 and end on September 30 of each year.

Russia-Ukraine Conflict

On February 24, 2022, the geopolitical situation in Eastern Europe intensified
with Russia's invasion of Ukraine, and the sanctions and other measures imposed
in response to this conflict have increased global economic and political
uncertainty. WMG operates both its Recorded Music and Music Publishing
businesses within Russia and, on March 10, 2022, the Company announced a
suspension of these operations in Russia. While our operations in Russia do not
constitute a material portion of our business, a significant escalation or
expansion of the conflict's current scope, increased or sustained economic
disruption, sanctions or countersanctions, further devaluation of the local
currency or increased cyber-related disruptions could make it difficult to
deliver our content, broaden inflationary costs, and have an adverse effect on
our results of operations.

COVID-19 Pandemic

On March 11, 2020, the COVID-19 outbreak (also referred to as "COVID") was
declared a global pandemic by the World Health Organization. The global pandemic
and governmental responses thereto disrupted physical and manufacturing supply
chains and required the closures of physical retailers, resulting in declines in
our physical revenue streams at the onset of the pandemic. Additionally,
stay-at-home orders, limited indoor and outdoor gatherings and other
restrictions have negatively affected our business in other ways, such as,
making it difficult to hold live concert tours, adversely impacting our concert
promotion business and the sale of merchandise, delaying the release of new
recordings and disrupting the production and release of motion pictures and
television programs, which negatively affected licensing revenue in our Recorded
Music business and synchronization revenue in our Music Publishing business.
However, the disruption from the COVID-19 pandemic, including the disruption
caused by the Omicron variant, accelerated growth of other revenue streams such
as fitness and interactive gaming (including augmented reality and virtual
reality), which may continue to grow. It is unclear how long the global pandemic
will last due to the possibility of new variants and sub-variants, increases in
infection rates and renewed government action to slow the spread of the virus,
and as such, it cannot be predicted to what extent the global pandemic will
continue to impact the demand for our music and related services.
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Our results of operations, cash flows and financial condition at and for the
fiscal years ended September 30, 2022, 2021 and 2020 were adversely affected by
the global pandemic despite a partial recovery starting in fiscal year 2021 as
businesses began to reopen and concerts and other live music resumed. For the
fiscal year ended September 30, 2022, costs recognized by the Company
attributable to COVID were not significant. For the fiscal year ended September
30, 2021, the Company recognized a one-time $3 million credit loss reserve
reversal impacting OIBDA. For the fiscal year ended September 30, 2020, the
Company recognized one-time charges of $17 million impacting OIBDA and a total
of $22 million impacting net income.

Initial Public Offering

On June 5, 2020, we completed an IPO of Class A Common Stock. The sale of shares
through the offering consisted entirely of secondary shares sold by Access. As a
result, we incurred one-time costs associated with the IPO of approximately $89
million for the fiscal year ended September 30, 2020, $60 million of which
relates to the Management Agreement as defined below. Following the IPO, our
results of operations include expenses associated with being a public company,
including auditing, accounting and legal fees and expenses, investor relations
expenses, increased directors' fees and director and officer liability insurance
costs, registrar and transfer agent fees and listing fees, as well as other
expenses.

Senior Management Free Cash Flow Plan

On June 5, 2020, we amended our Second Amended and Restated Senior Management
Free Cash Flow Plan (the "Plan"), which pays annual bonuses to certain
executives based on our free cash flow and offers participants the opportunity
to share in the appreciation of the value of our common stock, to remove the
cash-settlement feature of the awards issued previously under the Plan. Our
results of operations were adversely impacted by a non-cash stock-based
compensation charge of $593 million for the fiscal year ended September 30,
2020, which reflects the mark-to-market adjustment through the modification date
of the Plan for the change in value of our common stock upon consummation of the
IPO.

Subsequent to the amendment, the awards issued under the Plan were converted
from liability-classified to equity-classified and therefore are no longer
adjusted for changes in the value of our common stock. We continue to incur
non-cash stock-based compensation expense for awards that were unvested as of
the modification date of the Plan and for awards issued under the Omnibus
Incentive Plan. We incurred non-cash stock-based compensation expense and other
related expenses of $42 million, $47 million and $608 million for the fiscal
years ended September 30, 2022, 2021 and 2020, respectively. The total expense
of $608 million for fiscal 2020 includes the charge of $593 million as described
above.

Management Agreement

Upon completion of the Merger, the Company and Holdings entered into a
management agreement with Access, dated as of the Merger Closing Date (the
"Management Agreement"), pursuant to which Access provided the Company and its
subsidiaries with financial, investment banking, management, advisory and other
services. As a result of the completion of the IPO, the Management Agreement
terminated in accordance with its terms and the Company paid to Access a
one-time termination fee and a fee for transaction services in an aggregate
amount of $60 million, which was recorded within selling, general and
administrative expenses in the consolidated statements of operations for the
fiscal year ended September 30, 2020. As the Management Agreement was terminated
in June 2020, the Company incurred no costs associated with the Management
Agreement for the fiscal years ended September 30, 2022 and 2021. Prior to the
termination of the Management Agreement, the Company incurred costs associated
with the Management Agreement of approximately $7 million for the fiscal year
ended September 30, 2020, which was recorded within selling, general and
administrative expenses in the accompanying consolidated statements of
operations.
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RESULTS OF OPERATIONS

Fiscal Year Ended September 30, 2022 Compared with Fiscal Year Ended September 30, 2021 and Fiscal Year Ended September 30, 2020

Consolidated Results

Revenues

The Company's revenues were composed of the following amounts (in millions):

                                                For the Fiscal Year Ended
                                                      September 30,                                     2022 vs. 2021                              2021 vs. 2020
                                          2022                2021             2020             $ Change              % Change             $ Change              % Change
Revenue by Type
Digital                             $    3,305             $ 3,105          $ 2,568          $        200                    6  %       $        537                   21  %
Physical                                   563                 549              434                    14                    3  %                115                   26  %
Total Digital and Physical               3,868               3,654            3,002                   214                    6  %                652                   22  %
Artist services and expanded-rights        767                 599              525                   168                   28  %                 74                   14  %
Licensing                                  331                 291              283                    40                   14  %                  8                    3  %
Total Recorded Music                     4,966               4,544            3,810                   422                    9  %                734                   19  %
Performance                                159                 122              142                    37                   30  %                (20)                 -14  %
Digital                                    563                 436              337                   127                   29  %                 99                   29  %
Mechanical                                  50                  49               48                     1                    2  %                  1                    2  %
Synchronization                            172                 144              119                    28                   19  %                 25                   21  %
Other                                       14                  10               11                     4                   40  %                 (1)                  -9  %
Total Music Publishing                     958                 761              657                   197                   26  %                104                   16  %
Intersegment eliminations                   (5)                 (4)              (4)                   (1)                  25  %                  -                    -  %
Total Revenues                      $    5,919             $ 5,301          $ 4,463          $        618                   12  %       $        838                   19  %
Revenue by Geographical Location
U.S. Recorded Music                 $    2,231             $ 1,985          $ 1,609          $        246                   12  %       $        376                   23  %
U.S. Music Publishing                      513                 378              325                   135                   36  %                 53                   16  %
Total U.S.                               2,744               2,363            1,934                   381                   16  %                429                   22  %
International Recorded Music             2,735               2,559            2,201                   176                    7  %                358                   16  %
International Music Publishing             445                 383              332                    62                   16  %                 51                   15  %
Total International                      3,180               2,942            2,533                   238                    8  %                409                   16  %
Intersegment eliminations                   (5)                 (4)              (4)                   (1)                  25  %                  -                    -  %
Total Revenues                      $    5,919             $ 5,301          $ 4,463          $        618                   12  %       $        838                   19  %


Total Revenues

2022 vs. 2021

Total revenues increased by $618 million, or 12%, to $5,919 million for the
fiscal year ended September 30, 2022 from $5,301 million for the fiscal year
ended September 30, 2021. The current fiscal year included an additional week,
primarily reflected in Recorded Music streaming revenue and $38 million in
Recorded Music and Music Publishing downloads and other digital revenue from the
settlement of certain copyright infringement cases (the "Copyright Settlement").
Additionally, the current fiscal year included the impact of a new deal with one
of the Company's digital partners affecting Recorded Music streaming revenue.
The increase includes $198 million of unfavorable currency exchange
fluctuations. Prior to intersegment eliminations, Recorded Music and Music
Publishing revenues represented 84% and 16% of total revenues for the fiscal
year ended September 30, 2022, respectively, and 86% and 14% of total revenues
for the fiscal year ended September 30, 2021, respectively. Prior to
intersegment eliminations, U.S. and international revenues represented 46% and
54% for the fiscal year ended September 30, 2022, respectively, and 45% and 55%
for the fiscal year ended September 30, 2021, respectively.
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Total digital revenues after intersegment eliminations increased by $327
million, or 9%, to $3,866 million for the fiscal year ended September 30, 2022
from $3,539 million for the fiscal year ended September 30, 2021, which includes
$38 million in downloads and other digital revenue from the Copyright
Settlement. Total streaming revenue increased 9% driven by growth across
Recorded Music and Music Publishing. Recorded Music streaming revenue included
the impact of a new deal with one of the Company's digital partners. The growth
in Music Publishing includes a benefit of $20 million resulting from the July 1,
2022 remand ruling by the Copyright Royalty Board in Phonorecords III upholding
higher percentage revenue of U.S. mechanical royalty rates for 2018 to 2022 and
reflects amounts expected to be paid (the "CRB Rate Benefit"). Total digital
revenues represented 65% and 67% of consolidated revenues for the fiscal years
ended September 30, 2022 and September 30, 2021, respectively. The decrease in
digital revenues as a percentage of total revenue is primarily due to the growth
of artist services and expanded-rights revenue. Prior to intersegment
eliminations, total digital revenues for the fiscal year ended September 30,
2022 were composed of U.S. revenues of $1,983 million and international revenues
of $1,885 million, or 51% and 49% of total digital revenues, respectively. Prior
to intersegment eliminations, total digital revenues for the fiscal year ended
September 30, 2021 were composed of U.S. revenues of $1,769 million and
international revenues of $1,772 million, or 50% of total digital revenues for
each of U.S. and international revenues.

Recorded Music revenues increased by $422 million, or 9%, to $4,966 million for
the fiscal year ended September 30, 2022 from $4,544 million for the fiscal year
ended September 30, 2021. The increase includes $172 million of unfavorable
currency exchange fluctuations. U.S. Recorded Music revenues were $2,231 million
and $1,985 million, or 45% and 44% of consolidated Recorded Music revenues, for
the fiscal years ended September 30, 2022 and September 30, 2021, respectively.
International Recorded Music revenues were $2,735 million and $2,559 million, or
55% and 56% of consolidated Recorded Music revenues, for the fiscal years ended
September 30, 2022 and September 30, 2021, respectively.

The overall increase in Recorded Music revenue was driven by increases in
digital, artist services and expanded-rights, licensing and physical revenues.
Digital revenue increased by $200 million, or 6%, as a result of the continued
growth in streaming services, which was affected by market-related slowdown in
ad-supported revenue, $31 million in downloads and other digital revenue from
the Copyright Settlement, strength of releases including current year releases
from Ed Sheeran and Silk Sonic as well as carryover success from Dua Lipa, Ed
Sheeran and Bruno Mars. Revenue from streaming services grew by $187 million, or
6%, to $3,159 million for the fiscal year ended September 30, 2022 from $2,972
million for the fiscal year ended September 30, 2021. Streaming revenue growth
was partially offset by an unfavorable impact of foreign currency exchange rates
of $88 million, or 3%. Downloads and other digital revenue increased by $13
million, or 10%, to $146 million for the fiscal year ended September 30, 2022
from $133 million for the fiscal year ended September 30, 2021 due to the
Copyright Settlement, partially offset by continued shift to streaming services.
Artist services and expanded-rights revenue increased by $168 million primarily
due to higher touring activity, which was disrupted by COVID in the prior year,
and merchandising revenue, partially offset by an unfavorable impact of foreign
currency exchange rates of $37 million. Licensing revenue increased by $40
million, mainly due to higher synchronization and other licensing revenue,
partially offset by an unfavorable impact of foreign currency exchange rates of
$15 million. Physical revenue increased by $14 million, or 3%, primarily from
higher sales due to the success of new releases and an increased demand for
vinyl products, partially offset by an unfavorable impact of foreign currency
exchange rates of $28 million.

Music Publishing revenues increased by $197 million, or 26%, to $958 million for
the fiscal year ended September 30, 2022 from $761 million for the fiscal year
ended September 30, 2021. U.S. Music Publishing revenues were $513 million and
$378 million, or 54% and 50% of consolidated Music Publishing revenues, for the
fiscal year ended September 30, 2022 and September 30, 2021, respectively.
International Music Publishing revenues were $445 million and $383 million, or
46% and 50% of Music Publishing revenues, for the fiscal year ended
September 30, 2022 and September 30, 2021, respectively.

The overall increase in Music Publishing revenue was driven by increases in
digital revenue of $127 million, or 29%, performance revenue of $37 million,
synchronization revenue of $28 million and mechanical revenue of $1 million. The
increase in digital revenue is primarily due to increases in streaming revenue
driven by the continued growth in streaming services, the CRB Rate Benefit of
$20 million, $7 million in downloads and other digital revenue from the
Copyright Settlement and timing of new digital deals, partially offset by a
shift in the collection of certain writer's share income from certain digital
service providers. This change has no impact on Music Publishing OIBDA, but
results in a slight improvement to OIBDA margin. Revenue from streaming services
grew by $121 million, or 29%, to $539 million for the fiscal year ended
September 30, 2022 from $418 million for the fiscal year ended September 30,
2021. Performance revenue increased as bars, restaurants, concerts and live
events continued to recover from COVID disruption. The increase in
synchronization revenue is attributable to higher television and commercial
income. Mechanical revenue increase was partially offset by an unfavorable
impact of foreign currency exchange rates of $3 million.

2021 vs. 2020

Total revenues increased by $838 million, or 19%, to $5,301 million for the
fiscal year ended September 30, 2021 from $4,463 million for the fiscal year
ended September 30, 2020. Prior to intersegment eliminations, Recorded Music
revenues represented 86% and 85% of total revenues for the fiscal years ended
September 30, 2021 and September 30, 2020, respectively. Prior to
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intersegment eliminations, Music Publishing revenues represented 14% and 15% of
total revenues for the fiscal years ended September 30, 2021 and September 30,
2020, respectively. Prior to intersegment eliminations, U.S. and international
revenues represented 45% and 55% of total revenues for the fiscal year ended
September 30, 2021 and 43% and 57% of total revenues for the fiscal year ended
September 30, 2020, respectively.

