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Endeavor closes first day on Nasdaq up 5%

Endeavor Group Holdings, the parent company of international booking agency WME, is finally a listed company after shares began trading on New York’s Nasdaq stock market yesterday (29 April).

Endeavor’s or stock market launch, or ‘initial public offering’ (IPO), sees nearly 25 million shares of the company’s class-A stock offered to the market at US$24 per share, and is expected to close on Monday 3 May.

At the close of market yesterday, Endeavor (EDR) shares were priced at $25.20 – up $1.20 on the IPO price, but down from a daily high of $28.47 – with a trade volume of nearly 16m shares for the day.

Endeavor expects to raise around $1.8bn from the share sale, which also includes a private placement of 74.5m shares being sold to an investment group that includes the likes of Silver Lake Partners, Tencent, Dragoneer Investment Group, MSD Capital and Abu Dhabi’s Mubadala Investment Company.

Endeavor plans to use $835.7m of the proceeds to buy the remainder of UFC

Silver Lake, which also owns shares in Oak View Group and MSG Entertainment and a majority stake in TEG, is an existing Endeavor investor, while Tencent has partnered with WME on joint ventures in China. Dragoneer, meanwhile, recently bought into one-to-watch videogaming platform Roblox.

Endeavor says it plans to use $835.7m to buy the remainder of Ultimate Fighting Championship (UFC), in which it acquired a majority stake in 2016, with other new funding put towards future joint ventures, investments and acquisitions.

The Nasdaq listing is Endeavor’s second attempt to take the company public, following an aborted flotation in 2019 amid unfavourable market conditions. Yesterday’s successful IPO came despite a 24% drop in revenues, to $3.5bn, in 2020 owing to the impact of the coronavirus pandemic.

In addition to WME and UFC, Endeavor’s portfolio includes sports agency IMG, comedy agency Dixon Talent and the Miss Universe pageant.

 


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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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Nas teams up with LiveXLive to create urban content

Live entertainment company LiveXLive has signed a deal with rapper Nas and music company Mass Appeal, home to Nas’ record label, for a “360 degree partnership” to create, produce and distribute original urban-focused content.

Mass Appeal and Nas will curate a station on Slacker Radio, the internet radio service acquired by LiveXLive in 2017, and work to develop brand partnerships to establish new opportunities across urban and hip hop music.

Under the agreement, LiveXLive, Nas and Mass Appeal will work in conjunction to produce a slate of original programming for the LiveXLive platform, and co-produce original content to sell to third parties.

“I’m excited for Mass Appeal to continue expanding into different areas of media and music consumption in 2019,” says Nas. “Our partnership with LivexLive is the next step in that evolution.”

“We want to show the power live performances can have in connecting with fans, and this collaboration will bring them experiences in real time,” adds Nas.

“We want to show the power live performances can have in connecting with fans”

Chairman and chief executive of LiveXLive, Rob Ellin, comments on the “impressive” accomplishments of both Nas and Mass Appeal.

“Our partnership with Nas and Mass Appeal symbolises our status as a leader in hip hop and urban-focused content. The synergy of our partnership will be powerful as we together develop authentic, innovative concepts and programming,” says Ellin.

Launched in 2015, LiveXLive initially dubbed itself the “ESPN of premium live music experiences”, aiming the create a 24-hour network of live music broadcasting. The company livestreamed eight major music festivals last year, including Sziget, Paléo and Montreux Jazz Festival.

Expanding into other areas, LiveXLive acquired Wantickets in 2016 and created its own management division, LXL Influencers, in 2017. The Nasdaq Capital Market-listed company now produces much of its own, original music-related content.

LiveXLive continues to grow financially, reporting a record revenue of US$8 million in Q2 2019, driven by subscriber growth and advertising revenue.

 


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LiveXLive to list on Nasdaq

Shares of common stock in live music video company LiveXLive have been approved for listing on the Nasdaq Capital Market.

Shares are expected to begin trading today (22 February) on the Capital Market, the New York stock exchange’s small-cap equity market, under the symbol LIVX.

