Warner Music home to artists including Madonna and James Blunt, reported a fourth-
quarter profit on a gain from a legal settlement. Revenue fell as album sales declined. New releases from groups including Danity Kane and Mana failed to match last year’s recordings from Blunt and Faith Hill. CEO Edgar Bronfman boosted more profitable digital sales, which almost doubled to 12.2 percent of revenue. Music companies look to sales from downloads, cell phones and online videos to make up for falling CD revenue.

“Revenue was a little lighter than expected,” said Eric Handler, a Lehman Bros. analyst who rates the stock “neutral” and doesn’t own it. “Digital was quite strong — they’re outpacing the market on that,” Handler said. He said CD sales were “quite weak.”

Without the $13 million gain from a lawsuit against online file-sharing service Kazaa, the company lost $1 million

(reporter, Don Jeffrey )