Total digital revenues after intersegment eliminations increased by $636
million, or 22%, to $3,539 million for the fiscal year ended September 30, 2021
from $2,903 million for the fiscal year ended September 30, 2020. Total digital
revenues represented 67% and 65% of consolidated revenues for the fiscal years
ended September 30, 2021 and September 30, 2020, respectively. Prior to
intersegment eliminations, total digital revenues for the fiscal year ended
September 30, 2021 were composed of U.S. revenues of $1,769 million and
international revenues of $1,772 million, or 50% of total digital revenues for
each of U.S. and international revenues. Prior to intersegment eliminations,
total digital revenues for the fiscal year ended September 30, 2020 were
composed of U.S. revenues of $1,479 million and international revenues of $1,426
million, or 51% and 49% of total digital revenues, respectively.

Recorded Music revenues increased by $734 million, or 19%, to $4,544 million for
the fiscal year ended September 30, 2021 from $3,810 million for the fiscal year
ended September 30, 2020. U.S. Recorded Music revenues were $1,985 million and
$1,609 million, or 44% and 42%, of consolidated Recorded Music revenues for the
fiscal years ended September 30, 2021 and September 30, 2020, respectively.
International Recorded Music revenues were $2,559 million and $2,201 million, or
56% and 58% of consolidated Recorded Music revenues for the fiscal years ended
September 30, 2021 and September 30, 2020, respectively.

The overall increase in Recorded Music revenue was driven by increases in
digital, physical, artist services and expanded-rights, and licensing revenue.
Digital revenue increased by $537 million, or 21%, as a result of the continued
growth in streaming services, including growth in emerging streaming platforms
such as Facebook, TikTok and Peloton a well as strength of releases, which
included new release from Cardi B, as well as carryover success from Dua Lipa,
Ed Sheeran, Ava Max, the Hamilton original cast recording, Bruno Mars, Roddy
Ricch, Tones and I and YoungBoy Never Broke Again. Revenue from streaming
services grew by $569 million or 24% to $2,972 million for the fiscal year ended
September 30, 2021 from $2,403 million for the fiscal year ended September 30,
2020. Streaming revenue growth was partially offset by a decline in downloads
and other digital revenue of $32 million to $133 million for the fiscal year
ended September 30, 2021 from $165 million for the fiscal year ended September
30, 2020 due to the continued shift to streaming services. Physical revenue
increased by $115 million primarily from higher sales due to an increased demand
for vinyl products, continued recovery from COVID disruption, as well as the
favorable impact of foreign currency exchange rates of $15 million. Artist
services and expanded-rights revenue increased by $74 million primarily due to
higher direct-to-consumer merchandising revenue at EMP and the favorable impact
of foreign currency exchanges rates of $26 million, partially offset by a
decrease in touring activity resulting from COVID disruption. Licensing revenue
increased by $8 million primarily due to higher synchronization revenue as
businesses continued to recover from COVID disruption and the favorable impact
of foreign currency exchange rates of $9 million, partially offset by lower
compilation revenue and other COVID-impacted licensing revenue.

Music Publishing revenues increased by $104 million, or 16%, to $761 million for
the fiscal year ended September 30, 2021 from $657 million for the fiscal year
ended September 30, 2020. U.S. Music Publishing revenues were $378 million, or
50% of consolidated Music Publishing revenues for the fiscal year ended
September 30, 2021, and $325 million, or 49% of consolidated Music Publishing
revenues for the fiscal year ended September 30, 2020. International Music
Publishing revenues were $383 million, or 50% of consolidated Music Publishing
revenues for the fiscal year ended September 30, 2021, and $332 million, or 51%
of consolidated Music Publishing revenues for the fiscal year ended September
30, 2020.

The overall increase in Music Publishing revenue was mainly driven by increases
in digital revenue of $99 million or 29%, synchronization revenue of $25 million
or 21% and mechanical revenue of $1 million, partially offset by decreases in
performance revenue of $20 million or 14% and other revenue of $1 million. The
increase in digital revenue is primarily due to an increase in streaming revenue
driven by the continued growth in streaming services, including emerging
streaming platforms, and timing of new digital deals. Digital revenue growth in
the year was impacted by a favorable one-time settlement in the prior year, as
well as a shift in the collection of writer's share of U.S. digital performance
income from certain digital service providers. This change has no impact on
Music Publishing OIBDA, but results in a slight improvement to OIBDA margin. The
increase in synchronization revenue is attributable to higher motion picture and
commercial income and a one-time licensing settlement. Mechanical revenue is up
slightly due to the favorable impact of foreign currency exchange rates. The
decrease in performance revenue is primarily driven by the impact of COVID
disruption on bars, restaurants, concerts and live events, which have only
partially recovered.
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Revenue by Geographical Location

2022 vs. 2021

U.S. revenue increased by $381 million, or 16%, to $2,744 million for the fiscal
year ended September 30, 2022 from $2,363 million for the fiscal year ended
September 30, 2021. U.S. Recorded Music revenue increased by $246 million, or
12%. The primary driver was the increase of U.S. Recorded Music digital revenue
of $118 million driven by the continued growth in streaming services and the
Copyright Settlement. U.S. Recorded Music streaming revenue increased by $99
million, or 7%. Download and other digital increased by $19 million due to the
Copyright Settlement, partially offset by continued shift to streaming services.
U.S. Recorded Music artist services and expanded-rights revenue increased by $66
million, primarily driven by higher merchandising revenues. Increases are also
attributable to the increase in U.S. Recorded Music physical revenue of $34
million from higher sales due to the success of new releases and an increased
demand for vinyl products. The increase in licensing revenue of $28 million is
primarily due to higher synchronization activity. U.S. Music Publishing revenue
increased by $135 million, or 36%, to $513 million for the fiscal year ended
September 30, 2022 from $378 million for the fiscal year ended September 30,
2021. This was primarily driven by the increase in U.S. Music Publishing of $96
million in digital revenue due to the continued growth in streaming services,
the CRB Rate Benefit, the Copyright Settlement and timing of new digital deals,
partially offset by a shift in the collection of writer's share of U.S. digital
performance income from certain digital service providers. U.S. Music Publishing
streaming revenue increased by $90 million, or 39%. The increase in
synchronization revenue of $19 million is due to higher commercial and
television income. Performance revenue increased by $18 million driven by
recovery from COVID disruption and mechanical revenue increased by $1 million.

International revenue increased by $238 million, or 8%, to $3,180 million for
the fiscal year ended September 30, 2022 from $2,942 million for the fiscal year
ended September 30, 2021. Excluding the unfavorable impact of foreign currency
exchange rates, International revenue increased by $436 million, or 16%.
International Recorded Music revenue increased by $176 million primarily due to
increases in artist services and expanded-rights revenue of $102 million,
digital revenue of $82 million and licensing revenue of $12 million, partially
offset by the decrease in physical revenue of $20 million. International
Recorded Music artist services and expanded-rights revenue increased by $102
million primarily due to an increase in concert promotion which was disrupted by
COVID in the prior year, partially offset by the unfavorable impact of foreign
currency exchange rates of $37 million. International Recorded Music digital
revenue increased due to an $88 million, or 6%, increase in streaming services,
which was partially offset by an unfavorable impact of foreign currency exchange
rates of $88 million. International Recorded Music licensing revenue increased
by $12 million due to synchronization and other licensing revenue, partially
offset by the unfavorable impact of foreign currency exchange rates.
International Recorded Music physical revenue decreased by $20 million,
primarily driven by an unfavorable impact of foreign currency exchange rates,
which offset higher sales. International Music Publishing revenue increased by
$62 million, or 16%, to $445 million for the fiscal year ended September 30,
2022 from $383 million for the fiscal year ended September 30, 2021. This was
primarily driven by the increase in digital revenue of $31 million, performance
revenue of $19 million and synchronization revenue of $9 million. International
Music Publishing streaming revenue increased by $31 million, or 17%. Performance
revenue increased as businesses continued to recover from COVID disruption.
Higher synchronization revenue is primarily driven by higher television and
commercial income. Mechanical revenue remained constant due an unfavorable
impact of foreign currency exchange rates, which offset higher sales.

2021 vs. 2020

U.S. revenue increased by $429 million, or 22%, to $2,363 million for the fiscal
year ended September 30, 2021 from $1,934 million for the fiscal year ended
September 30, 2020. U.S. Recorded Music revenue increased by $376 million or
23%. The primary driver was the increase in U.S. Recorded Music digital revenue
of $239 million, or 18%, driven by the continued growth in streaming services.
Streaming revenue increased by $255 million, or 21%, partially offset by $16
million of digital download and other digital declines. Increases are also
attributable to the increase in U.S. Recorded Music physical revenue, which
increased by $77 million from higher sales due to an increased demand for vinyl
products and continued recovery from COVID disruption. U.S artist services and
expanded-rights revenue increased by $59 million driven by higher advertising
and social platform revenues, as well as merchandising revenues and U.S
licensing revenue increased by $1 million primarily due to higher
synchronization revenue, partially offset by lower compilation revenue. U.S.
Music Publishing revenue increased by $53 million or 16%. This was primarily
driven by the increase in U.S. Music Publishing digital revenue of $51 million,
or 27%, due to the continued growth in streaming services, including emerging
streaming platforms, and timing of new digital deals, partially offset by a
shift in the collection of writer's share of U.S. digital performance income
from certain digital service providers. The increase in synchronization revenue
of $11 million is due to higher motion picture and commercial income and a
one-time licensing settlement. Increases are partially offset by the decrease in
performance revenue of $7 million due to the impact of COVID disruption and
mechanical revenue of $2 million from the continuing shift to streaming
services.

International revenue increased by $409 million, or 16%, to $2,942 million for
the fiscal year ended September 30, 2021 from $2,533 million for the fiscal year
ended September 30, 2020. Excluding the favorable impact of foreign currency
exchange rates, international revenue increased by $280 million or 11%.
International Recorded Music revenue increased $358 million primarily due
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to an increase in digital revenue of $298 million, or 23%, physical revenue of
$38 million, artist services and expanded-rights revenue of $15 million and
licensing revenue of $7 million. International Recorded Music digital revenue
increased due to a $314 million, or
26%, increase in streaming services revenue, partially offset by a $16 million
decline in downloads and other digital revenue. The increase in international
Recorded Music streaming revenue was due to the continued growth in streaming
services internationally. International Recorded Music physical revenue
increased from higher sales due to an increased demand for vinyl products,
continued recovery from COVID disruption, as well as the favorable impact of
foreign currency exchange rates. International Recorded Music artist services
and expanded-rights revenue increased primarily due to the growth in EMP
direct-to-consumer merchandise revenue and favorable impact of foreign currency
exchanges rates, partially offset by the decrease in touring activity resulting
from COVID disruption. International Recorded Music licensing revenue increased
due to higher synchronization revenue and favorable foreign currency exchange
rates, partially offset by lower compilation revenue and other COVID-impacted
licensing revenue. International Music Publishing revenue increased by $51
million or 15%. This was primarily driven by increases in International Music
Publishing digital revenue of $48 million, or 32%, synchronization revenue of
$14 million and mechanical revenue of $3 million, partially offset by decreases
in performance revenue of $13 million and other revenue of $1 million. The
increase in digital revenue is primarily due to the increases in streaming
revenue driven by the continued growth in streaming services, including emerging
streaming platforms, and timing of new digital deals. Digital revenue growth in
the year was impacted by a favorable one-time settlement in the prior year. The
increase in synchronization revenue is due to higher commercial income. The
increase in mechanical revenue is a result of favorable foreign currency
exchange rates. The decline in performance revenue is due to the impact of COVID
disruption.

Cost of revenues

Our cost of revenues was composed of the following amounts (in millions):

                                                        For the Fiscal Year Ended
                                                              September 30,                                     2022 vs. 2021                              2021 vs. 2020
                                                  2022                2021             2020             $ Change              % Change             $ Change              % Change
Artist and repertoire costs                 $    1,960             $ 1,780          $ 1,560          $        180                   10  %       $        220                   14  %
Product costs                                    1,120                 962              773                   158                   16  %                189                   25  %
Total cost of revenues                      $    3,080             $ 2,742          $ 2,333          $        338                   12  %       $        409                   18  %


2022 vs. 2021

Our cost of revenues increased by $338 million, or 12%, to $3,080 million for
the fiscal year ended September 30, 2022 from $2,742 million for the fiscal year
ended September 30, 2021. Expressed as a percentage of revenues, cost of
revenues remained constant at 52% for each of the fiscal years ended
September 30, 2022 and September 30, 2021.

Artist and repertoire costs increased by $180 million, to $1,960 million for the
fiscal year ended September 30, 2022 from $1,780 million for the fiscal year
ended September 30, 2021. Artist and repertoire costs as a percentage of revenue
decreased to 33% for the fiscal year ended September 30, 2022 from 34% for the
fiscal year ended September 30, 2021, primarily due to revenue mix and timing of
artist and repertoire investments.

Product costs increased by $158 million, to $1,120 million for the fiscal year
ended September 30, 2022 from $962 million for the fiscal year ended
September 30, 2021. Product costs as a percentage of revenue increased to 19%
for the fiscal year ended September 30, 2022 from 18% for the fiscal year ended
September 30, 2021 due to revenue mix, primarily increases in artist services
and expanded-rights revenue.

2021 vs. 2020

Our cost of revenues increased by $409 million, or 18%, to $2,742 million for
the fiscal year ended September 30, 2021 from $2,333 million for the fiscal year
ended September 30, 2020. Expressed as a percentage of revenues, cost of
revenues remained constant at 52% for each of the fiscal years ended September
30, 2021 and September 30, 2020.

Artist and repertoire costs increased by $220 million, or 14%, to $1,780 million
for the fiscal year ended September 30, 2021 from $1,560 million for the fiscal
year ended September 30, 2020. Artist and repertoire costs as a percentage of
revenues decreased to 34% for the fiscal year ended September 30, 2021 from 35%
for the fiscal year ended September 30, 2020 due to revenue mix.

Product costs increased by $189 million, or 24%, to $962 million for the fiscal
year ended September 30, 2021 from $773 million for the fiscal year ended
September 30, 2020. Product costs as a percentage of revenues increased to 18%
for the fiscal year ended September 30, 2021 from 17% for the fiscal year ended
September 30, 2020. The overall increase as a percentage of revenues is due to
revenue mix, primarily increases in physical and third party distributed label
revenue.
                                       50
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Selling, general and administrative expenses

Our selling, general and administrative expenses were composed of the following
amounts (in millions):

                                                For the Fiscal Year Ended
                                                      September 30,                                     2022 vs. 2021                              2021 vs. 2020
                                          2022                2021             2020             $ Change              % Change             $ Change              % Change
General and administrative expense
(1)                                 $      939             $   870          $ 1,434          $         69                    8  %       $       (564)                 -39  %
Selling and marketing expense              792                 738              640                    54                    7  %                 98                   15  %
Distribution expense                       131                 113               95                    18                   16  %                 18                   19  %
Total selling, general and
administrative expense              $    1,862             $ 1,721          $ 2,169          $        141                    8  %       $       (448)                 -21  %

______________________________________

(1)Includes depreciation expense of $76 million, $77 million and $71 million for
the fiscal years ended September 30, 2022, September 30, 2021 and September 30,
2020, respectively.

