WME gears up for huge return to live
Powerhouse agency WME is expecting a boom period for the company as live entertainment resumes, with bookings well above where they were even in the pre-coronavirus era, CEO Ari Emanuel has said.
Speaking yesterday (16 August) during parent company Endeavor’s Q2 2021 earnings call, Emanuel, who took Endeavor public earlier this year, explained: “Our WME bookings for the second half of 2021 are double digits over where they were at the same point in 2019, the most recent non-Covid-impacted year.”
Endeavor CFO Jason Lublin said country music is “leading the way” for a rebound in live music in the US in the second half of 2021, with highlights including sold-out tours by Garth Brooks and Eric Church. “As Ari mentioned, we’re pacing ahead as relates to WME booking for the second half of the year, and we’re booking clients for dates much further into the future,” he added.
Endeavor increased revenue to US$1.1 billion in the second quarter of 2021 – up around $650 million on Q2 2020 – and expects adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) of $765–775m for the whole year. The company paid $600m worth of outstanding debt in Q2, reducing its total debt to $5.351bn (compared to $5.872bn in Q1 2021).
In its representation unit (comprising WME, IMG and Endeavor Content) specifically, Endeavor reported revenue of $328.2m (up from $192.8m year on year) and adjusted ebitda of $61.7m (compared to $52m in Q2 2020).
“We have experienced recovery in our business happening slightly faster than we had originally anticipated”
“We have experienced recovery in our business happening slightly faster than we had originally anticipated,” Lublin continued. “And although we continue to closely monitor the delta variant, bookings, ticket sales and other indicators remain positive for the balance of the year.”
According to Emanuel, Endeavor’s strength lies in its diversity, with the business also including sports properties including Ultimate Fighting Champtionship (UFC) and corporate hospitality businesses such as On Location Experiences.
“If you want to think about the whole picture, when you look at the other companies that trade in our space – whether it be WWE, Formula 1, Live Nation – they’re all one-trick ponies,” he told analysts. “We have multiple facets, whether it be sponsorship or sports properties, representation, On Location – there are multifaceted aspects of our business, and we have gone through the pandemic, and we’re raising EBITDA, we’re raising guidance…
“I think you guys are going to learn that we’re a multifaceted business that we get to pivot back and forth from. […] The company has multiple different aspects of our business that protect us against anything in the future.”
Endeavor’s latest quarterly report can be read in full here.
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Live Nation returns to profitability in Q2 2021
Live Nation beat its own earnings expectations in the second financial quarter of 2021, reporting a huge jump in year-on-year revenue and a return to profitability after the most difficult 16 months in the company’s history.
In the three months ending 30 June 2021, the concert giant grew its turnover from US$74.1 million to $575.9m – a more than 677% increase – posted adjusted operating income of $9.7m, or $12.4m on a constant-currency basis, reveals the company’s Q2 filing with the US Securities and Exchange Commission.
The growth, says LN, was driven by “roaring demand” for ticket sales ahead of widespread reopenings this summer and autumn, with Ticketmaster North America having its fourth-best month ever as global ticketing revenues climbed to $244m (from -$87m in Q2 2020). Ticketmaster issued 11m cost-bearing tickets in the six months leading to 30 June.
The number of shows is also up in the double digits for 2022 compared to 2019, indicating the huge “pent-up demand” for live entertainment, says Live Nation CEO Michael Rapino, and with it the value of the company’s sponsorship commitments.
“As communities reopen, we’re seeing the pent-up demand for live events play out as artists and fans are eager to reconnect in person,” Rapino comments. “In the US and UK, we are seeing strong ticket sales and the restart of our concerts and festivals, highlighted over the past weekends by Lollapalooza and Rolling Loud in the US and Latitude in the UK hosting a combined three quarters of a million fans. With vaccine roll-outs increasing throughout Canada and Europe, we expect additional markets to open more broadly in the coming months.
