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Columbia Music Entertainment Issues Notice of Consolidated Business Results to the End of the Third Quarter of the Fiscal Year Ending March 2007 and Revision of Full Year Results Forecast
February, 15 2007

Highest Full-Year Net Profit Projected Since October 2001 Corporate Split

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 through the end of the third quarter (April 1 ~ December 31, 2006) of the fiscal year ending March 31, 2007, and also issued a revision o f its full-year business result forecast.

For the three quarters under review, CME reported its highest quarterly net profit since beginning its business revitalization as a music production company following the corporate split of October 2001. In addition, we are currently projecting that the Company’s net profit for the full year will also be at its highest level since the corporate split.

CME will continue to actively develop its business in order to keep the Company on a growth track, continuously improving the profitability of our existing businesses, creating hit artists, and expanding our new businesses via the Internet.

During the nine-month period up to the end of the current third quarter, CME’s consolidated sales totaled 21,253 million yen, a reduction of 13.1% compared with the same period of the previous fiscal year. This was due to a decline in sales of 2,923 million yen in accordance with the liquidation of the non-core CD/DVD pressing business, etc. However, sales in the in-house music entertainment business were quite favorable. For example, Kiyoshi Hikawa’s Ikken, which received the Japan Record Award, was well supported by the record-buying public, and Yo Hitoto’s first best-of album BESTYO, also enjoyed strong sales. In addition, in the digital business, CME’s sales increased by 60.1% compared with the same period of the previous fiscal year due to the favorable expansion of full song ringtune downloads (chakuuta full), which can provide music to the mobile phone-compatible terminals of all Japanese carriers.

Moving on to the profit and loss balance, in addition to the in-house music entertainment business, the custom sales business and overseas production subsidiary also achieved favorable results. This performance allowed the Company to report a consolidated operating profit of 708 million yen for the current third quarter (October ~ December 2006), exceeding the planned target. As a result, the Company booked a consolidated ordinary profit for the period up to the end of the current third quarter of 343 million yen (an increase of 199.6% compared with the same period of the previous fiscal year), and a consolidated net profit for the current third quarter alone of 353 million yen (an increase of 120.9% compared with the same period of the previous fiscal year).

With regard to the Company’s consolidated business result forecast for the full fiscal year, in addition to the favorable performance during the third quarter, fourth quarter sales are also promising. For example, Kaela Kimura’s third album SCRATCH, which was released on February 7, has entered the Oricon album chart at No.1. Accordingly, we have revised our forecasts with respect to sales, ordinary profit and net profit for the current term.

With the liquidation of the non-core CD/DVD pressing business, which was reported in settlement of accounts for the previous term, the Company has strengthened its profitability and further solidified its basis for generating sustained future profits.

For the future too, we will continue to expand the digital business as well as exploiting new business models including the upgrading of our business activities aimed at the baby-boom generation, such as the vinyl LP record revival project that has received a favorable response. Through these and other efforts we will attempt to further boost our profitability as a music entertainment company.