Warner is reportedly close to a deal with Apple Computer to use Apple's copyright protection and encoding for the un-enhanced audio tracks.
However, if the new format does become popular, a number of companies (and stocks) stand to benefit. (1) Music companies Warner Music ( ), EMI and Universal Music, which is owned by Vivendi Universal ( ). (2) Music retailers Trans World Entertainment ( ), which owns the Coconuts, Wherehouse and FYE chains, and Best Buy ( ) would benefit from higher music revenue.
(3) Replacement of CD players by DVD players should benefit the consumer electronics vendors and their suppliers. (4) The spread of surround-sound audio would benefit Dolby Labs ( ) and Digital Theater Systems ( ). (Full disclosure: long DTSI at the time of writing.
) However, most of these stocks are more impacted by the rollout of the next generation DVD standard, and are thus suffering from the unresolved standards war between Blu-ray and HD-DVD. On its conference call last night, Dolby issued guidance for single-digit revenue growth and said: "we will be considering the anticipated slow adoption of next generation DVD given the competing formats and high initial price points. Also we are cautious of the fact that in the PC market, OEMs and ISVs are under pricing pressure which may cause them to evaluate whether or not to bundle DVD playback software into base models.
" If Warner does indeed adopt Apple's proprietary standard for the un-enhanced audio on the discs, that would be incrementally positive for Apple ( ). Resources: Warner Music's ; discusses the outlook for next generation DVD players; discusses the surround sound market in cars and other applications.
News RSS