“All our leading indicators continue to point to a roaring era for concerts and other live events”
“The momentum for the return to live events has been building every month, with ticket sales and concert attendance pacing faster than expected, underscoring the strength and resiliency of the concert business and live events in general.
“This progress, combined with our cost discipline, has enabled us to deliver positive adjusted operating income for the second quarter, well ahead of where we thought we would for this quarter. We expect to see further ramp-up accelerate through the rest of the year, with improving operating income and all segments returning to adjusted operating income profitability for the second half of the year, setting us up for a full-scale 2022.”
“Looking forward to 2022, and now also 2023, all our leading indicators continue to point to a roaring era for concerts and other live events. Starting with our concerts division, every major venue type – arenas, amphitheaters, and stadiums – have pipelines indicating double digit growth in show count and ticket sales relative to 2019 levels,” he adds.
Live Nation’s latest financials follow comments made by Rapino in a recent interview with podcaster Bob Lefsetz, in which he said the financial markets are also preparing for a boom time for live music in 2022 and beyond.
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Endeavor profitable in first quarter of 2021
WME parent company Endeavor posted a small profit of US$2.4 million in the first quarter of 2021, its Q1 financial results – the firm’s first since becoming a public company in April – reveal.
Endeavor, which also owns the IMG sports agency and the Ultimate Fighting Championship (UFC), among other properties, increased its net income from the -$51.3m it reported for the same period last year. Revenue for Q1 2021 totalled $1.07 billion, down slightly from the $1.19bn in Q1 2020, while operating income came to $94.5m, up from $53.8m year on year.
Speaking during yesterday (2 June)’s earnings call, Endeavor CEO Ari Emanuel noted that the growth was driven primarily by its ‘owned sports properties’ segment – one of three business units, along with representation (ie the agencies) and events, experiences and rights – which saw revenues rise 22%, to $283.5m. This segment comprises UFC, Professional Bull Riders (PBR) and Euroleague basketball.
Other significant Covid-era demand is coming from its events and experience business, which includes corporate hospitality firm On Location (acquired just before the pandemic), which was recently named global hospitality provider of the Olympic Games.
The representation unit (comprising WME, IMG and Endeavor Content) continues to be hit by restrictions on events, registering a 15% dip in year-on-year revenue, to $248.9m.
“Artists of all kinds are desperate to get back out and tour”
However, booking agency WME is seeing “brisk ticket sales for upcoming concerts,” explained Emanuel. “The pre-sale for the first event of On Location’s Mexico-based beach concert series, featuring WME client Dead and Company, sold out both its January 2022 weekend dates, and the next event featuring WME client Luke Bryan had its fastest sell-out in its seven year history.”
While live music hasn’t “done exactly a 180, we have high demand, coupled with favourable pricing and yield, and artists of all kinds are desperate to get back out and tour, to see, to greet their fans,” Emanuel added.
“We are locking down major arena tours for 2022 – and to make up for a year away from performing live, many of these tours are multi-year, spanning broad territories across North and South America, Europe and Asia.”
WME artists include Drake, Justin Timberlake, Adele, Bruno Mars, Pearl Jam, Kendrick Lamar, the Killers, Bjork, Frank Ocean, Foo Fighters, St Vincent, Shakira and more.
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“Bring on the Roaring ’20s”: $97 target for LN stock
Financial research firm Wolfe Research has begun coverage of Live Nation, assigning the company’s stock an ‘outperform’ (ie strong buy) rating ahead of the resumption of live entertainment activity later this year.
In an announcement, titled ‘LYV: Bring on the Roaring 20s – Initiate with Outperform’, that the company is initiating coverage of Live Nation stocks (which trade on the New York Stock Exchange under the symbol LYV), Wolfe analyst John Janedis says the promoter is “poised for a multi-year cycle of strong growth as the reopening accelerates for a business that will have the tailwind of favourable supply/demand and a structurally stronger margin profile coming out of the pandemic”.