LiveXLive chairman and CEO Rob Ellin comments: “2017 was a monumental year for LiveXLive and listing on Nasdaq is an exciting and major milestone in our evolution that we believe will expose the company to a wider audience of potential institutional investors and increase liquidity, ultimately contributing to our ability to increase shareholder value.

“Consumers demand accessible, world-class experiences and LiveXLive has built a platform for just that – a social ecosystem for music lovers around the world. Backed by an impressive management team and propelled by the incredible market opportunity, we have built a company that uniquely addresses a previously untapped market.

“Listing on Nasdaq is an exciting and major milestone in our evolution”

“We look forward to continuing to share our developing story with the investment community.”

LiveXLive, which launched in July 2015, initially positioned itself as the “ESPN of premium live music experience” with its aim of creating a 24-hour network of live music broadcasting digitally and on mobile. Last May it signed a strategic partnership with MTV to provide the broadcaster with LiveXLive’s stream of the closing night of Rock in Rio Lisbon (partnerships with Live Nation’s Outside Lands and AEG’s Hangout have followed since), and shortly after moved into ticketing with the acquisition of Wantickets following that company’s top brass’s controversial defection to Eventbrite.

It has since moved more into original content, with plans to develop a slate of “music news programming, documentaries, specials, and long- and short-form content”, and also recently launched a management division, LiveXLive Influencers, focusing on social-media stars. In September, it announced plans to acquire internet radio service Slacker Radio.

 


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Sillerman auditor resigns over “illegal” withdrawals

Accountancy firm BDO USA, LLP, formerly auditor for Robert Sillerman’s troubled Function(x) web business, has resigned amid allegations of “insufficiently authorised cash disbursements” to Sillerman from company bank accounts.

In a 21 June letter to Function(x)’s CFO, Michelle Lanken, and general counsel, Tom McLean, BDO said it had, through a phone conversation on 12 May, been made “aware of information indicating that an ‘illegal act’ […] may have occurred”.

It continues: “BDO stated that information provided to it at the time of the phone conversation […] included insufficiently authorised cash disbursements from a [Function(x)] bank account, unexplained deposits into the same registrant bank account and possible repayment to the registrant’s chairman of the board, chief executive officer and controlling shareholder [Sillerman] in excess of the amount owed to him under his line of credit to the registrant.”

The letter says the “possible payments” include a US$500,000 cash withdrawal by Sillerman in March 2017, “done without proper approval from the board”, and, more seriously, a total of $6.1m “released from a [Function(x)] bank account into an account held by the CEO at the same financial institution”.

The findings mirror similar allegations levelled at Sillerman in the final months of SFX Entertainment

At BDO’s request, it and Function(x) hired a third-party law firm to investigate the missing money, as well as alleged irregularities relating to a recent series-G stock offering. It concluded that there were “likely illegal acts committed by the CEO and the registrant [Function(x)]”, including “false and misleading statements in connection with the series-G offering”.

The findings mirror similar allegations levelled at Sillerman in the final months of SFX Entertainment, when he was accused of making “misleading statements” designed to boost the ailing business’s attractiveness to investors.

He denies any “wilful” wrongdoing, saying he was “misinformed as to the amounts outstanding on loans the CEO had made to the company” and paid Function(x) back as soon as he realised the error.

Function(x), which specialises in ‘viral’ online content, was last week delisted from the Nasdaq stock exchange after failing to file an up-to-date current report.

 


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Sillerman upbeat as Function(x) is delisted

As threatened at the beginning of June, former SFX Entertainment CEO Robert Sillerman’s new online news business, Function(x), has been delisted from the Nasdaq stock exchange, with trading in its stock suspended from opening of business today.

The business has yet to file an up-to-date quarterly report (10-Q) – which under Nasdaq rules constitutes a “public information failure” – and said in a recent filing it anticipates defaulting on US$3 million promissory note, in a scenario reminiscent of the financial problems that plagued the final months of SFX, which collapsed under a mountain of debt last February.

In a new 8-K filing, Function(x) – which has been rapidly buying up much of the online ‘viral content’ (clickbait) market – says it will continue trading stocks ‘over the counter’, or off-exchange, without the supervision of the Nasdaq.

