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As his company celebrates 19% revenue growth, the LN CEO hails a successful launch for Verified Fan – and says the Rock in Rio deal proves it's "serious" about S. America
By Jon Chapple on 04 May 2018
Live Nation has beaten expectations in the first quarter (Q1) of 2018, posting strong growth across the board.
Total revenue grew 19%, while operating income was up 72%, with all the live music giant’s divisions – concerts, sponsorship/advertising and ticketing – delivering double-digit growth in operating income and adjusted operating income (AOI).
“Twenty-eighteen is off to a great start, even better than expected when we had our full-year earnings call in February,” Live Nation’s president and CEO, Michael Rapino, told investors yesterday.
The company turned over US$1.48bn in Q1 2018 (compared to $1.24bn in Q1 2017), with the concerts business now worth more than $1bn (up 16% from $863m) and Ticketmaster $372.4m (up 17% from $312.8m).
The Q1 earnings call, held at 5pm ET (10pm GMT) yesterday, also saw Rapino and other Live Nation execs address shareholder questions on a range of topics, including Spotify, the Live Nation Festival Passport, Ticketmaster’s Verified Fan platform, the New York Times/DOJ controversy and the company’s recently announced plans to acquire Brazil’s Rock in Rio festival.
On the Rock in Rio deal, which sees Live Nation buy out former parent company LiveStyle, Rapino said the festival gives Live Nation a “great beacon in South America” and proves the company is “serious” about the potential of the local market.
“[The acquisition of Rock in Rio] sends a very loud signal to all of the potential partners we’re looking to bolt on to down there that we are serious about South America,” he told David Karnovsky of JPMorgan Securities. “Over the last couple of years, we’ve put in lots of stadium tours – Metallica, Coldplay, U2 – throughout the region, so we’ve got great partners, great experience.
“We continue to benefit from a global concerts industry that is structurally growing”
“Now, with Rock in Rio, we’re going to turn it into an actual Live Nation business down there. This will be the start.”
John Tinker from Gabelli & Company asked whether Spotify, the world’s leading music streaming service, had any plans to enter the ticketing market (after “your cousins at Pandora tried and failed”) – to which Rapino said he has a “ton of respect for Daniel [Ek]” but doesn’t think “Spotify is someone that’s looking to get into our business, nor are we looking to get into the streaming business” – while initiatives such as Festival Passports and the $20 National Concert Week form part of Live Nation’s commitment to “continually figure out ways to get that casual fan, who wasn’t going to end up going to that show, to think about going to our show”, he said.
Verified Fan, meanwhile – the Ticketmaster initiative that asks those hoping to buy tickets to provide personal information, such as their phone number, email and social handles, to assess whether the buyer is a ‘real’ fan or a ticket tout – “continues to grow”, continued Rapino, “with major onsales including Pearl Jam, Elton John, Thirty Seconds to Mars and 5 Seconds of Summer” in the pipeline.
However, he also alluded to a some teething problems for an otherwise “very successful launch” for the platform last year, saying some shows lacked the ticket inventory to match demand. “In 2017, we learned a lot,” he told Macquarie Capital’s Amy Yong. “I would say that what we learnt is that as long as we do [Verified Fan] in advance and get registered fans, and then we have inventory to match, it works seamlessly.
“Where we learnt some lessons is when we over-verified and didn’t have enough inventory – ie you got verified but we still didn’t have enough tickets, which is not a good experience for the fan…”
Live Nation president Joe Berchtold also addressed investors, answering a question on a recent New York Times article that claimed AEG had reported Live Nation to the US Department of Justice (DOJ) for alleged violations of competition law over its exclusive venue contracts.
Rock in Rio sends a very loud signal … that we are serious about South America
Saying the company takes “very seriously” its responsibility to comply with the ‘consent decree’ that governed its 2010 merger with Ticketmaster, Berchtold said the DOJ complaint was a bad-faith move by AEG driven by its ‘losing’ to its main rival.
“Our competitor, AEG, has chosen to complain to the DOJ whenever they lose to us, which has been often, and when they didn’t get what they wanted out of the DOJ, they complained to the New York Times,” said Berchtold. “That’s the genesis of this.”
He added that an internal investigation showed no evidence of consent decree violations on the part of Ticketmaster. “After AEG complained to the DOJ, we took a hard look at over 30 venues and produced information about our dealings with those venues,” he explained. “The DOJ then raised concerns about three of them – three out of over 2,000 venue clients in North America. We don’t believe they were decree violations with respect to those three, but given the thousands of Ticketmaster venue relationships, this clearly shows we have no systemic issues.”
Commenting on the Q1 results, Rapino says the latest set of financials bode well for Live Nation’s year ahead.
“We have now booked enough concerts, sold enough tickets and have enough sponsorship commitments to be confident that we will have a successful 2018, delivering double-digit operating income and AOI growth for the year,” he concludes. “We continue to benefit from a global concerts industry that is structurally growing, with strong tailwinds for both supply and demand.”
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