Greenfield: WMG Bought A Dud Concert Business

Warner Music Group shares have been dropping like a stone for months, and now trade below $5. Pali's Rich Greenfield isn't satisfied, though: He's convinced current WMG management will drive the stock lower.

Rich's newest complaint? WMG's involvement with Bulldog Entertainment Group, a money-losing high-end event promoter which threw a series of much-maligned concerts in the Hamptons last summer: Concertgoers had to pay $15,000 for a package which gave them a ticket to each one of the 5 shows Bulldog put on with the likes of Prince, Dave Matthews, Billy Joel.

What's the problem? Conventional wisdom is that WMG has made an investment in Bulldog, while Rich is convinced that WMG has actually acquired the whole company, because it lists a Bulldog as a subsidiary in its latest 10-K. He thinks that the company spent $16 million buying Bulldog, and that losses have pushed WMG's total investment beyond $30 million.

Rich's point: Bulldog is one of a slew of deals WMG managment has made that don't make sense: "We believe Bulldog is part of a group of investments/joint-ventures that Warner has made that go well beyond its core business (management appears to be “stretching,” highlighting how troubled its core business really is)."