It is a paradox of power that senior executives often miss out on choices available to their juniors. Even in an age of networked multinationals, the chief executive of a New York-based company is not expected to stray too far from home.

So when Edgar Bronfman Jr announced plans to move to London this month, rivals buzzed with speculation about its significance. Would Warner Music's chairman and chief executive be sidelined in its Rockefeller Center headquarters, or was this preparation for another pounce on UK-based EMI?

Neither, Mr Bronfman says, painting the move instead as a rare example of work-life balance at the chief executive level. He and his wife lived in London when growing up, and wanted their four children to have the same experience. "It should be a seamless situation here at the company and a wonderful thing for my family," he says.

With their oldest son heading for high school in two years, "we thought if we're ever going to do this, it's kind of now or never", he says.

He stresses that he will remain as hands-on as ever, spending half his time in New York, and says his closer oversight of an international business that has never matched Warner's clout in the US should accelerate its growth.

In most industries, chief executives' predictions of growth are routine, even now. In the music business, howwever, they can sound startling. For most of the five years since Mr Bronfman led a $2.6bn buy-out of the company from Time Warner, the consensus has been that his industry has had little option but to manage decline.

The narrative is depressingly familiar. Compact disc sales have halved since their 2000 peak, 20 pirated tracks are consumed online for every legal download, and artists are turning their backs on record labels to sell direct to consumers.

As the sole quoted music company of any size, Warner has been fully exposed to the gloom, its shares sliding from a 2005 initial offering price of $17 to less than $2 by February this year.

Recent months, however, have seen a distinct shift in sentiment. Wall Street analysts and ratings agencies have issued upgrades, and the group behind Green Day and the rights to "Happy Birthday to You" became for a moment the best-performing US media stock of 2009, breaching $7 in late May.

Sitting in the calm of his crisply decorated New York corner office, Mr Bronfman argues that there are concrete underpinnings to the change in sentiment. "We think we've got a pretty bright future as digital penetrates further around the world," he says.

The industry's misjudged optimism in the past has perhaps taught him not to guess the timing of a turnround, but a return is "inevitable", he says.

Mr Bronfman has been buoyed by having converted investors' new warmth into cash. In May, he managed to raise $1.1bn in new bonds to repay bank debt coming due in 2011. "It was a real vote of confidence," he says: "We now have no [debt] maturities for five years and frankly more flexibility in how we operate the company."

In a restless decade before the Warner buy-out, Mr Bronfman had transformed Seagram, his family's whisky and ginger ale business, into a Hollywood powerhouse, buying MCA and Polygram to create the world's largest record label, only to sell the empire to France's Vivendi for stock.

But after $85bn worth of deals, he saw his family's fortune crumble with Jean-Marie Messier's collapsing conglomerate. Many commentators concluded that the Warner deal was little more than an effort to prove himself in his own venture.

Mr Bronfman expresses little interest in looking back, but says he and his private equity backers have changed Warner's business model fundamentally.

First, he says they embraced digital distribution "earlier, harder and faster" than rivals, making its Atlantic label the first in the US to generate more than half its revenues from online and mobile sources. Warner's early willingness to work with scores of start-ups, however, was followed by a round of writedowns on its digital investments, and Mr Bronfman admits it is now being "more selective" about digital partners.

Second, his team has signed half of Warner's active artists to so-called " 360-degree " deals, where it can earn lucrative publishing, touring and merchandising revenues. Such deals are Mr Bronfman's answer to those who argue that labels have no role in a world where Radiohead can sell albums direct to fans.

"Fundamentally, we are the risk capital," he says. "We're prepared to take the capital risk on a new artist and we're building a company so that we can exploit on behalf of the artist all the revenue streams that are made possible by that initial investment."

For artists, making the breakthrough to stardom is getting harder, he argues, and organisations such as his "cannot easily be replaced".

The result of such changes is that Warner's revenues have held steady since 2004, as new streams replaced disappearing CD sales. Deep cost cuts that began within hours of the buy-out's completion have improved margins.

Rivals warned that reduced "artist and repertoire" budget would cost Warner chart success, "but we've gained market share because we focused the A&R budget on the artists we believed in", Mr Bronfman says. Its 21 per cent US market share last year was its highest for a decade.

Crucially for his private equity backers' chances of adding to their returns, they have proved that music "is a business that's capable of producing very real cash flow", he adds. Pali Research expects annual free cash flows of almost $200m (£122m) in the coming years.

Mr Bronfman and his former Polygram and MCA colleagues at Vivendi's Universal Music have also been helped by upheavals at EMI and, before it, Sony Music.

Management stability is crucial for content companies and their artists, he argues, adding: "I think if Sony and EMI can also find stability and quality at the same time, that will help."

Whether or not he is the one who ultimately brings stability to EMI through a long-anticipated merger (see box), Mr Bronfman expects to continue refining Warner's business model. Finding the right mobile music model "remains ahead of us", he says, while publishing and recorded music need further integration to simplify the sale of music to advertisers and digital retailers.

His attempts to navigate the digital uncertainty may be helped by the new-found urgency other content owners feel in getting paid online, he adds. "You can want your music or your news or your movies for free but all that will ultimately happen is there will be no music or news or movies because nobody will be able to afford to deliver it."

The pace of change has accelerated in the digital age, he concludes. "I don't think we or anyone else can say: 'This is our new model and this is how it's going to look five years from now.'"

Decade-long overture to EMI could finally lead to a duet

The returns Edgar Bronfman Jr's team made from Warner Music emboldened Terra Firma, the buy-out group, to take over EMI, where it has adopted similar tactics of cost cutting, digital investment and artist partnerships.

Mr Bronfman and his backers extracted 140 per cent of their investment by the time of Warner's initial public offering in 2005, allowing them to be "patient and thoughtful", he says. The unspoken contrast is with Terra Firma, which bought EMI as credit markets froze, leaving bankers unable to sell on the debt and investors facing writedowns.

Attempts to combine Warner with its UK rival began in 2000 and Warner's recent bond issue has reignited speculation about a deal. Asked whether another run at EMI would make sense, Mr Bronfman says that there is still "a fundamental rationale for scale" in the industry. "Let's see what the future holds. We probably should just leave the subject," he adds.

Prodded further, though, he adds carefully: "We'd like to achieve a happy medium where the bond market doesn't feel we're going to go crazy with acquisitions, which we certainly won't, but the company has the flexibility to do acquisitions which are attractive for both equity and debt holders." The decade-long dance with EMI may not be over.