2022 vs. 2021

Total selling, general and administrative expense increased by $141 million, or
8%, to $1,862 million for the fiscal year ended September 30, 2022 from $1,721
million for the fiscal year ended September 30, 2021. Expressed as a percentage
of revenue, total selling, general and administrative expense decreased to 31%
for the fiscal year ended September 30, 2022 from 32% for the fiscal year ended
September 30, 2021.

General and administrative expense increased by $69 million to $939 million for
the fiscal year ended September 30, 2022 from $870 million for the fiscal year
ended September 30, 2021. The increase in general and administrative expense was
mainly due to increased employee related costs, including the impact of an
additional week, the impact of acquisitions, unfavorable movements in foreign
currency exchange rates of $11 million and increased expenses related to
transformation initiatives, partially offset by the impact of the mark-to-market
adjustment of an earn-out liability related to an acquisition and lower
restructuring. Expressed as a percentage of revenue, general and administrative
expense remained constant at 16% for each of the fiscal years ended
September 30, 2022 and September 30, 2021.

Selling and marketing expense increased by $54 million, or 7%, to $792 million
for the fiscal year ended September 30, 2022 from $738 million for the fiscal
year ended September 30, 2021. Expressed as a percentage of revenue, selling and
marketing expense decreased to 13% for the fiscal year ended September 30, 2022
from 14% for the fiscal year ended September 30, 2021.

Distribution expense was $131 million for the fiscal year ended September 30,
2022 and $113 million for the fiscal year ended September 30, 2021. Expressed as
a percentage of revenue, distribution expense remained constant at 2% for each
of the fiscal years ended September 30, 2022 and September 30, 2021.

2021 vs. 2020

Total selling, general and administrative expense decreased by $448 million, or
21%, to $1,721 million for the fiscal year ended September 30, 2021 from $2,169
million for the fiscal year ended September 30, 2020. Expressed as a percentage
of revenues, selling, general and administrative expenses decreased to 32% for
the fiscal year ended September 30, 2021 from 49% for the fiscal year ended
September 30, 2020. This is primarily due to lower non-cash stock-based
compensation and other related expenses of $560 million, the prior-year
management agreement termination fee and IPO related expenses totaling $89
million. Excluding non-cash stock-based compensation and other related expenses,
the prior-year management agreement termination fee and IPO related expenses,
selling, general and administrative expense as a percentage of revenues
decreased to 32% for the fiscal year ended September 30, 2021 from 33% for the
fiscal year ended September 30, 2020.

General and administrative expenses decreased by $564 million, or 39%, to $870
million for the fiscal year ended September 30, 2021 from $1,434 million for the
fiscal year ended September 30, 2020. The decrease in general and administrative
expense was primarily due to lower expense associated with non-cash stock-based
compensation and other related expenses of $560 million, the prior-year
management agreement termination fee and IPO related expenses totaling $89
million and credit loss reserve reversal, partially offset by increased employee
related costs including restructuring. Expressed as a percentage of revenue,
general and administrative expense decreased to 16% for the fiscal year ended
September 30, 2021 from 32% for the fiscal year ended September 30, 2020.
Excluding non-cash stock-based compensation and other related expenses, the
prior-year management agreement termination fee and IPO related expenses,
general and administrative expense as a percentage of revenue decreased to 16%
for the fiscal year ended September 30, 2021 from 17% for the fiscal year ended
September 30, 2020.
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Selling and marketing expense increased by $98 million, or 15%, to $738 million
for the fiscal year ended September 30, 2021 from $640 million for the fiscal
year ended September 30, 2020. Expressed as a percentage of revenues, selling
and marketing expense remained constant at 14% for each of the fiscal years
ended September 30, 2021 and September 30, 2020.

Distribution expense increased by $18 million, or 19%, to $113 million for the
fiscal year ended September 30, 2021 from $95 million for the fiscal year ended
September 30, 2020. Expressed as a percentage of revenues, distribution expense
remained constant at 2% for each of the fiscal years ended September 30, 2021
and September 30, 2020.

Reconciliation of Net Income Attributable to Warner Music Group Corp. and Operating Income to Consolidated OIBDA

As previously described, we use OIBDA as our primary measure of financial
performance. The following table reconciles operating income to OIBDA, and
further provides the components from net income attributable to Warner Music
Group Corp. to operating income for purposes of the discussion that follows (in
millions):

                                             For the Fiscal Year Ended
                                                   September 30,                                  2022 vs. 2021                              2021 vs. 2020
                                        2022              2021           2020             $ Change              % Change             $ Change              % Change
Net income (loss) attributable to
Warner Music Group Corp.           $       551          $ 304          $ (475)         $        247                   81  %       $        779                    -  %
Income attributable to
noncontrolling interest                      4              3               5                     1                   33  %                 (2)                 -40  %
Net income (loss)                          555            307            (470)                  248                   81  %                777                    -  %
Income tax expense                         185            149              23                    36                   24  %                126                    -  %
Income (loss) before income taxes          740            456            (447)                  284                   62  %                903                    -  %
Other (income) expense                    (151)             9              57                  (160)                   -  %                (48)                 -84  %
Interest expense, net                      125            122             127                     3                    2  %                 (5)                  -4  %
Loss on extinguishment of debt               -             22              34                   (22)                -100  %                (12)                 -35  %
Operating income (loss)                    714            609            (229)                  105                   17  %                838                    -  %
Amortization expense                       263            229             190                    34                   15  %                 39                   21  %
Depreciation expense                        76             77              71                    (1)                  -1  %                  6                    9  %
OIBDA                              $     1,053          $ 915          $   32          $        138                   15  %       $        883                    -  %


OIBDA

2022 vs. 2021

OIBDA increased by $138 million to $1,053 million for the fiscal year ended
September 30, 2022 as compared to $915 million for the fiscal year ended
September 30, 2021 as a result of higher revenues, partially offset by higher
cost of revenues and selling, general and administrative expenses. Expressed as
a percentage of total revenue, OIBDA margin increased to 18% for the fiscal year
ended September 30, 2022 from 17% for the fiscal year ended September 30, 2021
due to strong operating performance, partially offset by unfavorable foreign
currency exchange rates.

2021 vs. 2020

Our OIBDA increased by $883 million to $915 million for the fiscal year ended
September 30, 2021 as compared to $32 million for the fiscal year ended
September 30, 2020 primarily as a result of higher revenues and lower expense
associated with non-cash stock-based compensation and other related expenses,
the prior-year management agreement termination fee and IPO related expenses,
partially offset by higher cost of revenues. Expressed as a percentage of total
revenue, OIBDA margin increased to 17% for the fiscal year ended September 30,
2021 from 1% for the fiscal year ended September 30, 2020. Excluding the expense
associated with non-cash stock-based compensation and other related expenses,
the prior-year management agreement termination fee and IPO related expenses,
OIBDA margin as a percentage of revenue increased to 18% for the fiscal year
ended September 30, 2021 from 16% for the fiscal year ended September 30, 2020
due to strong operating performance.

Depreciation expense

2022 vs. 2021

Our depreciation expense decreased by $1 million to $76 million for the fiscal year ended September 30, 2022 from $77 million for the fiscal year ended September 30, 2021.

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2021 vs. 2020

Our depreciation expense increased by $6 million, or 8%, to $77 million for the
fiscal year ended September 30, 2021 from $71 million for the fiscal year ended
September 30, 2020, primarily due to an increase in IT capital spend and assets
being placed into service, partially offset by a one-time charge of $10 million
related to the Los Angeles headquarters relocation in the prior year.

Amortization expense

2022 vs. 2021

Our amortization expense increased by $34 million, or 15%, to $263 million for
the fiscal year ended September 30, 2022 from $229 million for the fiscal year
ended September 30, 2021. The increase is primarily due to an increase in
amortizable intangible assets primarily related to the acquisition of
music-related assets.

2021 vs. 2020

Amortization expense increased by $39 million, or 21%, to $229 million for the
fiscal year ended September 30, 2021 from $190 million for the fiscal year ended
September 30, 2020, primarily due to an increase in amortizable intangible
assets primarily related to the acquisition of music-related assets.

Operating income (loss)

2022 vs. 2021

Our operating income increased by $105 million to $714 million for the fiscal
year ended September 30, 2022 from $609 million for the fiscal year ended
September 30, 2021. The increase in operating income was due to the factors that
led to the increase in OIBDA, partially offset by higher amortization as noted
above.

2021 vs. 2020

Our operating income increased by $838 million to $609 million for the fiscal
year ended September 30, 2021 from operating loss of $229 million for the fiscal
year ended September 30, 2020. The increase in operating income was due to the
factors that led to the increase in OIBDA, partially offset by higher
depreciation and amortization as noted above.

Loss on extinguishment of debt

2022 vs. 2021

There was no loss on extinguishment of debt for the fiscal year ended
September 30, 2022. We recorded a loss on extinguishment of debt in the amount
of $22 million for the fiscal year ended September 30, 2021 which represents the
premiums paid for early redemption and unamortized deferred financing costs in
connection with the redemption of the 5.500% Senior Notes and the 3.625% Senior
Secured Notes (as defined later in this Annual report).

2021 vs. 2020

We recorded a loss on extinguishment of debt in the amount of $22 million for
the fiscal year ended September 30, 2021, which represents the premiums paid for
early redemption and unamortized deferred financing costs in connection with the
redemption of the 5.500% Senior Notes and the 3.625% Senior Secured Notes (as
defined later in this Annual Report). We recorded a loss on extinguishment of
debt in the amount of $34 million for the fiscal year ended September 30, 2020,
which represents the premiums paid for early redemption and unamortized deferred
financing costs in connection with the redemption of the 4.125% Senior Secured
Notes due 2024 (the "4.125% Senior Secured Notes"), the 4.875% Senior Secured
Notes due 2024 (the "4.875% Senior Secured Notes") and the 5.00% Senior Secured
Notes due 2023 (the "5.00% Senior Secured Notes") and the partial repayment of
the Senior Term Loan Facility (as defined later in this Annual Report). Please
refer to Note 10 of our consolidated financial statements for further
discussion.

Interest expense, net

2022 vs. 2021

Our interest expense, net, increased to $125 million for the fiscal year ended
September 30, 2022 from $122 million for the fiscal year ended September 30,
2021 due to higher principal balance due to the issuance of senior secured notes
to partially fund the acquisition of a business and music-related assets.
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2021 vs. 2020

Our interest expense, net decreased by $5 million, or 4% to $122 million for the
fiscal year ended September 30, 2021 from $127 million for the fiscal year ended
September 30, 2020. This was primarily driven by lower interest rates resulting
from debt refinancing, partially offset by a higher principal balance due to the
issuance of senior secured notes.

Other (income) expense

2022 vs. 2021

Other income for the fiscal year ended September 30, 2022 primarily includes
foreign currency gains on our Euro-denominated debt of $151 million, currency
exchange gains on our intercompany loans of $34 million and unrealized gains on
hedging activity of $10 million, partially offset by aggregate realized and
unrealized losses of $49 million related to equity investments.

Other expense for the fiscal year ended September 30, 2021 primarily includes foreign currency losses on our Euro-denominated debt of $5 million and unrealized loss of $4 million on the mark-to-market of equity investments.

2021 vs. 2020

Other expense decreased by $48 million to $9 million for the fiscal year ended
September 30, 2021 from $57 million for the fiscal year ended September 30,
2020. Other expense for the fiscal year ended September 30, 2021 primarily
includes foreign currency losses on our Euro-denominated debt of $5 million and
unrealized loss of $4 million on the mark-to-market of equity investments.

Other expense for the fiscal year ended September 30, 2020 primarily includes
the non-cash unrealized loss on the remeasurement of our Euro-denominated debt
of $56 million, $4 million loss on hedging activity and losses on investments of
$7 million, partially offset by an unrealized gain of $9 million on the
mark-to-market of an equity method investment.

Income tax expense

2022 vs. 2021

Our income tax expense increased by $36 million to $185 million for the fiscal
year ended September 30, 2022 from $149 million for the fiscal year ended
September 30, 2021. The increase of $36 million in income tax expense is
primarily due to the impact of higher pre-tax income in the current year,
partially offset by the impact of a higher proportion of the pre-tax income
being earned in the United States in the current year and the change in the UK
statutory tax rate recognized in the prior year.

2021 vs. 2020

Our income tax expense increased by $126 million to $149 million for the fiscal
year ended September 30, 2021 from $23 million for the fiscal year ended
September 30, 2020. The net increase of $126 million in income tax expense
primarily relates to the higher pre-tax income in the current fiscal year as
compared to pre-tax income before non-deductible executive compensation and
transaction costs and release of valuation allowances of foreign tax credits for
the fiscal year ended September 30, 2020.

Net income (loss)

2022 vs. 2021

Net income increased by $248 million to $555 million for the fiscal year ended
September 30, 2022 from $307 million for the fiscal year ended September 30,
2021 as a result of the factors described above.

2021 vs. 2020

Our net income increased by $777 million to income of $307 million for the fiscal year ended September 30, 2021 from a loss of $470 million for the fiscal year ended September 30, 2020 as a result of the factors described above.

Noncontrolling interest

2022 vs. 2021

There was $4 million of income attributable to noncontrolling interest for the
fiscal year ended September 30, 2022 and $3 million of income attributable to
noncontrolling interest for the fiscal year ended September 30, 2021.
                                       54
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2021 vs. 2020

There was $3 million of income attributable to noncontrolling interests for the
fiscal year ended September 30, 2021. There was $5 million of income
attributable to noncontrolling interests for the fiscal year ended September 30,
2020.

