Welcome to Warner Music Group's Second Quarter Earnings Call for the Period Ended March 31, 2020. At the request of Warner Music Group, today's call is being recorded for replay purposes. And if you object, you may disconnect at any time. Now I would like to turn today's call over to your host, Mr. James Steven, Executive Vice President and Chief Communications Officer. You may begin.

Good morning, everyone. Welcome to Warner Music Group's Fiscal Second Quarter Ended March 31, 2020 Conference Call. Both our earnings press release and the Form 10-Q we filed this morning are available on our website. Today, our CEO, Steve Cooper, will update you on our business performance and strategy and then our Executive Vice President and CFO, Eric Levin, will discuss our financial condition and results. Usually, we then open the call for questions. However, in February, we filed a registration statement on Form S-1 with the SEC for a proposed IPO. As a result, we remain in a quiet period, and we have decided not to take questions this quarter. Before Steve's comments, let me remind you that this communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. All forward-looking statements are made as of today, and we disclaim any duty to update such statements. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs and projections will result or be achieved. Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties and other factors that can cause actual results that differ materially from our expectations. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our earnings press release, our Form 10-Q and Form 10-K and other SEC filings. We plan to present certain non-GAAP results during this conference call. We have provided schedules reconciling these results to our GAAP results in our earnings press release posted on our website. Also, please note that all revenue figures and comparisons discussed today will be presented in constant currency unless otherwise noted. And with that, I'll turn it over to Steve Cooper.

Hi, everyone. Thanks so much for joining us in the midst of this difficult time. I hope that you and your families are all keeping safe, sound, sane and out of harm's way. As James noted, we decided not to do a Q&A session today. That being said, I want to address one topic upfront, what's happening with our IPO. As you'll appreciate, we're in a regulatory quiet period, and we're limited in what we can say. The current market conditions are obvious, so our Board and management will continue to monitor the situation. In Q1, we achieved the highest quarterly revenue in our 16-year history as a stand-alone company. And well before the pandemic turned all of our lives upside down, we knew Q2 this year would be a tough comparison with an especially strong Q2 in 2019. In the prior year quarter, our results included the impact of a onetime digital streaming license and unusually high physical revenue due to several very successful physical-centric releases. So I'm really very pleased to report that due in large part to an 11% increase in streaming revenue in recorded music and a 17% increase in digital revenue in music publishing, we've matched our great performance in the prior year quarter. That's a tremendous achievement, especially given the unusual circumstances that I'll explain shortly. During this quarter, total revenue was flat, digital revenue was up 7.4% and OIBDA was down 93.7%. It's important to note that this OIBDA result doesn't properly reflect our great operating performance or the strong underlying health of our business. That's because we had an abnormal level of noise in our numbers this quarter, including expenses associated with our long-term incentive plan, which are a direct reflection of the strength of our results and the rising value of…

Thank you, and good morning, everyone. As Steve said, total revenue was flat in constant currency. On an as-reported basis, it was down slightly at 1.7%. While our headline performance isn't as impressive as in recent quarters, we're anticipating a very tough comparison with a strong Q2 2019, and our results are in line with what our expectations were for this 1 quarter. I'd also like to add that while COVID presents real and significant challenges to our industry, we remain very confident that we're well positioned for long-term growth. From an OIBDA perspective, certain adjustments are necessary to make the year-over-year comparisons more meaningful. The details are in our press release. But in the quarter, we had a charge of $169 million associated with variable compensation under our long-term incentive plan due to an increase in our valuation. This compares to $5 million of variable compensation expense in the prior year quarter. We also had $31 million of onetime expenses related to restructuring and publishing associated with management changes, the upgrade of our financial system, reserves taken due to COVID and cost of our proposed IPO. Q2 adjusted OIBDA declined 78% to $43 million, and adjusted OIBDA margin declined 16.4 percentage points to 1.1%, primarily driven by higher variable compensation expense. Excluding the impact of this higher expense, Q2 adjusted OIBDA would have increased $8 million or 3.9%. Adjusted OIBDA margin increased 1.1 percentage points to 19.8% due to revenue mix. Based on our valuation at quarter end, we would expect the payout associated with our long-term incentive plan to be approximately $400 million, which relates to the redemption of equity interests, with the majority expected to be paid out in fiscal '21. In recorded music, second quarter revenue was down 1.5%. Digital revenue grew 6% driven by an…