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Liberty Media launches $500m+ acquisition vehicle

Liberty Media, the US media, communications and entertainment giant which owns just over a third of Live Nation, is on the hunt for a new addition to its corporate portfolio.

The firm, which also owns Formula 1, satellite radio company SiriusXM and the Atlanta Braves baseball team, among other interests, has launched Liberty Media Acquisition Corporation (LMAC), a so-called special-purpose acquisition company (SPAC) with which Liberty intends to search for a “target in the media, digital media, music, entertainment, communications, telecommunications and technology industries”.

The SPAC – a type of shell company which allows for a launch on the stock market, in LMAC’s case New York’s Nasdaq, without going through the traditional initial public offering (IPO) process – launched on Friday (22 January) and is initially trading under the Nasdaq stock symbol LMACU.

LPAC is targeting a business in the media, music, entertainment, communications, telecommunications and technology industries”

Shares in LMACU were initially priced at US$10 each, with 50 million units up for grabs, giving LMAC an IPO price of $500m. The SPAC opened for trading at 32% above that, at $13.20 per share.

As of 25 January, the LMACU units – each of which comprise a share of series-A common stock, along with a fifth of a warrant which may be redeemed for another share of series-A stock, at $11.50 per share – were worth $13.

LMAC is led by Liberty Media CEO Greg Maffei (pictured) and other members of Liberty’s management team, with Citigroup, Morgan Stanley, Credit Suisse and Goldman Sachs underwriting the IPO as joint bookrunners.

On 19 January, Live Nation’s share price reached an all-time high of $76.54, despite the ongoing impact of the Covid-19 pandemic.

 


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Pandora and Live Nation ‘brought together’ by SiriusXM deal

SiriusXM has created the “world’s largest audio entertainment company” by acquiring internet radio/streaming service Pandora Media, the US satellite radio giant said today, in news that is likely to reignite speculation about a potential merger with Live Nation.

The acquisition – an all-stock deal worth US$3.5bn – will “capitalise on cross-promotion opportunities between SiriusXM’s base of more than 36m subscribers across North America and 23m-plus annual trial listeners and Pandora’s more than 70m monthly active users” – the largest digital audio audience in the US, according to a joint statement.  The new company expects to turn over more than $7bn in 2018, with “strong, long-term growth opportunities” predicted for the years ahead.

SiriusXM originally invested $480m in loss-making Pandora last June, concurrent with the company offloading Ticketfly to Eventbrite in a return to its “core priorities”.

Commenting on the merger, Jim Meyer, CEO of SiriusXM, says: “We have long respected Pandora and their team for their popular consumer offering that has attracted a massive audience, and have been impressed by Pandora’s strategic progress and stronger execution. We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses.

“There are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses”

“The addition of Pandora diversifies SiriusXM’s revenue streams with the US’s largest ad-supported audio offering, broadens our technical capabilities and represents an exciting next step in our efforts to expand our reach out of the car even further. Through targeted investments, we see significant opportunities to drive innovation that will accelerate growth beyond what would be available to the separate companies, and does so in a way that also benefits consumers, artists and the broader content communities.

“Together, we will deliver even more of the best content on radio to our passionate and loyal listeners, and attract new listeners, across our two platforms.”

SiriusXM – 71% owned by Liberty Media Corporation – has long been the subject of rumours it could take over, or merge with, Live Nation, in which Liberty holds a 34% stake. Greg Maffei, CEO of Liberty Media, said in said in May that the company may look at “ways to have them [SiriusXM and Live Nation] work together”, and many analysts espoused the potential benefits of a Live Nation/Ticketmaster–SiriusXM merger, which Citigroup’s Jason Bazinet says would create a “vertically integrated music titan”.

Brandon Ross, of BTIG Research – who said as long ago as June 2016 that Live Nation, SiriusXM and Pandora “could act as a powerful end-to-end music distribution platform from live music to streaming music and radio” – suggested in July that an acquisition of Live Nation by SiriusXM in on the cards. SiriusXM’s CFO, David Grear, however, soon poured cold water on the rumours, saying he’s “not certain they have much to do with reality”.