Business Segment Results

Revenues, operating income (loss) and OIBDA by business segment were as follows
(in millions):

                                              For the Fiscal Year Ended
                                                    September 30,                                     2022 vs. 2021                              2021 vs. 2020
                                        2022                2021             2020             $ Change              % Change             $ Change              % Change
Recorded Music
Revenues                          $    4,966             $ 4,544          $ 3,810          $        422                    9  %       $        734                   19  %
Operating income                         796                 733              175                    63                    9  %                558                    -  %
OIBDA                                  1,023                 936              349                    87                    9  %                587                    -  %
Music Publishing
Revenues                                 958                 761              657                   197                   26  %                104                   16  %
Operating income                         139                  89               81                    50                   56  %                  8                   10  %
OIBDA                                    231                 174              157                    57                   33  %                 17                   11  %
Corporate expenses and
eliminations
Revenue eliminations                      (5)                 (4)              (4)                   (1)                  25  %                  -                    -  %
Operating loss                          (221)               (213)            (485)                   (8)                   4  %                272                  -56  %
OIBDA                                   (201)               (195)            (474)                   (6)                   3  %                279                  -59  %
Total
Revenues                               5,919               5,301            4,463                   618                   12  %                838                   19  %
Operating income (loss)                  714                 609             (229)                  105                   17  %                838                    -  %
OIBDA                                  1,053                 915               32                   138                   15  %                883                    -  %


Recorded Music

Revenues

2022 vs. 2021

Recorded Music revenue increased by $422 million, or 9%, to $4,966 million for
the fiscal year ended September 30, 2022 from $4,544 million for the fiscal year
ended September 30, 2021. U.S. Recorded Music revenues were $2,231 million and
$1,985 million, or 45% and 44% of consolidated Recorded Music revenues, for the
fiscal years ended September 30, 2022 and September 30, 2021, respectively.
International Recorded Music revenues were $2,735 million and $2,559 million, or
55% and 56% of consolidated Recorded Music revenues, for the fiscal year ended
September 30, 2022 and September 30, 2021, respectively.

The overall increase in Recorded Music revenue was driven by growth across all
revenue types, including digital, artist services and expanded-rights, licensing
and physical revenue, as described in the "Total Revenues" and "Revenue by
Geographical Location" sections above.

2021 vs. 2020

Recorded Music revenues increased by $734 million, or 19%, to $4,544 million for
the fiscal year ended September 30, 2021 from $3,810 million for the fiscal year
ended September 30, 2020. U.S. Recorded Music revenues were $1,985 million and
$1,609 million, or 44% and 42%, of consolidated Recorded Music revenues, for the
fiscal years ended September 30, 2021 and September 30, 2020, respectively.
International Recorded Music revenues were $2,559 million and $2,201 million, or
56% and 58% of consolidated Recorded Music revenues, for the fiscal years ended
September 30, 2021 and September 30, 2020, respectively.

The overall increase in Recorded Music revenue was driven by increases in digital, physical, artist services and expanded-rights and licensing revenue as described in the "Total Revenues" and "Revenue by Geographical Location" sections above.

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Cost of revenues

Recorded Music cost of revenues was composed of the following amounts (in
millions):

                                                        For the Fiscal Year Ended
                                                              September 30,                                     2022 vs. 2021                              2021 vs. 2020
                                                  2022                2021             2020             $ Change              % Change             $ Change              % Change
Artist and repertoire costs                 $    1,345             $ 1,291          $ 1,148          $         54                    4  %       $        143                   13  %
Product costs                                    1,120                 962              771                   158                   16  %                191                   25  %
Total cost of revenues                      $    2,465             $ 2,253          $ 1,919          $        212                    9  %       $        334                   17  %


2022 vs. 2021

Recorded Music cost of revenues increased by $212 million, or 9%, to $2,465
million for the fiscal year ended September 30, 2022 from $2,253 million for the
fiscal year ended September 30, 2021. Expressed as a percentage of Recorded
Music revenue, cost of revenues remained constant at 50% for each of the fiscal
years ended September 30, 2022 and September 30, 2021.

Artist and repertoire costs as a percentage of revenue decreased to 27% for the
fiscal year ended September 30, 2022 from 28% for the fiscal year ended
September 30, 2021. The decrease is primarily attributable to revenue mix and
timing of artist and repertoire investments.

Product costs as a percentage of revenue increased to 23% for the fiscal year
ended September 30, 2022 from 21% for the fiscal year ended September 30, 2021.
The overall increase as a percentage of revenue primarily relates to revenue mix
due to an increase in lower-margin artist services and expanded-rights revenue.

2021 vs. 2020

Recorded Music cost of revenues increased by $334 million, or 17%, to $2,253
million for the fiscal year ended September 30, 2021 from $1,919 million for the
fiscal year ended September 30, 2020. Expressed as a percentage of Recorded
Music revenue, cost of revenues remained constant at 50% for each of the fiscal
years ended September 30, 2021 and September 30, 2020.

Artist and repertoire costs as a percentage of revenue decreased to 28% for the fiscal year ended September 30, 2021 from 30% for the fiscal year ended September 30, 2020. The decrease is primarily attributable to revenue mix.

Product costs as a percentage of revenues increased to 21% for the fiscal year
ended September 30, 2021 from 20% for the fiscal year ended September 30, 2020.
The increase in product costs primarily relates to revenue mix due to higher
physical and third party distributed label revenue.

Selling, general and administrative expense

Recorded Music selling, general and administrative expenses were composed of the following amounts (in millions):

                                                For the Fiscal Year Ended
                                                      September 30,                                     2022 vs. 2021                              2021 vs. 2020
                                          2022                2021             2020             $ Change              % Change             $ Change              % Change
General and administrative expense
(1)                                 $      623             $   569          $   875          $         54                    9  %       $       (306)                 -35  %
Selling and marketing expense              775                 726              627                    49                    7  %                 99                   16  %
Distribution expense                       131                 113               95                    18                   16  %                 18                   19  %
Total selling, general and
administrative expense              $    1,529             $ 1,408          $ 1,597          $        121                    9  %       $       (189)                 -12  %

______________________________________

(1)Includes depreciation expense of $51 million, $53 million, and $55 million for the fiscal years ended September 30, 2022, September 30, 2021 and September 30, 2020, respectively.

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2022 vs. 2021

Recorded Music selling, general and administrative expense increased by $121
million, or 9%, to $1,529 million for the fiscal year ended September 30, 2022
from $1,408 million for the fiscal year ended September 30, 2021. The increase
in general and administrative expense was primarily due to the impact of
acquisitions, increased employee related costs, the unfavorable movements in
foreign currency exchange rates of $14 million and legal expenses for the
Copyright Settlement, partially offset by the impact of the mark-to-market
adjustment of an earn-out liability related to an acquisition, lower non-cash
stock-based compensation and other related expenses of $9 million, as a result
of equity awards becoming fully vested, and lower restructuring. The increase in
selling and marketing expense was primarily due to increased variable marketing
spend on higher revenues and new releases, increased employee related costs and
higher travel expenses as limited travel resumed. The increase in distribution
expense was primarily due to higher artist services and expanded-rights revenue.
Expressed as a percentage of Recorded Music revenue, Recorded Music selling,
general and administrative expense remained constant at 31% for each of the
fiscal years ended September 30, 2022 and September 30, 2021.

2021 vs. 2020

Recorded Music selling, general and administrative expense decreased by $189
million, or 12%, to $1,408 million for the fiscal year ended September 30, 2021
from $1,597 million for the fiscal year ended September 30, 2020. The decrease
in general and administrative expense was primarily due to lower non-cash
stock-based compensation and other related expenses of $367 million and credit
loss reserve reversal, partially offset by increased employee related costs
including restructuring. The increase in selling and marketing expense was
primarily due to increased variable marketing spend on higher revenues and new
releases. The increase in distribution expense was primarily due to higher
artist services and expanded-rights revenue. Expressed as a percentage of
Recorded Music revenue, Recorded Music selling, general and administrative
expense decreased to 31% for the fiscal year ended September 30, 2021 from 42%
for the fiscal year ended September 30, 2020 primarily due to lower non-cash
stock-based compensation and other related expenses of $367 million. Excluding
non-cash stock-based compensation and other related expenses, selling, general
and administrative expense as a percentage of Recorded Music revenue decreased
to 30% for the fiscal year ended September 30, 2021 from 32% for the fiscal year
ended September 30, 2020.

Operating income and OIBDA

Recorded Music OIBDA included the following amounts (in millions):

                                           For the Fiscal Year Ended
                                                 September 30,                                  2022 vs. 2021                             2021 vs. 2020
                                       2022              2021           2020            $ Change             % Change             $ Change              % Change
Operating income                  $       796          $ 733          $ 175          $        63                    9  %       $        558                    -  %
Depreciation and amortization             227            203            174                   24                   12  %                 29                   17  %
OIBDA                             $     1,023          $ 936          $ 349          $        87                    9  %       $        587                    -  %


2022 vs. 2021

Recorded Music OIBDA increased by $87 million, to $1,023 million for the fiscal
year ended September 30, 2022 from $936 million for the fiscal year ended
September 30, 2021 as a result of higher revenues, partially offset by higher
costs of revenue and selling, general and administrative expenses. Expressed as
a percentage of Recorded Music revenue, Recorded Music OIBDA margin remained
constant at 21% for each of the fiscal years ended September 30, 2022 and
September 30, 2021 due to strong operating performance, which was offset by
revenue mix resulting from the growth of lower-margin revenue streams and an
unfavorable impact of foreign currency exchange rates.

Recorded Music operating income increased by $63 million to $796 million for the
fiscal year ended September 30, 2022 from $733 million for the fiscal year ended
September 30, 2021 due to the factors that led to the increase in Recorded Music
OIBDA noted above, partially offset by an increase in amortizable intangible
assets related to the acquisition of music-related assets.

2021 vs. 2020

Recorded Music OIBDA increased by $587 million to $936 million for the fiscal
year ended September 30, 2021 from $349 million for the fiscal year ended
September 30, 2020 primarily as a result of higher revenues and lower non-cash
stock-based compensation and other related expenses of $367 million, partially
offset by higher cost of revenues. Expressed as a percentage of Recorded Music
revenues, Recorded Music OIBDA margin increased to 21% for the fiscal year ended
September 30, 2021 from 9% for the fiscal year ended September 30, 2020.
Excluding non-cash stock-based compensation and other related expenses, OIBDA as
a percentage of Recorded Music revenue increased to 21% for the fiscal year
ended September 30, 2021 from 19% for the fiscal year ended September 30, 2020
due to strong operating performance.
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Recorded Music operating income increased by $558 million to $733 million for
the fiscal year ended September 30, 2021 from $175 million for the fiscal year
ended September 30, 2020 due to the factors that led to the increase in Recorded
Music OIBDA noted above, partially offset by an increase in amortizable
intangible assets related to the acquisition of music-related assets.

Music Publishing

Revenues

2022 vs. 2021

Music Publishing revenues increased by $197 million, or 26%, to $958 million for
the fiscal year ended September 30, 2022 from $761 million for the fiscal year
ended September 30, 2021. U.S. Music Publishing revenues were $513 million and
$378 million, or 54% and 50% of consolidated Music Publishing revenues, for the
fiscal years ended September 30, 2022 and September 30, 2021, respectively.
International Music Publishing revenues were $445 million and $383 million, or
46% and 50% of consolidated Music Publishing revenues, for the fiscal years
ended September 30, 2022 and September 30, 2021, respectively.

The overall increase in Music Publishing revenue was driven by growth across all
revenue types, including digital, performance, synchronization and mechanical
revenue, as described in the "Total Revenues" and "Revenue by Geographical
Location" sections above.

2021 vs. 2020

Music Publishing revenues increased by $104 million, or 16%, to $761 million for
the fiscal year ended September 30, 2021 from $657 million for the fiscal year
ended September 30, 2020. U.S. Music Publishing revenues were $378 million and
$325 million, or 50% and 49%, of Music Publishing revenues for the fiscal years
ended September 30, 2021 and September 30, 2020, respectively. International
Music Publishing revenues were $383 million and $332 million, or 50% and 51%, of
Music Publishing revenues for the fiscal years ended September 30, 2021 and
September 30, 2020, respectively.

The overall increase in Music Publishing revenue was mainly driven by digital,
synchronization and mechanical revenue growth, partially offset by lower
performance and other revenue, as described in the "Total Revenues" and "Revenue
by Geographical Location" sections above.

Cost of revenues

Music Publishing cost of revenues was composed of the following amounts (in
millions):

                                                    For the Fiscal Year Ended
                                                          September 30,                                 2022 vs. 2021                              2021 vs. 2020
                                                2022             2021           2020            $ Change              % Change             $ Change             % Change
Artist and repertoire costs                 $     620          $ 493          $ 418          $        127                   26  %       $        75                   18  %
Total cost of revenues                      $     620          $ 493          $ 418          $        127                   26  %       $        75                   18  %


2022 vs. 2021

Music Publishing cost of revenues increased by $127 million, or 26%, to $620
million for the fiscal year ended September 30, 2022 from $493 million for the
fiscal year ended September 30, 2021. Expressed as a percentage of Music
Publishing revenue, Music Publishing cost of revenues remained constant at 65%
for each of the fiscal years ended September 30, 2022 and September 30, 2021.

2021 vs. 2020

Music Publishing cost of revenues increased by $75 million, or 18%, to $493
million for the fiscal year ended September 30, 2021 from $418 million for the
fiscal year ended September 30, 2020. Expressed as a percentage of Music
Publishing revenue, Music Publishing cost of revenues increased to 65% for the
fiscal year ended September 30, 2021 from 64% for the fiscal year ended
September 30, 2020, primarily attributable to revenue mix, partially offset by
lower royalty expense due to a shift in the collection of writer's share of U.S.
digital performance income from certain digital service providers.
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Selling, general and administrative expense

Music Publishing selling, general and administrative expenses were composed of the following amounts (in millions):

                                             For the Fiscal Year Ended
                                                   September 30,                                 2022 vs. 2021                             2021 vs. 2020
                                        2022              2021           2020            $ Change             % Change             $ Change             % Change
General and administrative expense
(1)                                 $      110          $  99          $  85          $        11                   11  %       $        14                   17  %
Selling and marketing expense                2              1              2                    1                  100  %                (1)                 -50  %
Total selling, general and
administrative expense              $      112          $ 100          $  87          $        12                   12  %       $        13                   15  %

______________________________________

(1)Includes depreciation expense of $5 million, $6 million and $5 million for
the fiscal years ended September 30, 2022, September 30, 2021 and September 30,
2020, respectively.

2022 vs. 2021

Music Publishing selling, general and administrative expense increased to $112
million for the fiscal year ended September 30, 2022 from $100 million for the
fiscal year ended September 30, 2021. The increase in general and administrative
expense was primarily due to higher variable compensation expense related to
strong operating performance, employee-related costs and legal expenses for the
Copyright Settlement, partially offset by lower restructuring. Expressed as a
percentage of Music Publishing revenue, Music Publishing selling, general and
administrative expense decreased to 12% for the fiscal year ended September 30,
2022 from 13% for the fiscal year ended September 30, 2021.

2021 vs. 2020

Music Publishing selling, general and administrative expense increased by $13
million, or 15%, to $100 million for the fiscal year ended September 30, 2021 as
compared to $87 million for the fiscal year ended September 30, 2020. The
increase in general and administrative expense was primarily due to higher
employee-related costs. Expressed as a percentage of Music Publishing revenues,
Music Publishing selling, general and administrative expense remained constant
at 13% for each of the fiscal years ended September 30, 2021 and September 30,
2020.

