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‘The glass is half full’: Live Nation upbeat after difficult first quarter

Executives from Live Nation were bullish on the company’s future, both immediate and long term, as the concert giant posted its first quarterly financial results since touring came to a halt in March.

After recording its best-ever financials in 2019 (its ninth consecutive year of growth), Live Nation’s first-quarter 2020 results, as expected, look less rosy, with revenue falling 21% year on year (from US$1.72 billion to $1.37bn) and operating loss widening to $172.7 million (from $23.9m in Q1 2019).

Total net loss for shareholders was $184.8m, or 94¢ per share, according to the company’s Q1 2020 filing with the US Securities and Exchange Commission.

Speaking during Live Nation’s latest earnings call at 5pm ET (9pm GMT) yesterday (7 May), its CEO, Michael Rapino, president, Joe Berchtold, and CFO, Kathy Willard, moved to reassure investors of the company’s financial viability, highlighting continuing fan demand for live entertainment, as well as recent measures to cut costs and increase liquidity.

Berchtold said the firm had exceeded its previous target of cutting $500m in costs, and is now targeting $600m, resulting in projected burn (negative cash flow) rate of approximately $150m per month for the rest of 2020.

Helping cash flow is the fact that 80% of Live Nation’s shows are rescheduled, rather than cancelled outright, added Rapino, with “almost all fans” choosing to hold onto their tickets for vouchers rather than asking for cash refunds.

“In ’20 and ’21, the promoter can’t take all the risk on the business as we historically have. We need to share some of that”

“[T]he glass half full here,” he said. “Thankfully, our show is not time-dependent. […] So, the great advantage we have is it’s just now timing. The fan wants to see Billie Eilish. They would have liked to see them in March, but they’ll wait until October or they’ll wait until February.

“The average customer goes to two and a half shows a year. So, these are the Kodak moments, and they’ll wait for them.”

Rapino also praised the industry for its unity during the coronavirus outbreak, saying it “has never come together this well, from the agents, the artists, the buildings, the managers, the promoters… we’re all in the same boat.”

Addressing ongoing negotiations between promoters and agents, in which the former are seeking better terms on rescheduled shows, he said: “I would say that the artists, the agents, the managers have been incredibly supportive. The reality is that in ’20 and ’21, the promoter can’t take all the risk on the business as we historically have. We need to share some of that, especially refunds on the guarantees.”

“They’re helping sharing some of that risk,” he added, “which will provide us great opportunity to get back, scale fast, but not have to worry about losing money on the show.”

Addressing the immediate future of Live Nation’s shows, Rapino said the company will get creative when it comes to emerging alternative concert formats, including drive-in concerts, fan-free concert broadcasts and reduced-capacity seated shows.

“We’re going to play for the long safety of business. We’re not looking to rush”

“We did 15,000 club and theatre shows last year, and we did them in 40 countries,” he told Jefferies Wall Street analyst Khoa Ngo. “So, we’ll […] start slow and small, focusing on the basics, kind of testing regionally. […] We’re going to dabble in fan-less concerts with broadcast. We’re going to go and reduce capacity shows, because we can make the math[s] work.

“There are a lot of great artists that maybe they can sell an arena out, but they’ll do ten higher-end smaller theatres or clubs. We’re seeing lots of artists jumping to get back out when it’s safe. So, you’re going to see us in different countries, whether it’s Finland, whether it’s Asia, Hong Kong – certain markets are farther ahead.”

“[I]t’s important for us to keep doing drive-in concerts. We’re going to test and roll out – which we’re having some success with – fan-less concerts, which have great broadcast opportunities,” he continued. “[We can] reduce the capacity of festival concerts, where it could be outdoors, could be in a theatre, it could be in a large stadium floor, where there’s enough room to be safe.”

He concluded” “So, we have all of these plans in place depending on the market, and where that city may sit in their reopening phases. [But] we want to be smart. We don’t want to rush. We’re playing long ball.

“One of the realities is we and AEG are the two companies that can withstand this storm as long as it plays. And we’re going to play for the long safety of business. So, we’re not looking to rush and provoke any new spread of the virus. We want to do it smart, with local participation. But there’s lots of great opportunities that are arising now [that] we will get to test over the summer period.”

At press time, Live Nation’s share price was $39.37 – down from a one-month high of $46.53, but up from a low of $36.35 on 22 April.

 


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Berchtold, Willard, Rowles re-up with Live Nation

Live Nation’s Joe Berchtold, Michael Rowles and Kathy Willard have followed CEO Michael Rapino in extending their contracts with the company until 2022.

Berchtold, formerly chief operating officer, becomes president – a role also held by president/CEO Rapino, who recently extended his tenure with Live Nation until 31 December 2022 – while Rowles and Willard remain in their current roles as executive vice-president, general counsel and secretary, and executive vice-president and chief financial officer, respectively.

As president, Berchtold will receive a base salary of $1.3m annually, along with a 200% performance bonus and a grant of 100,000 restricted shares and 300,000 performance-based shares.

Rowles, meanwhile, receives a base salary of $800,000, a 100% performance bonus and 25,000 restricted shares, while Willard receives a $950,000 base salary, a 100% performance bonus, 50,000 restricted shares and a grant of 50,000 options to purchase Live Nation common stock.

Live Nation’s share price currently stands at $43.37, after having broken the $40 mark for the first time in August

That compares to $9m per annum ($3m base salary + $6m in bonuses) and a grant of 289,505 shares in restricted Live Nation stock for Rapino.

Live Nation’s share price currently stands at $43.37, after having broken the $40 mark for the first time in August.

Live Nation Entertainment, now the world’s largest live entertainment company, continues to grow, both financially – it is on course for a seventh consecutive year of record growth, turning over $3.6bn in Q3 2017 – and in scope through buy-outs, joint ventures and partnerships: The company has made 17 acquisitions or equivalent in the past two years alone, the most recent being the Bank of New Hampshire Pavilion in Gilford, New England.

 


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