“This could be anti-competitive in the concert industry – or not”

In an investor call yesterday, Ross was again banging the drum for a SiriusXM–Live Nation merger, asking Meyer (pictured) whether “Live Nation together with these assets [SiriusXM and Pandora] makes more sense than what one carries just as a standalone company”, although the CEO declined to comment.

Speaking to Slate, David Lowery, a music business lecturer at the University of Georgia, says he also sees deeper integration for the three brands in future, with today’s deal “effectively bring[ing] these three companies together”.

Lowery – also the founder of alt-rock bands Camper Van Beethoven and Cracker – adds that only time will tell if the acquisition has a significant impact on the live music business. “This could be anti-competitive in the concert industry – or not,” he comments. “For instance, my bands enjoy significant SiriusXM play. Cross-promotion could enhance revenues of many mid-tier artists. But honestly that’s an unknown.”

Following news of the acquisition, Pandora’s shares jumped 8.6% to $9.88, although they have since fallen to $8.98.

 


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Analyst: Live Nation–SiriusXM merger “inevitable”

A merger between Live Nation and Liberty Media’s SiriusXM is inevitable in the near term, a leading Wall Street analyst has suggested.

Earlier this month, Live Nation’s share price climbed above US$50 for the first time, bolstered by rumours the concert giant could be the target of an acquisition by satellite radio provider SiriusXM.

Greg Maffei, CEO of SiriusXM parent company Liberty Media – which owns roughly a third of Live Nation – said in May that the company may look at “ways to have them [SiriusXM and Live Nation] work together”, and analysts have long espoused the potential benefits of a Live Nation/Ticketmaster–SiriusXM merger, which Citigroup’s Jason Bazinet says would create a “vertically integrated music titan”.

Brandon Ross, of BTIG Research – who said as long ago as June 2016 that Live Nation, SiriusXM and Pandora (since partially acquired by Liberty) “could act as a powerful end-to-end music distribution platform from live music to streaming music and radio” – now says an acquisition of Live Nation by SiriusXM in on the cards – if Live Nation’s board agrees to a deal.

BTIG has given Live Nation shares a price target of $60 and upgraded to ‘buy’

“We and a growing group of investors have come to believe a nearer-term combination of SiriusXM and Live Nation is inevitable,” Ross writes. “Or, put another way, that Liberty would like a deal to happen, which likely makes a transaction inevitable.

“A trail of data points has been widely circulated over the past month which give credence to this theory. The most interesting evidence comes from the words of [Liberty Media chairman] John Malone himself, in this excerpt from the 14 June WSJ: ‘There are some synergies amongst companies that we have a stake in that we’re still exploring’ that could lead to deals, Mr Malone said.”

Other indicators suggesting an acquisition is likely, continues Ross, are slowing growth at SiriusXM (SIRI), with a “Sirius acquisition of LYV [helping to] solve Liberty’s problems by helping to (at least optically) protect SIRI’s terminal value”; threat to SiriusXM’s in-car radio business from music streaming services and the “exploding popularity” of podcast apps; the attractiveness of SiriusXM’s free cashflow to Live Nation for further expansion; and the fact Live Nation CEO Michael Rapino was added to the SiriusXM board at the beginning of 2018.

Would Live Nation agree to a deal? Ultimately, reckons Ross, Rapino – who he predicts would become the CEO of the combined company – and Live Nation’s directors will “do what is in the best interest of shareholders”. While, “on a personal level, top management is financially incentivised to sell”, and “sure access to additional cash could expedite” Live Nation’s global ambitions, BTIG says SiriusXM’s cash is “not critical to the company’s long term”.