Operating income and OIBDA

Music Publishing OIBDA included the following amounts (in millions):

                                          For the Fiscal Year Ended
                                                September 30,                                 2022 vs. 2021                             2021 vs. 2020
                                      2022             2021           2020            $ Change             % Change             $ Change             % Change
Operating income                  $     139          $  89          $  81          $        50                   56  %       $         8                   10  %
Depreciation and amortization            92             85             76                    7                    8  %                 9                   12  %
OIBDA                             $     231          $ 174          $ 157          $        57                   33  %       $        17                   11  %


2022 vs. 2021

Music Publishing OIBDA increased by $57 million, or 33%, to $231 million for the
fiscal year ended September 30, 2022 from $174 million for the fiscal year ended
September 30, 2021. Expressed as a percentage of Music Publishing revenue, Music
Publishing OIBDA margin increased to 24% for the fiscal year ended September 30,
2022 from 23% for the fiscal year ended September 30, 2021. The increase was due
to strong operating performance, partially offset by the unfavorable impact of
foreign currency exchange rates.

Music Publishing operating income increased by $50 million to $139 million for
the fiscal year ended September 30, 2022 from $89 million operating income for
the fiscal year ended September 30, 2021 largely due to the factors that led to
the increase in Music Publishing OIBDA noted above, partially offset by an
increase in amortizable intangible assets related to the acquisition of
music-related assets.
                                       59
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2021 vs. 2020

Music Publishing OIBDA increased by $17 million, or 11%, to $174 million for the
fiscal year ended September 30, 2021 from $157 million for the fiscal year ended
September 30, 2020. Expressed as a percentage of Music Publishing revenues,
Music Publishing OIBDA margin decreased to 23% for the fiscal year ended
September 30, 2021 from 24% for the fiscal year ended September 30, 2020. The
decrease was primarily due to higher artist and repertoire costs, partially
offset by lower royalty expense due to a shift in the collection of writer's
share of U.S. digital performance income from certain digital service providers.

Music Publishing operating income increased by $8 million to $89 million for the
fiscal year ended September 30, 2021 from $81 million for the fiscal year ended
September 30, 2020 due to the factors that led to the increase in Music
Publishing OIBDA noted above, partially offset by an increase in amortizable
intangible assets related to the acquisition of music-related assets.

Corporate Expenses and Eliminations

2022 vs. 2021

Our operating loss from corporate expenses and eliminations increased by $8
million to $221 million for the fiscal year ended September 30, 2022 from $213
million for the fiscal year ended September 30, 2021, which primarily includes
increased expenses related to transformation initiatives and employee related
costs, including the impact of an additional week, partially offset by recovery
of previously incurred legal expenses for the Copyright Settlement.

Our OIBDA loss from corporate expenses and eliminations increased by $6 million
to $201 million for the fiscal year ended September 30, 2022 from $195 million
for the fiscal year ended September 30, 2021 primarily due to the operating loss
factors noted above.

2021 vs. 2020

Our operating loss from corporate expenses and eliminations decreased by $272
million to $213 million for the fiscal year ended September 30, 2021 from $485
million for the fiscal year ended September 30, 2020 which primarily includes
the decrease in non-cash stock-based compensation and other related expenses of
$195 million, the prior-year management agreement termination fee and IPO
related expenses totaling $89 million and decline in management fees of $7
million, partially offset by higher employee related costs, technology spend and
public company related expenses.

Our OIBDA loss from corporate expenses and eliminations decreased by $279
million to $195 million for the fiscal year ended September 30, 2021 from $474
million for the fiscal year ended September 30, 2020, due to the operating loss
factors noted above.
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FINANCIAL CONDITION AND LIQUIDITY

Financial Condition at September 30, 2022

At September 30, 2022, we had $3.732 billion of debt (which is net of $41
million of premiums, discounts and deferred financing costs), $584 million of
cash and equivalents (net debt of $3.148 billion, defined as total debt, less
cash and equivalents and premiums, discounts and deferred financing costs) and
$152 million of Warner Music Group Corp. equity. This compares to $3.346 billion
of debt (which is net of $37 million of premiums, discounts and deferred
financing costs), $499 million of cash and equivalents (net debt of $2.847
billion) and $31 million of Warner Music Group Corp. equity at September 30,
2021.

Cash Flows

The following table summarizes our historical cash flows (in millions). The
financial data for fiscal years ended September 30, 2022, 2021 and 2020 have
been derived from our consolidated financial statements included elsewhere
herein.

                                        Fiscal Year Ended September 30,
                                           2022                  2021       2020
Cash provided by (used in):
Operating activities          $        742                      $ 638      $ 463
Investing activities                  (824)                      (638)      (219)
Financing activities                   188                        (61)      (316)


Operating Activities

Cash provided by operating activities was $742 million for the fiscal year ended September 30, 2022 compared to $638 million for the fiscal year ended September 30, 2021 and $463 million for the fiscal year ended September 30, 2020. The $104 million, or 16%, increase in cash provided by operating activities during the current year was primarily due to strong operating performance and timing of working capital.

The increase in results from operating activities for the fiscal year ended September 30, 2021 compared to the fiscal year ended September 30, 2020 reflected an increase in OIBDA offset by a decrease in non-cash equity compensation expense and continued A&R investment driving a use from working capital.

Investing Activities

Cash used in investing activities was $824 million for the fiscal year ended September 30, 2022 compared to $638 million for the fiscal year ended September 30, 2021 and $219 million for the fiscal year ended September 30, 2020.

Cash used in investing activities of $824 million for the fiscal year ended
September 30, 2022 consisted of $509 million relating to investments and
acquisitions of businesses, a portion of which was debt-financed, $191 million
to acquire music-related assets, a portion of which was debt-financed, and $135
million relating to capital expenditures, partially offset by $11 million of
proceeds from the sale of investments.

Cash used in investing activities of $638 million for the fiscal year ended September 30, 2021 consisted of $64 million relating to investments and acquisitions of businesses, $93 million relating to capital expenditures and $481 million to acquire music-related assets, a portion of which was debt-financed.

Cash used in investing activities of $219 million for the fiscal year ended
September 30, 2020 consisted of $81 million related to an acquisition, net of
cash and equivalents acquired, $13 million relating to other investments, $85
million relating to capital expenditures, including investment in transformation
initiatives, and $40 million to acquire music publishing rights and music
catalogs.

Financing Activities

Cash provided by financing activities was $188 million for the fiscal year ended
September 30, 2022 compared to cash used in financing activities of $61 million
for the fiscal year ended September 30, 2021 and cash used in financing
activities of $316 million for the fiscal year ended September 30, 2020.
                                       61
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The $188 million of cash provided by financing activities for the fiscal year
ended September 30, 2022 consisted of proceeds from debt issuance of $535
million, which was used to fund the acquisition of a business and music-related
assets, partially offset by dividends paid of $318 million, taxes paid related
to net share settlement of restricted stock units of $6 million, deferred
financing costs of $5 million, cash paid to settle deferred and contingent
consideration of $7 million, distributions to noncontrolling interest holders of
$6 million and other for $5 million.

The $61 million of cash used in financing activities for the fiscal year ended
September 30, 2021 consisted of the redemption of the outstanding aggregate
principal amount of $325 million of the 5.500% Senior Notes due 2026, the
redemption of the 3.625% Senior Secured Notes due 2026 of $524 million,
dividends paid of $265 million, call premiums paid on early redemption of debt
of $21 million, deferred financing costs of $12 million and distributions to
noncontrolling interest holders of $7 million, partially offset by the proceeds
from the issuance of the 3.000% Senior Secured Notes due 2031 of $244 million
which was used to fund the acquisition of music-related assets, proceeds from
the issuance of the 2.250% Senior Secured Notes due 2031 of $524 million, and
proceeds from the increase supplement to the Senior Term Loan Facility of $325
million.

The $316 million of cash used in financing activities for the fiscal year ended
September 30, 2020 consisted of the tender for and repayment of Acquisition
Corp.'s 5.000% Senior Secured Notes due 2023 of $300 million, repayment of
Acquisition Corp.'s 4.875% Senior Secured Notes due 2024 of $220 million,
repayment of Acquisition Corp.'s 4.125% Senior Secured Notes due 2024 of $349
million, partial repayment of Acquisition Corp.'s Senior Term Loan Facility due
2023 of $506 million, call premiums paid on and redemption deposits for early
redemption of the aforementioned Senior Secured Notes of $23 million, dividends
paid of $344 million and distributions to noncontrolling interest holders of $7
million, partially offset by the proceeds from the issuance of Acquisition
Corp.'s 3.875% Senior Secured Notes due 2030 of $535 million, proceeds from the
issuance of Acquisition Corp.'s 2.750% Senior Secured Notes due 2028 of $365
million, and proceeds from the issuance of Acquisition Corp.'s 3.000% Senior
Secured Notes due 2031 of $550 million. Proceeds from issuance of Senior Secured
Notes were offset by deferred financing costs paid of $17 million.

There were no drawdowns on the Revolving Credit Facility during the fiscal years ended September 30, 2022, September 30, 2021 and September 30, 2020.

Liquidity

Our primary sources of liquidity are the cash flows generated from our
subsidiaries' operations, available cash and equivalents and funds available for
drawing under our Revolving Credit Facility. These sources of liquidity are
needed to fund our debt service requirements, working capital requirements,
capital expenditure requirements, strategic acquisitions and investments, and
dividends, prepayments of debt, repurchases or retirement of our outstanding
debt or notes or repurchases of our outstanding equity securities in open market
purchases, privately negotiated purchases or otherwise, we may elect to pay or
make in the future.

We believe that our primary sources of liquidity will be sufficient to support our existing operations over the next twelve months.

We are continuing our financial transformation initiative, launched in August
2019, to upgrade our information technology and finance infrastructure,
including related systems and processes, for which we currently expect upfront
costs to be approximately $185 million, which includes capital expenditures of
approximately $80 million. There has been a delay in the timing of the
transformation initiative as a result of the disruption from COVID-19. In
addition, the size and scale of this global system implementation requires us to
invest more time performing the rigorous system testing and data validation to
ensure go-live readiness. Annualized run-rate savings from the financial
transformation initiative are expected to be between approximately $35 million
and $40 million. We expect that our primary sources of liquidity will be
sufficient to fund these expenditures.

Debt Capital Structure

Since Access acquired us in 2011, we have sought to extend the maturity dates on
our outstanding indebtedness, reduce interest expense and improve our debt
ratings. For example, our S&P corporate credit rating improved from B in 2017 to
BB+ in July 2021 with a stable outlook, and our Moody's corporate family rating
improved from B1 in 2016 to Ba3 in 2020. In addition, our weighted-average
interest rate on our outstanding indebtedness has decreased from 10.5% in 2011
to 3.5% as of September 30, 2022. Our nearest-term maturity date is in 2028.
Subject to market conditions, we expect to continue to take opportunistic steps
to extend our maturity dates and reduce related interest expense. From time to
time, we may incur additional indebtedness for, among other things, working
capital, repurchasing, redeeming or tendering for existing indebtedness and
acquisitions or other strategic transactions.
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3.750% Senior Secured Notes Offering

On November 24, 2021, Acquisition Corp. issued and sold $540 million of 3.750%
Senior Secured Notes due 2029 (the "Notes"). Interest on the Notes will accrue
at the rate of 3.750% per annum and will be payable semi-annually in arrears on
June 1 and December 1, commencing on June 1, 2022.

The proceeds of the issuance and sale of the aforementioned Notes were used to
fund the acquisition of a business and music-related assets for aggregate cash
consideration of $525 million.

Revolving Credit Facility

On January 31, 2018, Acquisition Corp. entered into the revolving credit
agreement (as amended by the amendment dated October 9, 2019 and as further
amended, amended and restated or otherwise modified from time to time, the
"Revolving Credit Agreement") for a senior secured revolving credit facility
with Credit Suisse AG, as administrative agent, and the other financial
institutions and lenders from time to time party thereto (the "Revolving Credit
Facility"). On April 3, 2020, Acquisition Corp. entered into an amendment to the
Revolving Credit Agreement (the "Second Amendment") which, among other things,
increased the commitments under the Revolving Credit Facility from an aggregate
principal amount of $180 million to an aggregate principal amount of $300
million and extended the final maturity of the Revolving Credit Facility from
January 31, 2023 to April 3, 2025. For a more detailed description of the
changes effected by the Second Amendment, see Note 10 to our consolidated
financial statements included elsewhere herein.

On March 1, 2021, Acquisition Corp. entered into an amendment (the "Revolving
Credit Agreement Amendment") to the Revolving Credit Agreement among Acquisition
Corp., the several banks and other financial institutions party thereto and
Credit Suisse AG, as administrative agent, governing Acquisition Corp.'s
revolving credit facility with Credit Suisse AG, as administrative agent, and
the other financial institutions and lenders from time to time party thereto.
The Revolving Credit Agreement Amendment (among other changes) adds certain
exceptions and increases the leverage ratio below which Acquisition Corp. can
access certain baskets in connection with Acquisition Corp.'s negative
covenants, including those related to incurrence of indebtedness, restricted
payments and covenant suspension. On May 4, 2021, certain covenants set forth in
our Revolving Credit Facility were suspended, including the restriction on
incurring certain additional indebtedness, based on the determination that the
total indebtedness to EBITDA ratio is below the required threshold specified
therein.

Acquisition Corp. is the borrower under the Revolving Credit Agreement which
provides for a revolving credit facility in the amount of up to $300 million and
includes a $90 million letter of credit sub-facility. Amounts are available
under the Revolving Credit Facility in U.S. dollars, euros or pounds sterling.
The Revolving Credit Agreement permits loans for general corporate purposes and
may also be utilized to issue letters of credit. Borrowings under the Revolving
Credit Agreement bear interest at Acquisition Corp.'s election at a rate equal
to (i) the rate for deposits in the borrowing currency in the London interbank
market (adjusted for maximum reserves) for the applicable interest period
("Revolving LIBOR") plus 1.875% per annum, or (ii) the base rate, which is the
highest of (x) the corporate base rate established by the administrative agent
from time to time, (y) the overnight federal funds rate plus 0.5% and (z) the
one-month Revolving LIBOR plus 1.00% per annum, plus, in each case, 0.875% per
annum; provided that, for each of clauses (i) and (ii), the applicable margin
with respect to such loans is subject to adjustment upon achievement of certain
leverage ratios as set forth in a leverage-based pricing grid in the Revolving
Credit Agreement. Based on the Senior Secured Indebtedness to EBITDA Ratio of
3.02x at September 30, 2022, the applicable margin for Eurodollar loans would be
1.625% instead of 1.875% and the applicable margin for ABR loans would be 0.625%
instead of 0.875% in the case of 2020 Revolving Loans (as defined in the
Revolving Credit Agreement).

Prepayments

If, at any time, the aggregate amount of outstanding loans (including letters of
credit outstanding thereunder) exceeds the commitments under the Revolving
Credit Facility, prepayments of the loans (and after giving effect to such
prepayment the cash collateralization of letters of credit) will be required in
an amount equal to such excess. The application of proceeds from mandatory
prepayments shall not reduce the aggregate amount of then effective commitments
under the Revolving Credit Facility and amounts prepaid may be reborrowed,
subject to then effective commitments under the Revolving Credit Facility.

