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CME Announces Major Profit Increase

11.10.04

Columbia Achieved a Consolidated Ordinary Profit of 148 Million Yen 

Columbia Music Entertainment Inc. (hereinafter CME; Head Office: Minato-ku, Tokyo; Chief Executive Officer (CEO): Sadahiko Hirose, Chairman: Strauss Zelnick) today issued its consolidated business results indicating the Company's overall performance for the first half (April 1 ~ September 30, 2004) of the fiscal year ending March 31, 2005.

Consolidated Actual Business Results
During the first-half term under review, the Company returned to profitability on both a consolidated and non-consolidated basis. Consolidated sales for the period were 14,742 million yen, which is 584 million yen better than sales for the same period last fiscal year. Consolidated ordinary profit was 148 million yen, which compares favorably to a loss of 829 million yen for the same period last fiscal year. Consolidated net profit was 8 million yen, which is 805 million yen better than the net loss of 797 million yen that was recorded for the same term of the previous fiscal year. These results exceed those that were originally forecast.

The Company improved its performance despite continued decline in the overall music market in Japan. The results arise primarily from the Company's successful efforts to reduce overall costs and specifically to contain marketing and advertising expenditures and improve return rates. The improvement also results from the Company's third party distribution business, which materially outperformed the Company's expectations, as well as the strength of its own in-house A&R activities

During the term, the Company also began to successfully execute its digital distribution strategy. For example, the Company entered into an agreement with NTT DoCoMo, which will allow the Company to distribute its content through NTT DoCoMo's FOMA service and link to NTT DoCoMo's FOMA Official Site.

Looking ahead to the second half of the year, the Company will concentrate its efforts on revenue growth as well as continue its focus on cost reduction, including costs related to sales, advertising and marketing, and general management expense.

Full Year Business Result Forecast for Fiscal Year Ending March 2005
In the second half, the Company anticipates strong performance from its roster of new artists, who will be making their debuts in a wide variety of genres and are expected to have a positive impact on the Company's overall sales. The Company also intends to expand its digital distribution business by broadening distribution to more wireless carriers such as au/KDDI and Vodaphone.

The Company is issuing a full-year consolidated business forecast that anticipates sales of 28 billion yen, an ordinary profit of 200 million yen, and a net profit of 100 million yen.