“We and a growing group of investors have come to believe a nearer-term combination of SiriusXM and Live Nation is inevitable”

To complicate matters, should SiriusXM bid for Live Nation, other bidders will likely emerge, says Ross – with “the most likely, in our view, are Amazon and Spotify”. (Music remains a “top priority for Amazon”, which could also “significantly improve Ticketmaster”, he writes, while Spotify and Live Nation could partner on 360 deals with artists, as well as “advertising and sponsorship packages, leveraging data and Live Nation generating content to catalyse Spotify’s video ambitions”.)

Whether or not a bid materialises, the analyst says Live Nation has a bright future ahead regardless. He predicts the “new normal LYV AOI [adjusted operating income] growth to be mid-teens”, highlighting the continued growth of the live music industry, the company’s effective pricing of its shows (‘slow ticketing’) and the “large international opportunity ahead” as reasons to be optimistic.

BTIG has given Live Nation (LYV) shares a price target of $60 and upgraded them to ‘buy’. The firm also predicts AOI of $851m in 2018, and $975m for 2019, compared to average (‘Street’) expectations of $827m and $912m, respectively.

 


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Liberty eyeing more music in ATL with The Battery

Liberty Media CEO Greg Maffei has told investors Liberty is “increasingly a company [involved] in live performance”, as he unveiled plans to leverage his company’s stake in Live Nation to bring more live music to Atlanta, Georgia.

In an investors’ meeting yesterday afternoon, Maffei said The Battery – an under-construction entertainment district surrounding the new SunTrust Park (41,149-cap.) stadium, home to the Liberty-owned Atlanta Braves baseball team – said his focus is on “getting the rest of The Battery leased [and] seeing increased events around the whole experience, like more concerts from Live Nation”, with the promoter a “big part of” the company’s future plans.

The Battery has already hosted several live events, with John Mayer, TI, Glass Animals and comedian Dave Chappelle already having placed the 3,000-cap. Coca-Cola Roxy venue and a “strong line-up of concerts” planned for the summer and autumn, Maffei said.

The stadium itself, operated by Liberty’s Atlanta National League Baseball Club Inc. company, has also hosted headline shows by Billy Joel and Metallica.

“The Braves have begun a path to creating an awful lot of experience which is more than just putting a baseball team on the field”

Other major stadia in Atlanta include Georgia Tech’s Bobby Dodd Stadium (55,000-cap.) and GWCCA’s Georgia Dome (80,000-cap.), the latter soon to be replaced by the new Mercedes-Benz Stadium.

“Liberty is increasingly a company which has investment and operations in live performance, whether it’d be live concerts or live sporting,” Maffei told investors. “And I think you’ll see that the Braves have begun a path to create an awful lot of experience which is more than just putting a baseball team on the field. [The] Battery’s a part of that.”

In addition to Live Nation, Liberty’s other investments include motorsports series Formula 1, which it agreed to acquire last September, and satellite radio service Sirius XM, which last month pumped US$480 million into Pandora as the company sold off Ticketfly.

Live Nation rival AEG has of late been investingly heavily in Battery-style mixed-use entertainment districts, including in Tennessee’s Nashville Yards and Puerto Rican capital San Juan.

 


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Live Nation part owner Liberty Media acquires F1

Live Nation stockholder Liberty Media Corporation has agreed to acquire Formula 1 (F1), opening the door for a potential expansion of the motorsport’s post-race concert programme.

Liberty Media has initially acquired a 18.7% stake in F1, which it values at US$8 billion, for $746 million in cash, and will take control of the remaining 81.3% from current owners Delta Topco and CVC Capital Partners subject to approval from its shareholders, competition bodies and the sport’s governing body, the Fédération Internationale de l’Automobile (FIA).

Former 21st Century Fox president and chief operating officer Chase Carey will become F1 chairman, replacing Nestlé chairman Peter Brabeck-Letmathe, while CEO Bernie Ecclestone, who also holds a stake in the sport, will remain in his role.

