Warner is singing the blues after posting weak quarterly sales on Tuesday Warner Music’s shares closed down another 1.4 percent on Wednesday meaning it’s shares have dropped some 11 percent since Monday. As if that wasn’t enough concern, the heavily leveraged No.3 music company was given a heads-up that its debt is about to be downgraded. Ratings agency Moody’s placed ratings for Warner Music Group’s BA3 debt on review for ”possible downgrade” which usually is as good as definite .

Warner Music Chief Executive Edgar Bronfman tried to put a positive spin on his company’s unimpressive quarterly performance, in an admittedly very tough environment for all music companies.  But even Bronfman, in a conference call with analysts, seemed slightly exasperated with the rate of decline and slowing digital growth, in a quarter which saw rivals grab market share from Warner Music:

“We think the business is extremely competitive all of the time, regardless of the overall environment, which is one of decline, currently. So, we battle for market share, but as I’ve always said, we also battle for margin share. So, we try very hard to be very focused on our margins. Having said that, we had a lot of releases in the December quarter and, by and large, they did not do as well as we expected them to do versus, obviously, other companies.

It’s hard to ascribe that we lost as a result of better releases from other companies, or maybe our releases simply didn’t meet the expectations of their consumers. We don’t know that much that quickly, but we don’t like to see ourselves losing share, and that happened to us in the December quarter. But, as I motioned, we’re very optimistic for the rest of the fiscal year and are seeing progress both in our release schedule and in our actual releases.”

Long-time Warner Music bear BTIG analyst Richard Greenfield today advised his investorsto short Warner Music making the point that even Warner Music’s normally ’steady as she goes’ song publishing unit Warner/Chappell is beginning to suffer from the fallout in recorded music. (Requires registration):

“Following fiscal Q1 results, we are increasingly confident with our WMG fiscal (Sept) 2011 estimates which call for a 10% drop in revenues and a 9% drop in EBITDA (including the annually reoccurring restructuring charges) and believe it could be worse as WMG is clearly struggling to hit their forecasts.”

Maybe Warner Music’s problems can be solved with it’s long expected combination in some form with EMI?  Maybe a more solid push into online music sales can help?

Radiohead has hit out at the chief of its former label after a news report claimed the rock band rejected a 3 million pound ($5.95 million) advance for its new album and demanded the rights to some of its older albums. According to the report, published last Friday by The Times of London, Radiohead’s demands to EMI Group chairman Guy Hands totaled more than 10 million pounds ($19.8 million).

In addition to the advance, the Times said the band also wanted a 3 million pound international marketing budget for the album, “In Rainbows,” while the reversion of the rights to its previous two albums would have cost EMI 4 million pounds ($7.9 million) in future earnings.  The paper quoted an EMI spokesman as saying, “Radiohead were demanding an extraordinary amount of money and we did not believe that our other artists should have to subsidize their gains.”

It also quoted the band’s manager, Bryce Edge, as saying, “We were not seeking a big advance payment, or a guaranteed marketing spend as discussions never got that far.”

Representatives for EMI in London and New York were not available to comment Tuesday.

Hands’ buyout firm Terra Firma Capital Partners agreed to buy EMI in May for 2.4 billion pounds ($4.8 billion). The financier has warned artists they could be dropped if they do not work hard enough for the company.  Imagine that, having to actually work for your money?

Poor Briteny Spears looks to be headed for more legal and tabloid headaches.  A court commissioner said Tuesday he would consider a motion by a magazine and a TV station to unseal documents in the Britney Spears-Kevin Federline divorce case.

“They’re appropriate participants in here,” Superior Court Commissioner Scott M. Gordon said of the request by People magazine and KNBC, on behalf of the celebrity news show “Access Hollywood.”

Spears and Federline weren’t present for the hearing. Gordon scheduled another hearing for Sept. 14 to give their attorneys time to make their case for keeping the documents under seal. Spears’ divorce from Federline became official July 30.

After the hearing, Federline attorney Mark Vincent Kaplan said the documents contain information about the schedules of the couple’s children and other details that could put them in jeopardy.

“It would be best for the children that they not be exposed,” Kaplan said.

He gave no specific examples of threats to the children.

Spears attorney Laura Wasser did not address reporters at the courthouse and did not immediately return a phone call seeking comment.

Lawyer Alonzo Wickers, who represents KNBC and People magazine, said in an interview that attorneys for the former couple have not been able to prove that their concerns outweigh the public’s right of access to court records.

“Celebrities have to meet the same high burden to justify the sealing of court records” as other people, he said.

Since February, Spears, 25, and Federline, 29, have shared joint custody of their sons, 22-month-old Sean Preston and 10-month-old Jayden James.

Kaplan said Federline is seeking additional custody because the two boys are “isolated from risks” when they are with his client. He declined to elaborate.

A hearing on the custody modification request is set for Sept. 17.  I am all for protecting the child but please let this media circus stop.

I am sure you’ve heard this one before: Pete Doherty may be going to prison on a litany of drug charges…or not.  A London judge is once again giving the arrest-prone rocker the benefit of the doubt, postponing his sentencing on drug charges for one month to better assess the progress of the Babyshambles frontman.

District Judge Davinder Lachlar issued a now familiar ultimatum to the 28-year-old, telling him that if sufficient progress has not been made to sober up, he will be put behind bars.  “What I have in mind is to adjourn this matter for four weeks to assess his motivation,” Lachlar said in court. “What I have in mind is a community order or prison…if he does not show his motivation, it’s prison—simple as that.”

I really hope this legendary rocker gets some professional help or his life might end up being sadly cut short.