“LN will have the tailwind of favourable supply/demand and a structurally stronger margin profile coming out of the pandemic”
Channelling Marc Geiger in predicting a second “roaring twenties” for live entertainment, Janedis says he also sees Live Nation growing its already dominant market share post-Covid-19 “given its scale and vertical positioning within live entertainment”.
Wolfe has given Live Nation shares a price target of US$97 by the end of 2021. At press time, LYV stocks were worth $85.80; they reached an all-time high of $92.86 on 1 March.
Other analysts covering Live Nation stock include JP Morgan, William Blair, Morgan Stanley and Northcoast Research.
LN 2020 results: Michael Rapino predicts huge 2022
Live Nation’s share price broke the US$90 mark for the first time yesterday ahead of the company’s Q4 2020 earnings call, buoyed by the roll-out of coronavirus vaccines globally and unprecedented fan demand for its shows, illustrated by rapid sell-outs for both Reading Festival and Creamfields in the UK.
Shares in Live Nation Entertainment reached an all-time high of $91.18 – some $15 higher than they were pre-pandemic – on 25 February, with Wall Street untroubled by the headline figures in the company’s most recent financial report, which show a 92% drop in revenue (to $237.3 million) for the fourth quarter (Q4) and 84% slump (to $1.86 billion) for the entire year.
In total, the company lost over $1bn in 2020, with its sponsorship and advertising division the only part of the business to make a profit: It earnt $82m, compared to a $639m loss for Live Nation Concerts and $375m loss for Ticketmaster.
Despite this, investor confidence in Live Nation’s long-term potential remains strong, and CEO Michael Rapino was bullish when taking questions from analysts, also highlighting the company’s cost savings and investment in new technology in 2020 and looking forward to the light at the end of the tunnel. “It appears that the timing to release [fans’s] pent-up supply and demand is now approaching,” he explained. “Vaccine distribution is accelerating, and declines in Covid cases throughout most of the world gives us even more confidence that a safe and meaningful return to shows will soon be possible.”
“I have never been more excited about the opportunities in front of us”
To illustrate that pent-up demand for tickets, Rapino (pictured) used the example of the aforementioned UK festivals. “Just to show you when we keep talking about pent-up demand, Reading and Leeds went on sale, thanks to the government-outlined new plan for the summer, and sold 100,000 tickets in 72 hours,” he told LightShed Partners’ Brandon Ross. “Creamfields went on sale and sold out in 48 hours, over 70,000 [tickets]. So we are seeing the fan and [this is] what we’ve been talking about; they are excited to get back to the show as soon as we get the green lights in these markets to open up.”
Addressing the financials, Live Nation president Joe Berchtold revealed that the company ended with 2020 with $950m in cost savings compared to 2019. Its $500m debt raise in January, he added, gives LN $2bn in available liquidity and $1.1bn in free cash.
Looking to this summer, Rapino said he sees shows returning on a region-by-region basis (a “module model”) in 2021, with 2022 set to be a huge year for major international tours, depending on the vaccination status locally. “Given the limited touring activity in 2020 and ’21, the pipeline for 2022 is much stronger than usual, with almost twice as many major touring artists on cycle in 2022 [as] in a typical year – about 45 artists versus the usual 25,” he said.
Rapino added: “For both the US and UK, projections indicate that everyone who wants a vaccine will be able to get one by May or June, with Europe and most other markets following a few months later. Given the mass social and economic toll the lockdown has put on the public, we believe there will be strong momentum to reopen society swiftly as soon as vaccines are readily available, and we believe outdoor activity will be the first to happen.
“The pipeline for 2022 is much stronger than usual, with almost twice as many major touring artists on cycle”
“So, while the timing of return to live will continue to vary across global markets, every sign points to beginning safely in many countries sometime this summer and scaling further from there.”
In a statement released with the earnings report, Rapino praises Live Nation staff for their resilience during a “challenging” year and highlights the strides the company has made towards securing its post-Covid-19 future.