“We think our long-term perspective and expertise with media and sports assets will allow us to be good stewards of Formula 1 and benefit fans, teams and our shareholders”

Greg Maffei, president and CEO of Liberty Media, which grew its revenue by $144m in Q2 2016 driven by “exceptional” Live Nation results, says: “We think our long-term perspective and expertise with media and sports assets will allow us to be good stewards of Formula 1 and benefit fans, teams and our shareholders. We look forward to working closely with Chase Carey and Bernie Ecclestone to support the next phase of growth for this hugely popular global sport.”

Live Nation currently books shows at the 14,000-capacity Austin360 Amphitheater, at the Circuit of the Americas F1 track in Austin, Texas, and was also involved with the with the now-defunct F1 Rocks concert series in Italy and Spain. It also has a joint venture with Singapore-based promoter Lushington Entertainments, which is a partner in Singapore grand prix organiser Singapore GP Pte Ltd.

The music line-up for March’s Australian grand prix in Melbourne was widely criticised for its lack of any major international headliners.

 


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Liberty grows after “exceptional” LN results

Greg Maffei, the CEO and president of Live Nation stakeholder Liberty Media Corporation, praised the live entertainment giant’s “exceptional” second-quarter (Q2) 2016 financial results as Liberty Media posted a US$144 million increase in revenue compared to Q2 2015.

Liberty Media, which owns a 34% stake in Live Nation, grew its revenue to $1.366 billion in Q2 2016, up from $1.222bn this time last year.

Operating income increased from $171m to $328m, and adjusted operating income before depreciation and amortisation (OIBDA) – which excludes non-cash severance plan costs, share-based payment costs and deferred stock compensation – from $418m to $455m.

“Live Nation delivered a very strong quarter, and leading indicators point to another record year in 2016”

In the Liberty Media Group stock group, specifically – of which Liberty’s holdings in Live Nation are part – loss decreased from $17m to $12m, and adjusted OIBDA remained static, at -$7m.

Live Nation “delivered a very strong quarter”, said Maffei in Liberty’s earnings call on Friday, “and leading indicators across concerts and ticketing sales, sponsorship and advertising are pointing to another record year in 2016”.

Maffei (pictured), who last month reportedly offered $3.4bn for music streaming service Pandora in a bid to bring it and Live Nation under one roof, was reelected to the Live Nation board with an increased majority in June.

 


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Pandora rejects Live Nation director takeover bid

The board of music streaming service Pandora has reportedly turned down a US$3.4 billion offer to be acquired by Liberty Media, which owns a 34% stake in Live Nation Entertainment and whose CEO and president, Greg Maffei, sits on Live Nation’s board of directors.

Maffei’s offer works out at around $15 a share, but Pandora directors feel the company is worth closer to $20, according to a report in The Wall Street Journal.

The company’s latest financial results, released today, reveal that it continues to bleed money, with a net loss of $76.3 million in the second quarter of 2016. More an internet radio platform than a true streaming service, Pandora has struggled to play catch-up with on-demand streaming services such as Spotify and Apple Music, although it is rumoured to be launching its own on-demand music streaming feature in the near future.

In addition to its stake in Live Nation, Liberty Media owns satellite-radio operator Sirius XM and part of the Pepsi Center in Denver (20,000-cap.) and the Atlanta Braves baseball team and its stadium, Turner Field (49,586-cap.).

“Live Nation, Pandora and Sirius could act as a powerful end-to-end music distribution platform from live music to streaming music and radio”

Last month BTIG analyst Brandon Ross said Pandora could be the lynchpin in an eventual Sirius XM/Live Nation merger. “While Sirius and Live Nation together might not create great synergy, we believe that Sirius and Pandora together create a little more and that Live Nation and Pandora create a lot more than that,” he commented.

“All together, the three companies could act as a powerful end-to-end music distribution platform from live music to streaming music and radio. Such a company would also have significant control over artists and labels and be able to act as an extended flywheel with many ways to monetise. Sirius’s consistent FCF [free cash flow] could also be used to make this platform global. If the combined company wanted to launch on-demand streaming, it could do so.”

Maffei was reelected to the Live Nation board with an increased majority in June.

 


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