Voluntary reductions of the unutilized portion of the Commitments under the
Revolving Credit Facility are permitted at any time in certain minimum principal
amounts, without premium or penalty. Voluntary prepayments of borrowings under
the Revolving Credit Facility are permitted at any time in certain minimum
principal amounts, subject to reimbursement of the lenders' redeployment costs
actually incurred in the case of a prepayment of LIBOR-based borrowings other
than on the last day of the relevant interest period.
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Senior Term Loan Facility

Acquisition Corp. is party to a $1,145 million senior secured term loan credit
facility, pursuant to a credit agreement dated November 1, 2012, as amended or
supplemented (the "Senior Term Loan Credit Agreement") with Credit Suisse AG, as
administrative agent and collateral agent, and the other financial institutions
and lenders from time to time party thereto (as described below, the "Senior
Term Loan Facility" and, together with the Revolving Credit Facility, the
"Senior Credit Facilities").

On January 20, 2021, Acquisition Corp. entered into an amendment (the "Senior
Term Loan Credit Agreement Amendment") to the Senior Term Loan Credit Agreement.
The Senior Term Loan Credit Agreement Amendment (among other changes) (i)
extends the maturity date of its outstanding term loans from November 1, 2023 to
January 20, 2028 and (ii) removes a number of negative covenants limiting the
ability of Acquisition Corp. to take various actions. The remaining negative
covenants are limited to restrictions on liens, restrictions on fundamental
changes and change of control, and are in a form substantially similar to the
negative covenants in the 2.750% Senior Secured Notes due 2028, 3.875% Senior
Secured Notes due 2030, 3.000% Senior Secured Notes due 2031 and 2.250% Senior
Secured Notes due 2031.

On April 14, 2021, Acquisition Corp. borrowed additional term loans in an amount
of $325 million under the Increase Supplement as described further in Note 10 to
our consolidated financial statements included elsewhere herein. The Increase
Supplement was entered into to provide for the redemption of Acquisition Corp.'s
5.500% Senior Notes due 2026. Following such borrowing, there was an aggregate
principal amount outstanding under the Senior Term Loan Credit Agreement of
$1,145 million.

On November 1, 2022, Acquisition Corp. entered into a Seventh Incremental
Commitment Amendment (the "Seventh Incremental Commitment Amendment") to the
Senior Term Loan Credit Agreement, pursuant to which Acquisition Corp. borrowed
additional term loans in the amount of $150 million for an aggregate principal
amount outstanding under the Senior Term Loan Credit Agreement of
$1,295 million.

General

Acquisition Corp. is the borrower under the Senior Term Loan Facility (the "Term Loan Borrower"). The loans outstanding under the Senior Term Loan Facility mature on January 20, 2028.

In addition, the Senior Term Loan Credit Agreement provides the right for individual lenders to extend the maturity date of their loans upon the request of the Term Loan Borrower and without the consent of any other lender.

Subject to certain conditions, without the consent of the then existing lenders
(but subject to the receipt of commitments), the Senior Term Loan Facility may
be expanded (or a new term loan facility entered into) by up to the greater of
(i) $300 million and (ii) such additional amount as would not cause the net
senior secured leverage ratio, after giving effect to the incurrence of such
additional amount and any use of proceeds thereof, to exceed 4.50:1.00.

Interest Rates and Fees

Term loan borrowings under the Senior Term Loan Credit Agreement bear interest at a floating rate measured by reference to, at Acquisition Corp.'s option, either (i) an adjusted London inter-bank offered rate, LIBOR, not less than 0.00% per annum plus a borrowing margin of 2.125% per annum or (ii) an alternative base rate plus a borrowing margin of 1.125% per annum.

Prepayments

The Senior Term Loan Facility is subject to mandatory prepayment and reduction
in an amount equal to (a) 50% of excess cash flow (as defined in the Senior Term
Loan Credit Agreement), with reductions to 25% and zero based upon achievement
of a net senior secured leverage ratio of less than or equal to 4.50:1.00 or
4.00:1.00, respectively, (b) 100% of the net cash proceeds received from the
incurrence of indebtedness by the Term Loan Borrower or any of its restricted
subsidiaries (other than indebtedness permitted under the Senior Term Loan
Facility) and (c) 100% of the net cash proceeds of all non-ordinary course asset
sales or other dispositions of property by the Term Loan Borrower and its
restricted subsidiaries (including certain insurance and condemnation proceeds)
in excess of $75 million and subject to the right of the Term Loan Borrower and
its restricted subsidiaries to reinvest such proceeds within a specified period
of time, and other exceptions. Voluntary prepayments of borrowings under the
Senior Term Loan Facility are permitted at any time, in minimum principal
amounts of $1 million or a whole multiple of $500,000 in excess thereof, subject
to reimbursement of the lenders' redeployment costs actually incurred in the
case of a prepayment of adjusted LIBOR borrowings other than on the last day of
the relevant interest period.
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Secured Notes

3.875% Senior Secured Notes

On June 29, 2020, Acquisition Corp. issued $535 million in aggregate principal
amount of its 3.875% Senior Secured Notes under the Indenture, dated June 29,
2020 (the "Senior Secured Base Indenture"), among Acquisition Corp., the
guarantors party thereto, Credit Suisse AG, as Notes Authorized Representative
and Collateral Agent and Wells Fargo Bank, National Association, as Trustee, as
supplemented by the First Supplemental Indenture (the "3.875% Supplemental
Indenture").

At any time prior to July 15, 2025, the 3.875% Senior Secured Notes may be
redeemed at a redemption price equal to 100% of the principal amount of the
3.875% Senior Secured Notes redeemed plus the applicable make-whole premium (the
"Make-Whole Redemption") set forth in the Secured Notes Indenture, plus accrued
and unpaid interest thereon, if any, to the applicable redemption date in
accordance with the 3.875% Supplemental Indenture. Additionally, at any time
prior to July 15, 2025, on one or more occasions, up to 40% of the 3.875% Senior
Secured Notes may be redeemed with proceeds that Acquisition Corp. or its direct
or indirect parent raises in one or more equity offerings (the "Equity
Redemption") at a redemption price equal to 103.875% of the principal amount of
the 3.875% Senior Secured Notes redeemed, plus accrued and unpaid interest
thereon, if any, to the date of redemption. On or after July 15, 2025,
Acquisition Corp. may redeem all or a portion of the 3.875% Senior Secured
Notes, at its option, at the redemption prices starting at 101.938% (expressed
as percentages of principal amount) plus accrued and unpaid interest thereon, if
any, on the 3.875% Senior Secured Notes to be redeemed to the applicable
redemption date, if redeemed during the twelve-month period beginning on July
15, 2025. Additionally, during any twelve month period prior to July 15, 2025,
the 3.875% Senior Secured Notes may be redeemed at a redemption price equal to
103.000% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the redemption date (the "Secured Notes
Redemption").

2.750% Senior Secured Notes

Also on June 29, 2020, Acquisition Corp. issued €325 million in aggregate
principal amount of its 2.750% Senior Secured Notes under the Senior Secured
Base Indenture, as supplemented by the Second Supplemental Indenture, dated as
of June 29, 2020, among Acquisition Corp., the guarantors party thereto and the
Trustee (the "2.750% Supplemental Indenture").

At any time prior to July 15, 2023, the 2.750% Senior Secured Notes may be
redeemed pursuant to a Make-Whole Redemption in accordance with the 2.750%
Supplemental Indenture. Additionally, at any time prior to July 15, 2023, the
2.750% Senior Secured Notes may be redeemed pursuant to an Equity Redemption at
a redemption price equal to 102.750% of the principal amount of the 2.750%
Senior Secured Notes redeemed, plus accrued and unpaid interest, subject to the
same provisos as the 3.875% Senior Secured Notes Equity Redemption. On or after
July 15, 2023, Acquisition Corp. may redeem all or a portion of the 2.750%
Senior Secured Notes, at its option, at the redemption prices starting at
101.375% (expressed as percentages of principal amount) plus accrued and unpaid
interest thereon, if any, on the 2.750% Senior Secured Notes to be redeemed to
the applicable redemption date, if redeemed during the twelve-month period
beginning on July 15, 2023. Additionally, during any twelve month period prior
to July 15, 2023, the 2.750% Senior Secured Notes may be redeemed pursuant to a
Secured Notes Redemption.

3.000% Senior Secured Notes

On August 12, 2020, Acquisition Corp. issued $550 million in aggregate principal
amount of its 3.000% Senior Secured Notes under the Senior Secured Base
Indenture, as supplemented by the Third Supplemental Indenture, dated as of
August 12, 2020, among Acquisition Corp., the guarantors party thereto and the
Trustee (the "3.000% Supplemental Indenture").

At any time prior to February 15, 2026, the 3.000% Senior Secured Notes may be
redeemed pursuant to a Make-Whole Redemption in accordance with the 3.000%
Supplemental Indenture. Additionally, at any time prior to August 15, 2023, the
3.000% Senior Secured Notes may be redeemed pursuant to an Equity Redemption at
a redemption price equal to 103.000% of the principal amount of the 3.000%
Senior Secured Notes redeemed, plus accrued and unpaid interest, subject to the
same provisos as the 3.875% Senior Secured Notes Equity Redemption. On or after
February 15, 2026, Acquisition Corp. may redeem all or a portion of the 3.000%
Senior Secured Notes, at its option, at the redemption prices starting at
101.500% (expressed as percentages of principal amount) plus accrued and unpaid
interest thereon, if any, on the 3.000% Senior Secured Notes to be redeemed to
the applicable redemption date, if redeemed during the twelve-month period
beginning on February 15, 2026. Additionally, during any twelve month period
prior to February 15, 2026, the 3.000% Senior Secured Notes may be redeemed
pursuant to a Secured Notes Redemption.

On November 2, 2020, Acquisition Corp. issued and sold $250 million of
additional 3.000% Senior Secured Notes (the "Additional Notes"). Interest on the
Additional Notes will accrue at the rate of 3.000% per annum and will be payable
semi-annually in arrears on February 15 and August 15, commencing on February
15, 2021. The Additional Notes have identical terms as (other than the issue
date and the issue price) and are fungible with, and treated as a single series
of senior secured debt securities with, the 3.000% Senior Secured Notes issued
on August 12, 2020 (the "Original Notes").
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2.250% Senior Secured Notes

On August 16, 2021, Acquisition Corp. issued and sold €445 million in aggregate
principal amount of its 2.250% Senior Secured Notes due 2031 (the "2.250% Senior
Secured Notes") under the Senior Secured Base Indenture, as supplemented by the
Fifth Supplemental Indenture, dated as of August 16, 2021, among Acquisition
Corp., the guarantors party thereto and the Trustee (the "2.250% Supplemental
Indenture").

At any time prior to August 15, 2026, the 2.250% Senior Secured Notes may be
redeemed pursuant to a Make-Whole Redemption in accordance with the 2.250%
Supplemental Indenture. Additionally, at any time prior to August 15, 2026, the
2.250% Senior Secured Notes may be redeemed pursuant to an Equity Redemption at
a redemption price equal to 102.250% of the principal amount of the 2.250%
Senior Secured Notes redeemed, plus accrued and unpaid interest, subject to the
same provisos as the 3.875% Senior Secured Notes Equity Redemption. On or after
August 15, 2026, Acquisition Corp. may redeem all or a portion of the 2.250%
Senior Secured Notes, at its option, at the redemption prices starting at
101.125% (expressed as percentages of principal amount) plus accrued and unpaid
interest thereon, if any, on the 2.250% Senior Secured Notes to be redeemed to
the applicable redemption date, if redeemed during the twelve-month period
beginning on August 15, 2026. Additionally, during any twelve month period prior
to August 15, 2026, the 2.250% Senior Secured Notes may be redeemed pursuant to
a Secured Notes Redemption at 101.125%.

3.750% Senior Secured Notes

On November 17, 2021, Acquisition Corp. priced $540 million in aggregate
principal amount of its 3.750% Senior Secured Notes due 2029 (the "3.750% Senior
Secured Notes," together with the 3.875% Senior Secured Notes, the 2.750% Senior
Secured Notes, the 3.000% Senior Secured Notes and the 2.250% Senior Secured
Notes, the "Secured Notes"). We expect to issue the 3.750% Senior Secured Notes
on November 24, 2021 under the Senior Secured Base Indenture, as supplemented by
the Sixth Supplemental Indenture, dated as of November 24, 2021, among
Acquisition Corp., the guarantors party thereto and the Trustee (the "3.750%
Supplemental Indenture," together with the Senior Secured Base Indenture, the
3.875% Supplemental Indenture, the 2.750% Supplemental Indenture, the 3.000%
Supplemental Indenture and the 2.250% Supplemental Indenture, the "Secured Notes
Indenture").

At any time on one or more occasions on or prior to the fifth business day
following December 20, 2021 by giving notice at least five business days prior
to such time, Acquisition Corp. may elect to redeem all or a portion of the
3.750% Senior Secured Notes at a special optional redemption price equal to the
issue price of the 3.750% Senior Secured Notes plus 1% of the principal amount
thereof, plus accrued and unpaid interest thereon to, but excluding, the
redemption date, provided, that Acquisition Corp. may only elect to redeem fewer
than all of the 3.750% Senior Secured Notes, if, after giving effect to any such
redemption, at least $250 million aggregate principal amount of the 3.750%
Senior Secured Notes remains outstanding following such special optional
redemption.

At any time prior to December 1, 2024, the 3.750% Senior Secured Notes may be
redeemed pursuant to a Make-Whole Redemption in accordance with the 3.750%
Supplemental Indenture. Additionally, at any time prior to December 1, 2024, the
3.750% Senior Secured Notes may be redeemed pursuant to an Equity Redemption at
a redemption price equal to 103.750% of the principal amount of the 3.750%
Senior Secured Notes redeemed, plus accrued and unpaid interest, subject to the
same provisos as the 3.875% Senior Secured Notes Equity Redemption. On or after
December 1, 2024, Acquisition Corp. may redeem all or a portion of the 3.750%
Senior Secured Notes, at its option, at the redemption prices starting at
101.875% (expressed as a percentage of principal amount) plus accrued and unpaid
interest thereon, if any, on the 3.750% Senior Secured Notes to be redeemed to
the applicable redemption date, if redeemed during the twelve-month period
beginning on December 1, 2024. Additionally, during any twelve month period
prior to December 1, 2024, the 3.750% Senior Secured Notes may be redeemed
pursuant to a Secured Notes Redemption.

General Terms of Our Indebtedness

Certain terms of the Senior Credit Facilities and certain terms of each series of notes under our Secured Notes Indenture are described below.