“Over the last year, leaders across all our business lines of concerts, ticketing and sponsorship have been analysing ways to improve their businesses,” he says. “Some of our key initiatives include re-organising to become more nimble while also reducing our cost structure by $200 million; building concert streaming and direct-to-consumer businesses to expand our revenue streams; advancing our technology initiatives globally while accelerating the shift to digital tickets to meet changing needs of fans, venues and artists; and reinforcing our balance sheet to endure this period, while maintaining a strong position to build our business for the future and act on opportunities as we identify them, such as our recent acquisition of the streaming platform Veeps and a continued pipeline of bolt-on acquisitions throughout the globe.
“So while this past year has been challenging for the company, our employees, fans, artists and so many others globally impacted by Covid, I have never been more excited about the opportunities in front of us.”
DEAG turns a profit in first nine months of 2020
Germany’s Deutsche Entertainment AG (DEAG) made money in the first nine months of 2020, its latest financial results reveal, turning a profit of €300,000 in quarters one to three, even against the backdrop of the Covid-19 pandemic.
The Berlin-based company, which trades on the Frankfurt stock exchange, turned over €39 million in January–September (compared to €123.1m in the same period last year), resulting in earnings before interest, tax depreciation, and amortisation (ebitda) of €0.3m.
In Q3 (July to September) alone, ebitda was €0.6m, with DEAG attributing the success to new event formats, significant cost cutting (the firm has almost halved its spending this year) and €10m worth of insurance compensation. (DEAG revealed in March it is “fully covered” for coronavirus-related disruption.)
For the full year 2020, DEAG expects to at least break even, according CEO Peter Schwenkow, who says the company already has over €100m in sales for 2021, along with liquidity of around €50m.
“In view of the Covid-19 pandemic, we are comfortable with our results for the first nine months of 2020,” comments Schwenkow.
“We are comfortable with our results for the first nine months of 2020”
“Although large parts of our visible operational business are currently suspended, the DEAG team is working behind the scenes to continue our growth course successfully as the pandemic ebbs away and finally comes to an end.
“The breakthrough in the development of vaccines in November brings a tailwind for our entire industry. We have significantly reduced our cost base and are taking advantage of available promotion and support programmes in our core markets. We are currently already planning for the opening of the market and a new start in live entertainment.
“In addition to our core markets of Germany, Switzerland and the UK, we are also present in Ireland through our joint venture Singular Artists. We are seeking contact with artists and management, preparing the expansion of our successful formats and developing new offers.”
DEAG says its ticketing business, comprising MyTicket and the UK’s Gigantic, is becoming “increasingly important” for the company’s bottom line, adding that MyTicket now includes additionally functionality to ensure social distancing at events.
The publishing of DEAG’s latest financial results follows that of German rival CTS Eventim, which revealed last week it has lost just under €18m in 2020 to date.
CTS Eventim losses just €17.7m in 2020
Thanks to insurance compensation, the introduction of ticket vouchers in key markets and tens of millions of euros’ worth of cost cutting, CTS Eventim has lost just €17.7 million this year, the company’s latest financial figures reveal.
The Munich-based, pan-European live entertainment giant released its fiscal results for the first nine months of 2020 today (19 November), with the headline figure a 79% decline in turnover, to €228.7m, in financial quarters one to three.
However, showing earnings before interest, taxes, depreciation and amortisation (ebitda) at a modest -€17.7m – and assets of nearly €800m in cash and cash equivalents – the report illustrates the relative strength of CTS Eventim’s financial position as the business heads into an uncertain winter.
Commenting on the figures, CTS Eventim CEO Klaus-Peter Schulenberg says: “We have been convinced since the outbreak of the pandemic that the stresses imposed on our company must be seen as a trial of our strengths. That is the basis on which we act. There is no such thing as standstill.”
“In the midst of this crisis, especially, we continue to bank on our strengths”
According to Schulenberg, the company has also made cost reductions worth a “double-digit-million [euro] figure” in 2020, with investments also “reduced to a minimum”, while insurance pay-outs for cancelled shows organised by its owned promoters have brought in another €43.3m this year.
“In the midst of this crisis, especially, we continue to bank on our strengths, namely technology and industry know-how,” continues Schulenberg, highlighting a new partnership with the European Handball Federation, as well as ticketing deals with football clubs Werder Bremen and Hannover 96, as evidence of the continued popularity of its platform in the sporting world.
“This is how we continue to convince our customers, both new and existing,” he adds.
For sports and live entertainment clients, meanwhile, Eventim is (like rivals Ticketmaster and See Tickets) offering a reengineered ticketing package designed to help promoters organise Covid-secure, socially distanced events. “Maintaining minimum distancing and logging visitor data are the prime focus,” says the company.
Eventbrite: 30% of ticket sales still for virtual events
Eight months on from the shutdown of nearly all live events, a third of ticket sales on Eventbrite are still for online experiences, according to the US-based ticketing/event-management company.
Even as major events return to markets in Asia and Australasia – and following a temporary return to semi-normality in Europe and North America over the summer – up to 30% of Eventbrite’s ticket volume in the third financial quarter (Q3) of 2020 involved virtual events, says the company’s CFO, Lanny Baker.
Speaking to investors during Eventbrite’s Q3 earnings call, Baker said the continued popularity of online events could point to a “structural” change in the business, even after a vaccine for Covid-19 becomes available.
“When the in-person events have recovered and people have moved from their computer screens back into the real world, we’ve seen that next shift back [to physical], but we’re still talking about 10%, 20%, 30% of ticket volume being for virtual events,” he explained. “Whereas pre-Covid, that number might have been 2%, 3% or 4%.
“So I think there’s been a structural opening of a business opportunity and habit around online events. There are new creators [which were] not necessarily [in] the event marketplace in the past.”
“I think there’s been a structural opening of a business opportunity … around online events”
This continued demand for virtual experiences hasn’t, however, affected ticket sales for physical events: the company reported in September that it saw paid ticket volume grow 17% in August alone, as more fans went to Covid-secure in-person shows.
Eventbrite, which has offices in the US, UK, Canada, Australia, Spain and the Republic of Ireland, reported a 75% year-on-year decline in revenue, to US$21.8 million, in Q3 – an improvement on Q2, where the figure was just $8.4m.
The company says it has also achieved expense savings “ahead of plan” for its $100m cost-cutting scheme, announced in April, reducing net loss to $19.1m, compared to $30.1m in Q3 2019.
“The continued improvement in our results reflects creators’ ingenuity and their confidence in our platform to deliver when it matters most,” comments Eventbrite CEO Julia Hartz. “Activity on our platform rebounded in the third quarter, as creators hosted more events than they did this time last year, and total consumer ticket volume began to approach pre-Covid levels.
“We believe that our platform is uniquely positioned to serve the needs of independent creators, helping them to grow their businesses and lead the recovery of live experiences.”
This article forms part of IQ’s Covid-19 resource centre – a knowledge hub of essential guidance and updating resources for uncertain times.
Live Nation: ‘We expect shows at scale next summer’
Live Nation execs were bullish on the company’s prospects during its Q3 2020 earnings call, citing further cost cutting, progress on Covid-19 testing and a “consistently low” refund rate as reasons to be cheerful after another difficult quarter for the US concert giant.
With next to no concerts taking place globally, Live Nation reported a 95.1% drop in revenue, from US$3.77 billion (in Q3 2019) to US$184 million, in the third quarter of 2020 (June–September), the second full financial quarter of the Covid-19 pandemic.
This resulted in an operating loss of $504m, compared to an operating profit of $260m the previous year, although the financial picture has improved somewhat compared to Q2 2020, part due to new concert formats such as drive-ins, live streams and socially distanced shows. (Fans attending Live Nation shows grew 180% quarter on quarter.)
Live Nation’s share price increased slightly, to a near-one month-high of just over $56, following the earnings call.