Ranking

The indebtedness incurred pursuant to the Revolving Credit Facility and the
Senior Term Loan Facility and the Secured Notes are Acquisition Corp.'s senior
secured obligations and are secured on an equal and ratable basis with all
existing and future indebtedness secured with the same security arrangements.
The Secured Notes rank senior in right of payment to Acquisition Corp.'s
existing and future subordinated indebtedness; rank equally in right of payment
with all of Acquisition Corp.'s existing and future senior indebtedness and any
future senior secured credit facility; are effectively senior to Acquisition
Corp.'s unsecured senior indebtedness to the extent of the value of the
collateral securing the senior secured obligations; and are structurally
subordinated in right of payment to all existing and future indebtedness and
other liabilities of any of Acquisition Corp.'s non-guarantor subsidiaries
(other than indebtedness and liabilities owed to Acquisition Corp. or one of its
subsidiary guarantors (as such term is defined below)).

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Guarantees and Security

The obligations under each of the Revolving Credit Facility, the Senior Term
Loan Facility and the Secured Notes Indenture are guaranteed by each direct and
indirect U.S. restricted subsidiary of Acquisition Corp., other than certain
excluded subsidiaries. All obligations of Acquisition Corp. and each guarantor
under the Revolving Credit Facility, the Senior Term Loan Facility and the
Secured Notes Indenture are secured by substantially all the assets of
Acquisition Corp and each subsidiary guarantor.

Covenants, Representations and Warranties

The Revolving Credit Facility, the Senior Term Loan Facility and the Secured
Notes contain customary representations and warranties and certain affirmative
and negative covenants. The negative covenants applicable to securities issued
pursuant to the Secured Notes Indenture, Senior Term Loan Facility and the
Revolving Credit Facility limit the ability of Acquisition Corp. and its
restricted subsidiaries to, among other things, create liens and consolidate,
merge, sell or otherwise dispose of all or substantially all of its assets. In
addition, our Revolving Credit Facility includes additional covenants, which are
incurrence-based high yield covenants and limit the ability of Acquisition Corp.
and its restricted subsidiaries to, among other things, incur additional
indebtedness or issue certain preferred shares; pay dividends, redeem stock or
make other distributions; repurchase, prepay or redeem subordinated
indebtedness; make investments; create restrictions on the ability of its
restricted subsidiaries to pay dividends to it or make other intercompany
transfers; transfer or sell assets; enter into certain transactions with its
affiliates; and designate subsidiaries as unrestricted subsidiaries. These
additional covenants are currently suspended. These covenants will be reinstated
if Acquisition Corp.'s Total Indebtedness to EBITDA Ratio increases above
3.50:1.00 and the term loans do not achieve an investment grade rating.

The negative covenants are subject to customary exceptions. There are no
financial covenants included in the Revolving Credit Agreement, other than a
springing leverage ratio of 5.00:1.00 (with no step-down), which is not tested,
unless at the end of a fiscal quarter the outstanding amount of loans and
drawings under letters of credit which have not been reimbursed exceeds $105
million. There are no financial covenants included in the Senior Term Loan
Credit Agreement or the Secured Notes Indenture.

Events of Default

Events of default under the Revolving Credit Facility, the New Senior Term Loan
Facility and the Secured Notes Indenture include, as applicable, nonpayment of
principal when due, nonpayment of interest or other amounts, inaccuracy of
representations or warranties in any material respect, violation of covenants,
cross default and cross acceleration to other material debt, certain bankruptcy
or insolvency events, certain ERISA events, certain material judgments, actual
or asserted invalidity of security interests in excess of $50 million, or $75
million in the case of the Secured Notes Indenture, in each case subject to
customary thresholds, notice and grace period provisions.

Change of Control

Upon the occurrence of a change of control triggering event, which is defined in
the Secured Notes Indenture, each holder of the Secured Notes has the right to
require Acquisition Corp. to repurchase some or all of such holder's Secured
Notes at a purchase price in cash equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the repurchase date.
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Existing Debt as of September 30, 2022

As of September 30, 2022, our long-term debt, all of which was issued by Acquisition Corp., was as follows (in millions):

Revolving Credit Facility (a)                                                $        -
Senior Term Loan Facility due 2028                                          

1,145

2.750% Senior Secured Notes due 2028 (€325 face amount)                   

318

3.750% Senior Secured Notes due 2029                                        

540

3.875% Senior Secured Notes due 2030                                        

535

2.250% Senior Secured Notes due 2031 (€445 face amount)                   

435

3.000% Senior Secured Notes due 2031                                        

800

Total long-term debt, including the current portion                         

$ 3,773 Issuance premium less unamortized discount and unamortized deferred financing costs

$      (41)
Total long-term debt, including the current portion, net                    

$ 3,732

______________________________________

(a)Reflects $300 million of commitments under the Revolving Credit Facility,
less letters of credit outstanding of approximately $4 million at September 30,
2022. There were no loans outstanding under the Revolving Credit Facility at
September 30, 2022.

Dividends

The Company's ability to pay dividends may be restricted by covenants in the
credit agreement for the Revolving Credit Facility which are currently suspended
but which will be reinstated if Acquisition Corp.'s Total Indebtedness to EBITDA
Ratio increases above 3.50:1.00 and the term loans do not achieve an investment
grade rating.

The Company intends to pay quarterly cash dividends to holders of its Class A
Common Stock and Class B Common Stock. The declaration of each dividend will
continue to be at the discretion of the Company's board of directors and will
depend on the Company's financial condition, earnings, liquidity and capital
requirements, level of indebtedness, contractual restrictions with respect to
payment of dividends, restrictions imposed by Delaware law, general business
conditions and any other factors that the Company's board of directors deems
relevant in making such a determination. Therefore, there can be no assurance
that the Company will pay any dividends to holders of the Company's common
stock, or as to the amount of any such dividends.

On August 12, 2022, the Company's board of directors declared a cash dividend of
$0.16 per share on the Company's Class A Common Stock and Class B Common Stock,
as well as related payments under certain stock-based compensation plans, which
was paid on September 1, 2022.

The Company paid cash dividends to stockholders and participating security holders of $318 million, $265 million and $344 million for the fiscal years ended September 30, 2022, 2021 and 2020, respectively.

On November 10, 2022, the Company's board of directors declared a cash dividend
of $0.16 per share on the Company's Class A Common Stock and Class B Common
Stock, as well as related payments under certain stock-based compensation plans,
payable on December 1, 2022 to stockholders of record as of the close of
business on November 22, 2022.

Covenant Compliance

The Company was in compliance with its covenants under its outstanding notes, the Revolving Credit Facility and the Senior Term Loan Facility as of September 30, 2022.

On January 18, 2019, we delivered a notice to the trustee under the 2012 Secured
Indenture and 2014 Unsecured Indenture changing the Fixed GAAP Date, as defined
under the indentures, to October 1, 2018. Under the Senior Term Loan Facility,
the Revolving Credit Facility and the Secured Notes Indenture, the Fixed GAAP
Date is set for April 3, 2020, other than in respect of capital leases, which
are frozen at November 1, 2012.

The Revolving Credit Facility contains a springing leverage ratio that is tied
to a ratio based on EBITDA, which is defined under the Revolving Credit
Agreement. Our ability to borrow funds under the Revolving Credit Facility may
depend upon our ability to meet the leverage ratio test at the end of a fiscal
quarter to the extent we have drawn a certain amount of revolving loans. On May
4, 2021, certain covenants set forth in our Revolving Credit Facility were
suspended, including the restriction on incurring certain additional
indebtedness, based on the determination that the total indebtedness to EBITDA
ratio is below the required threshold
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specified therein. EBITDA as defined in the Revolving Credit Facility is based
on Consolidated Net Income (as defined in the Revolving Credit Facility), both
of which terms differ from the terms "EBITDA" and "net income" as they are
commonly used. For example, the calculation of EBITDA under the Revolving Credit
Facility, in addition to adjusting net income to exclude interest expense,
income taxes and depreciation and amortization, also adjusts net income by
excluding items or expenses such as, among other items, (1) the amount of any
restructuring charges or reserves; (2) any non-cash charges (including any
impairment charges); (3) any net loss resulting from hedging currency exchange
risks; (4) the amount of management, monitoring, consulting and advisory fees
paid to Access; (5) business optimization expenses (including consolidation
initiatives, severance costs and other costs relating to initiatives aimed at
profitability improvement); (6) transaction expenses; (7) equity-based
compensation expense; and (8) certain extraordinary, unusual or non-recurring
items. The definition of EBITDA under the Revolving Credit Facility also
includes adjustments for the pro forma impact of certain projected cost savings,
operating expense reductions and synergies and any quality of earnings analysis
prepared by independent certified public accountants in connection with an
acquisition, merger, consolidation or other investment. The Senior Term Loan
Facility and the Secured Notes Indenture use financial measures called
"Consolidated EBITDA" or "EBITDA" and "Consolidated Net Income" that have
substantially the same definitions to EBITDA and Consolidated Net Income, each
as defined under the Revolving Credit Agreement.

EBITDA as defined in the Revolving Credit Facility (referred to in this section
as "Adjusted EBITDA") is presented herein because it is a material component of
the leverage ratio contained in the Revolving Credit Agreement. Non-compliance
with the leverage ratio could result in the inability to use the Revolving
Credit Facility, which could have a material adverse effect on our results of
operations, financial position and cash flow. Adjusted EBITDA does not represent
net income or cash from operating activities as those terms are defined by U.S.
GAAP and does not necessarily indicate whether cash flows will be sufficient to
fund cash needs. While Adjusted EBITDA and similar measures are frequently used
as measures of operations and the ability to meet debt service requirements,
these terms are not necessarily comparable to other similarly titled captions of
other companies due to the potential inconsistencies in the method of
calculation. Adjusted EBITDA does not reflect the impact of earnings or charges
resulting from matters that we may consider not to be indicative of our ongoing
operations. In particular, the definition of Adjusted EBITDA in the Revolving
Credit Agreement allows us to add back certain non-cash, extraordinary, unusual
or non-recurring charges that are deducted in calculating net income. However,
these are expenses that may recur, vary greatly and are difficult to predict.

Adjusted EBITDA as presented below should not be used by investors as an
indicator of performance for any future period. Further, our debt instruments
require that it be calculated for the most recent four fiscal quarters. As a
result, the measure can be disproportionately affected by a particularly strong
or weak quarter. Further, it may not be comparable to the measure for any
subsequent four quarter period or any complete fiscal year. In addition, our
debt instruments require that the leverage ratio be calculated on a pro forma
basis for certain transactions including acquisitions as if such transactions
had occurred on the first date of the measurement period and may include
expected cost savings and synergies resulting from or related to any such
transaction. There can be no assurances that any such cost savings or synergies
will be achieved in full.

In addition, Adjusted EBITDA is a key measure used by our management to
understand and evaluate our operating performance, generate future operating
plans and make strategic decisions regarding the allocation of capital. Adjusted
EBITDA has limitations as an analytical tool, and you should not consider it in
isolation or as a substitute for analysis of our results as reported under U.S.
GAAP. Some of those limitations include: (1) it does not reflect the periodic
costs of certain capitalized tangible and intangible assets used in generating
revenue for our business; (2) it does not reflect the significant interest
expense or cash requirements necessary to service interest or principal payments
on our indebtedness; and (3) it does not reflect every cash expenditure, future
requirements for capital expenditures or contractual commitments. In particular,
this measure adds back certain non-cash, extraordinary, unusual or non-recurring
charges that are deducted in calculating net income; however, these are expenses
that may recur, vary greatly and are difficult to predict. In addition, Adjusted
EBITDA is not the same as net income or cash flow provided by operating
activities as those terms are defined by U.S. GAAP and does not necessarily
indicate whether cash flows will be sufficient to fund cash needs. Accordingly,
Adjusted EBITDA should be considered in addition to, not as a substitute for,
net income (loss) and other measures of financial performance reported in
accordance with U.S. GAAP.
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The following is a reconciliation of net income (loss), which is a U.S. GAAP
measure of our operating results, to Adjusted EBITDA as defined, for the most
recently ended four fiscal quarters, or the twelve months ended September 30,
2022, for the twelve months ended September 30, 2021 and for the three months
ended September 30, 2022 and September 30, 2021. In addition, the reconciliation
includes the calculation of the Senior Secured Indebtedness to Adjusted EBITDA
ratio, which we refer to as the Leverage Ratio, under the Revolving Credit
Agreement for the most recently ended four fiscal quarters, or the twelve months
ended September 30, 2022. The terms and related calculations are defined in the
Revolving Credit Agreement. All amounts in the reconciliation below reflect
Acquisition Corp. (in millions, except ratios):

                                                           Twelve Months Ended                     Three Months Ended
                                                              September 30,                          September 30,
                                                          2022                 2021              2022               2021
Net Income                                         $       555              $   307          $      150          $    30
Income tax expense                                         185                  149                  37               22
Interest expense, net                                      125                  122                  31               29
Depreciation and amortization                              339                  306                  82               79
Loss on extinguishment of debt (a)                           -                   22                   -               10
Net losses (gains) on divestitures and sale of
securities (b)                                               9                   (3)                  -                -
Restructuring costs (c)                                     22                   29                  11               18
Net hedging and foreign exchange (gains) losses
(d)                                                       (195)                  11                 (67)             (20)

Transaction costs (e)                                        8                   10                   -                5
Business optimization expenses (f)                          54                   42                  11               12
Non-cash stock-based compensation expense (g)               39                   45                   5               12
Other non-cash charges (h)                                  23                    5                  11               30
Pro forma impact of cost savings initiatives and
specified transactions (i)                                  32                   45                   5               10
Adjusted EBITDA                                    $     1,196              $ 1,090          $      276          $   237
Senior Secured Indebtedness (j)                    $     3,607
Leverage Ratio (k)                                              3.02x

______________________________________

(a)Reflects loss on extinguishment of debt, primarily including tender fees and
unamortized deferred financing costs.
(b)Reflects net losses (gains) on sale of securities and divestitures.
(c)Reflects severance costs and other restructuring related expenses.
(d)Reflects unrealized losses (gains) due to foreign exchange on our
Euro-denominated debt, losses (gains) from hedging activities and intercompany
transactions.
(e)Reflects mainly transaction related costs and mark-to-market adjustments of
an earn-out liability related to a transaction in 2021.
(f)Reflects costs associated with our transformation initiatives and IT system
updates, which includes costs of $9 million and $40 million related to our
finance transformation and other related costs for the three and twelve months
ended September 30, 2022, respectively, as well as $10 million and $33 million
for the three and twelve months ended September 30, 2021, respectively.
(g)Reflects non-cash stock-based compensation expense related to the Omnibus
Incentive Plan and the Warner Music Group Corp. Senior Management Free Cash Flow
Plan.
(h)Reflects non-cash activity, including the unrealized losses (gains) on the
mark-to-market adjustment of equity investments, investment losses (gains),
mark-to-market adjustments of an earn-out liability in 2022 and other non-cash
impairments.
(i)Reflects expected savings resulting from transformation initiatives and the
pro forma impact of certain specified transactions for the three and twelve
months ended September 30, 2022. Certain of these cost savings initiatives and
transactions impacted quarters prior to the quarter during which they were
identified within the last twelve-month period. The pro forma impact of these
specified transactions and initiatives resulted in a $14 million decrease in the
twelve months ended September 30, 2022 Adjusted EBITDA, primarily driven by the
shift in the timing of the financial transformation initiative.
(j)Reflects the balance of senior secured debt at Acquisition Corp. of
approximately $3.732 billion and the balance of current notes payable of
approximately $125 million less cash of $250 million.
(k)Reflects the ratio of Senior Secured Indebtedness, including Revolving Credit
Agreement Indebtedness, to Adjusted EBITDA. This is calculated net of cash and
equivalents of the Company as of September 30, 2022 not exceeding $250 million.
If the outstanding aggregate principal amount of borrowings and drawings under
letters of credit which have not been reimbursed under our Revolving Credit
Facility is greater than $105 million at the end of a fiscal quarter, the
maximum leverage ratio permitted under the Revolving Credit Facility is
5.00:1.00. The Company's Revolving Credit Facility does not impose any "leverage
ratio" maintenance requirement on the Company when the aggregate principal
amount of borrowings and drawings under letters of credit, which have not been
reimbursed under the Revolving Credit Facility, is less than or equal to $105
million at the end of a fiscal quarter. On May 4, 2021, certain covenants set
forth in our Revolving Credit
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Facility were suspended, including the restriction on incurring certain additional indebtedness, based on the determination that the total indebtedness to EBITDA ratio is below the required threshold specified therein.

Summary

Management believes that funds generated from our operations and borrowings
under the Revolving Credit Facility and available cash and equivalents will be
sufficient to fund our debt service requirements, working capital requirements
and capital expenditure requirements for the foreseeable future. We also have
additional borrowing capacity under our indentures and the Senior Term Loan
Facility. However, our ability to continue to fund these items and to reduce
debt may be affected by general economic, financial, competitive, legislative
and regulatory factors, as well as other industry-specific factors such as the
ability to control music piracy and the continued transition from physical to
digital formats in the recorded music and music publishing industries. It could
also be affected by the severity and duration of geopolitical conflicts or
natural or man-made disasters, including pandemics such as COVID-19. We and our
affiliates continue to evaluate opportunities to, from time to time, depending
on market conditions and prices, contractual restrictions, our financial
liquidity and other factors, seek to pay dividends or prepay outstanding debt or
repurchase or retire Acquisition Corp.'s outstanding debt or debt securities or
repurchase our outstanding equity securities in open market purchases, privately
negotiated purchases or otherwise. The amounts involved in any such
transactions, individually or in the aggregate, may be material and may be
funded from available cash or from additional borrowings. In addition, from time
to time, depending on market conditions and prices, contractual restrictions,
our financial liquidity and other factors, we may seek to refinance the Senior
Credit Facilities or our outstanding debt or debt securities with existing cash
and/or with funds provided from additional borrowings.
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Contractual and Other Obligations

Firm Commitments

The following table summarizes the Company's aggregate contractual obligations
at September 30, 2022, and the estimated timing and effect that such obligations
are expected to have on the Company's liquidity and cash flow in future periods.

                                                         Less than           1-3            3-5           After 5
Firm Commitments and Outstanding Debt                     1 year            years          years           years            Total
                                                                                       (in millions)
Senior Secured Notes (1)                               $        -         

$ - $ - $ 2,628 $ 2,628 Interest on Senior Secured Notes (1)

                           83            167            167              245              662
Senior Term Loan Facility (1)                                   -              -              -            1,145            1,145
Interest on Senior Term Loan Facility (1)                      60            143            130               20              353
Operating leases (2)                                           52            101             82               95              330
Artist, songwriter and co-publisher commitments
(3)                                                           469                 *              *                *           469
Minimum funding commitments to investees and
other obligations (4)                                          36             11              1                -               48
Total firm commitments and outstanding debt            $      700

$ 422 $ 380 $ 4,133 $ 5,635

______________________________________

The following is a description of our firmly committed contractual obligations at September 30, 2022:

(1)Outstanding debt obligations consist of the Senior Term Loan Facility and the
Senior Secured Notes. These obligations have been presented based on the
principal amounts due as of September 30, 2022. Amounts do not include any fair
value adjustments, bond premiums, discounts or unamortized deferred financing
costs.
(2)Operating lease obligations primarily relate to the minimum lease rental
obligations for our real estate and operating equipment in various locations
around the world.
(3)The Company routinely enters into long-term commitments with recording
artists, songwriters and publishers for the future delivery of music. Such
commitments generally become due only upon delivery and Company acceptance of
albums from the recording artists or future musical compositions from
songwriters and publishers. Additionally, such commitments are typically
cancellable at the Company's discretion, generally without penalty. Based on
contractual obligations and the Company's expected release schedule, off-balance
sheet aggregate firm commitments to such talent approximated $469 million at
September 30, 2022. The aggregate firm commitments expected for the next
twelve-month period based on contractual obligations and the Company's expected
release schedule approximates $306 million at September 30, 2022.
(4)We have minimum funding commitments and other related obligations to support
the operations of various investments, which are reflected in the table above.
Other long-term liabilities, which are not included in the table above, include
$8 million and $12 million of liabilities for uncertain tax positions as of
September 30, 2022 and September 30, 2021, respectively. We are unable to
accurately predict when these amounts will be realized or released.
*Because the timing of payment, and even whether payment occurs, is dependent
upon the timing of delivery of albums and musical compositions, the timing and
amount of payment of these commitments as presented in the above summary can
vary significantly.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The SEC's Financial Reporting Release No. 60, "Cautionary Advice Regarding
Disclosure About Critical Accounting Policies" ("FRR 60"), suggests companies
provide additional disclosure and commentary on those accounting policies
considered most critical. FRR 60 considers an accounting policy to be critical
if it is important to our financial condition and results, and requires
significant judgment and estimates on the part of management in our application.
We believe the following list represents critical accounting policies as
contemplated by FRR 60. For a summary of all of our significant accounting
policies, see Note 2 to our consolidated financial statements included elsewhere
herein.

Business Combinations

We account for our business acquisitions under the FASB ASC Topic 805, Business
Combinations ("ASC 805") guidance for business combinations. The total cost of
acquisitions is allocated to the underlying identifiable net assets based on
their respective estimated fair values. The excess of the purchase price over
the estimated fair values of the net assets acquired is recorded as goodwill.
Determining the fair value of assets acquired and liabilities assumed requires
management's judgment and often involves the use of estimates and assumptions,
including assumptions with respect to future cash inflows and outflows, discount
rates, asset lives and market multiples, among other items. If our assumptions
or estimates in the fair value calculation change based on information that
becomes available during the one-year period from the acquisition date, the fair
value of our acquired intangible assets could change; this would also change the
value of our goodwill. Upon the conclusion of the measurement period, any
subsequent adjustments are recorded to earnings.

Accounting for Goodwill and Other Intangible Assets

We account for our goodwill and other indefinite-lived intangible assets as
required by FASB ASC Topic 350, Intangibles - Goodwill and Other ("ASC 350"). We
test goodwill for impairment at the reporting unit level and have concluded that
our reporting units are generally the same as our reportable segments. We
evaluate the determination of our reporting units periodically or whenever
events or substantive changes in circumstances occur. ASC 350 requires that
goodwill and certain intangible assets be assessed for impairment using fair
value measurement techniques on an annual basis and when events occur that may
suggest that the fair value of such assets cannot support the carrying value.
ASC 350 gives an entity the option to first assess qualitative factors to
determine whether it is more likely than not that the fair value of a reporting
unit or intangible asset is less than its carrying amount. If an entity
determines it is not more likely than not that the fair value of a reporting
unit or intangible asset is less than its carrying amount, then performing the
quantitative impairment test is unnecessary. However, if an entity concludes
otherwise, then the quantitative impairment test shall be used to identify the
impairment and measure the amount of an impairment loss to be recognized (if
applicable).

As of September 30, 2022, we had recorded goodwill in the amount of $1.920
billion, including $1.456 billion and $464 million for our Recorded Music and
Music Publishing businesses, respectively, primarily related to the Merger and
PLG Acquisition. As of September 30, 2022, we had recorded indefinite-lived
intangible assets of $145 million. We test our goodwill and other
indefinite-lived intangible assets for impairment on an annual basis in the
fourth quarter of each fiscal year as of July 1. We performed a qualitative
assessment for our reporting units and other indefinite-lived intangible assets
in fiscal 2022. This assessment considered changes in our projected future cash
flows and discount rates, recent market transactions and overall macroeconomic
conditions. Based on this assessment, we concluded that it was more likely than
not that the estimated fair values of our reporting units and other
indefinite-lived intangible assets were higher than their carrying values and
that the performance of a quantitative impairment test was not required.

See Note 9 to the consolidated financial statements for a further discussion of our goodwill and intangible assets.

Revenue and Cost Recognition

Revenues

Recorded Music

As required by FASB ASC Topic 606, Revenue from Contracts with Customers ("ASC
606"), the Company recognizes revenue when, or as, control of the promised
services or goods is transferred to our customers and in an amount that reflects
the consideration the Company is contractually due in exchange for those
services or goods. The Company's revenue recognition process involves several
applications that are responsible for the initiation and processing of
transactions in order to recognize revenue in accordance with the Company's
policy and ASC 606.
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Revenues from the sale or license of Recorded Music products through digital
distribution channels are typically recognized when sale or usage occurs based
on usage reports received from the customer. Certain contracts contain minimum
guarantees, which are recoupable against royalties. Upon contract inception, the
Company will assess whether a shortfall or breakage is expected (i.e., where the
minimum guarantee will not be recouped through royalties) in order to determine
timing of revenue recognition for the minimum guarantee.

For fixed fee contracts and minimum guarantee contracts where breakage is
expected, the total transaction price (fixed fee or minimum guarantee) is
typically recognized using an appropriate measure of progress over the
contractual term. The Company updates its assessment of the transaction price
each reporting period to see if anticipated royalty earnings exceed the minimum
guarantee. For contracts where breakage is not expected, royalties are
recognized as revenue as sales or usage occurs based upon the licensee's usage
reports and, when these reports are not available, revenue is based on
historical data, industry information and other relevant trends.

Music Publishing

Music Publishing revenues are earned from the receipt of royalties relating to
the licensing of rights in musical compositions and the sale of published sheet
music and songbooks. The receipt of royalties principally relates to amounts
earned from the public performance of musical compositions, the mechanical
reproduction of musical compositions on recorded media, including digital
formats and the use of musical compositions in synchronization with visual
images. Music publishing royalties, except for synchronization royalties,
generally are recognized when the sale or usage occurs. The most common form of
consideration for publishing contracts is sales- and usage-based royalties. The
collecting societies submit usage reports, typically with payment for royalties
due, often on a quarterly or biannual reporting period, in arrears. Royalties
are recognized as the sale or usage occurs based upon usage reports and, when
these reports are not available, royalties are estimated based on historical
data, such as recent royalties reported, company-specific information with
respect to changes in repertoire, industry information and other relevant
trends. Synchronization revenue is typically recognized as revenue when control
of the license is transferred to the customer in accordance with ASC 606.

Accounting for Royalty Costs and Royalty Advances

The Company incurs royalty costs that are payable to our recording artists and
songwriters generated from the sale or license of our Recorded Music catalog and
Music Publishing copyrights. Royalties owed to artists are calculated using
negotiated rates which is applied to revenue earned in accordance with recording
artist and songwriter contracts. There are instances where such data is not
available to be processed and royalty cost calculations may involve judgments
about significant volumes of data to be processed and analyzed.

We had $1,918 million and $1,880 million of royalty payables in our balance sheet at September 30, 2022 and September 30, 2021, respectively.

In many instances, the Company commits to pay our recording artists and
songwriters royalties in advance of future sales. The Company accounts for these
advances under the related guidance in FASB ASC Topic 928, Entertainment-Music
("ASC 928"). Under ASC 928, the Company capitalizes as assets advances that it
believes are recoverable from future royalties to be earned by the recording
artist or songwriter. Recoverability is assessed upon initial commitment of the
advance based upon the Company's forecast of anticipated revenue from the sale
of future and existing albums or musical compositions. In determining whether
the advance is recoverable, the Company evaluates the current and past
popularity of the recording artist or songwriter, the sales history of the
recording artist or songwriter, the initial or expected commercial acceptability
of the product, the current and past popularity of the genre of music that the
product is designed to appeal to, and other relevant factors. Advances vary in
both amount and expected life based on the underlying recording artist or
songwriter. To the extent that a portion of an outstanding advance is no longer
deemed recoverable, that amount will be expensed in the period the determination
is made.

We had $875 million and $830 million of advances in our balance sheet at September 30, 2022 and September 30, 2021, respectively. We believe such advances are recoverable through future royalties to be earned by the applicable recording artists and songwriters.

Accounting for Stock-Based Compensation

Stock-based compensation represents compensation payment for which the amounts
are based on the fair market value of the Company's common stock. Prior to the
Company's IPO, the Company's Second Amended and Restated Senior Management Free
Cash Flow Plan (the "Plan") was classified as a liability rather than equity
under FASB ASC Topic 718, Compensation-Stock Compensation ("ASC 718"). In
February 2020, the Company filed a Form S-1 registration statement with the SEC
in connection with
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the IPO, which required a change in accounting policy during the three months
ended March 31, 2020 from the intrinsic value method to fair value method in
determining the basis of measurement of its stock-based compensation liability.

In determining fair value, the Company utilized an option pricing model for
those awards with an option-like pay-off, which includes various inputs for
volatility, term to exit, discount for lack of marketability, expected dividend
yield and risk-free rates. For awards with an equity-like pay-off, inputs for
discount of lack of marketability and non-performance risk were considered. The
Company continued to use an income approach using a discounted cash flow model
to determine its per-share value input within the model. Upon completion of the
IPO in June 2020, the Plan was amended to remove the cash-settlement feature on
all future redemptions. As a result, all awards previously issued under the Plan
will require settlement in Class A Common Stock. Under the provision of ASC 718,
the Company determined the Plan was modified as of June 3, 2020, and as such,
converted the awards from liability-classified to equity-classified. Prior to
conversion, the Company performed a final measurement of its stock-based
compensation liability under the fair value method. Subsequent to the amendment,
the awards issued under the Plan will no longer be adjusted for changes in the
value of the Company's common stock.

Recent Accounting Pronouncements

Refer to Note 2 to our consolidated financial statements included elsewhere herein for more information regarding recently issued accounting pronouncements.

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