“We are working on a roadmap to get back to live safely”
Speaking to investors and analysts yesterday (5 November), LN CEO Michael Rapino said while there have “been no major changes in our business conditions or outlook since the last time we spoke”, he is encouraged by the small number of fans who have returned tickets for refunds, as well as strong festival onsales for next summer, including for EDC Las Vegas (pictured), which sold out 2021 in 24 hours.
“Meanwhile, we are working on a roadmap to get back to live safely,” he continued. “We are encouraged by progress on testing technology treatments and vaccines which will help us build our plans.”
Rapino added that the promoter “expect[s] shows at scale next summer”, although he concedes that the “exact timeline of this return will vary by region, and so we continue to focus on remaining flexible.”
He also highlighted Ticketmaster’s new SmartEvent technology, which aims to enable event organisers to easily ticket Covid-secure shows, and revealed that Live Nation is developing a set of procedures, in partnership with health experts, that will allow shows to go ahead safely until a vaccine is found. “From venue sanitation procedures to fan-friendly policies and on ticket purchases and the latest testing options, we are setting standards that will give the fans, crews and artists peace of mind before, during and after the show,” he commented.
“We are setting standards that will give the fans, crews and artists peace of mind before, during and after the show”
Live Nation president Joe Berchtold revealed that the company has made savings of a further $100m, taking its 2020 cost cutting to a total of over $900m (at last estimate, in May, the figure was nearer $600m). “We have […] reduce[d] our cash usage by $1.5 billion relative to our pre-Covid plans,” he explained.
“With these reductions, we have lowered the estimate on our operational cash burn rate [negative cash flow] to $110m per month and our gross burn rate to $175m per month on average for the last nine months of the year and prior, to the benefit of contribution margin generated by the business.”
The call also saw Rapino touch on Marc Geiger’s plan to spend $75m on buying up US venues, saying he disagrees that there is a “fire sale” on grassroots venues (“the thesis […] that these independent venues are so distressed that they’re to throw someone they keys at a very cheap price” is, he said, disproved by the amount of “capital out there” at present, including Paycheck Protection Program loans), and the problem of securing insurance for shows next year, explaining that LN remains “optimistic that the government here in the US, like many of them internationally, [will] sort it out and make sure that there’s not spurious liability [claims] for everybody who is doing the appropriate actions [on making shows Covid-safe].”
Looking to the future, Rapino says it is clear that “the path to live will not be a straight line”. That’s why, he says, Live Nation “will maintain flexibility and focus on innovating” until the long-awaited return of live music.
Live DMA estimates €1.2bn loss for member venues
Live DMA, a European live music network comprising 16 member countries, has released a new report which estimates a €1.2 billion loss in audience income for the 2,600 music venues it represents.
The new report, which gives an overview on the impact of Covid-19 has had on its member venues, estimates that 664,000 artist performances will not take place in the venues, because 284,000 music events are cancelled or postponed this year.
This is only 30% (a 70% decline) of the number of music events and artist performances that took place last year.
Therefore, a 76% decline in audience visits is expected –53 million less compared to last year. This leads to the €1.2bn loss in audience income for the venues.
The loss in audience income consists of an estimated: €496m less income from ticket sales; €521m less income from food & beverages sales; €172m less other income.
Audience income makes up 84% of the €1.8 bn+ income the venues were expected to generate in 2020
According to Live DMA, audience income makes up 84% of the €1.8bn+ income the venues were expected to generate in 2020.
Among Live DMA’s worst affected venues are the 48% that have a private commercial structure. These venues and clubs lost almost 100% of their total income, which consists almost solely of income generated by their audiences (ticket sales, beverage, food, etc.).
According to the report, without this income source, the 1,250 venues and clubs cannot fulfil their financial obligations and are relying solely on their own reserves, cutbacks and financial support from governments to survive.
The full report can be viewed here.
Live DMA’s members include the Music Venue Trust (UK); Live Komm (Germany); Svensk Live (Sweden), and Dansk Live (Denmark).