“The company came to the conclusion that the overhang of uncertainty, and the continuing expense related to these issues, were an unnecessary cost and distraction as we execute on our vision,” says Sillerman. “Nothing has changed in our stated goals to become the preeminent digital media publisher.

“Nothing has changed in our stated goals to become the preeminent digital media publisher”

“We intend to file our 10-Q in the near term, and follow all necessary steps to both be a responsible and productive public company and accelerate our growth trajectory.”

Simply Wall St, a website which provides market advice to investors, isn’t so confident: It suggests Function(x) has a “concerning amount of debt” and may be at risk of succumbing to its debt load. According to the site, Function(x)’s operating cashflow remains at around -100% of its debt, with a debt-to-equity ratio of 279.8%.

“Clearly, Function(x) has a concerning amount of debt on its balance sheet,” writes Simply Wall St’s Arjun Bhatia. “Additionally, the company fails to impress in terms of generating strong enough operating cashflows and earnings to cover annual interest expenses. Thus, for now, I don’t find it a financially sound company.”

Function(x)’s stocks have fallen in value by almost 50% in last 30 days, from a high of $0.70 on 26 May to $0.39 today.

 


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Function(x) threatened with Nasdaq delisting

Function(x), the rapidly expanding online news business led by ex-SFX Entertainment CEO Robert FX Sillerman, has been threatened with delisting from the Nasdaq for the non-filing of financial information.

Function(x) has yet to submit a form 10-Q – a quarterly financial report which must be filed with the Securities and Exchange Commission (SEC) by all public companies in the US – for the latest quarter, and will be delisted unless it “requests a hearing before the Nasdaq hearings panel”, the New York stock exchange announced today.

The company contacted Nasdaq yesterday to request a hearing, which automatically delays its delisting for a period of 15 days.

A separate form, 8-K – which notifies shareholders of any significant events that may affect their investment – reveals Function(x) will ask Nasdaq for an extended delay from delisting while it gets its affairs in order, although it notes “there can be no assurance that the stay will be extended or that the panel will ultimately grant the company’s request for continued listing on Nasdaq”.

The late filing of Function(x)’s quarterly accounts, reveals the 8-K, constitutes a “public information failure”.

“The company does not anticipate it will be able to pay the note on the due date and therefore will be in default”

This means the company will be obliged to pay one of its creditors – the holder of US$3 million promissory note, issued following its recent acquisition of Rant, Inc. – “an amount in cash equal to one percent (1%) of the greater of the product of (A) the aggregate number of shares of common stock which the holder is entitled to convert pursuant to the [promissory] note and (B) the closing bid price of the common stock on the trading day immediately preceding the public information failure”. (That was, according to the document, 24 May, when its share price stood at $0.66 – it’s now around $0.62.)

Payment is due on “on the earlier of the last day of the month in which the public information failure occurred and the third business day after the failure is cured” – by our calculations, 31 May. According to the form, Function(x) “does not anticipate it will be able to pay the note on the due date” and “therefore will be in default under the note on the date that is five business days following the due date”.

Sillerman’s previous venture, EDM promotion conglomerate SFX Entertainment, collapsed under a mountain of debt last February, since being revived under new management as LiveStyle Inc.

 


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Goldman Sachs: Buy Live Nation stocks

Investment banking giant Goldman Sachs has begun tracking Live Nation’s financial performance, assigning the company’s stocks a ‘buy’ rating following a period of sustained growth.

Shares in Live Nation Entertainment (LYV), which trades on the New York’s Nasdaq stock exchange, today reached an all-time high of US$31.31. Goldman analysts have given Live Nation stocks a target price of $35.

Outlining the logic behind the buy rating, CNBC reports Goldman Sachs’s Drew Borst told clients: “As the world’s largest concert promoter […] and ticketing platform, LYV is uniquely positioned to benefit from secular growth in global concerts and gain marketshare.

“Touring has become increasingly important to artists’ income, given the decline in album sales. On the demand side, the millennial ‘experience economy’ is fuelling steady attendance growth in a wide array of live music events.”

“Live Nation is uniquely positioned to benefit from secular growth in global concerts and gain marketshare”

Live Nation recorded record revenue for the sixth year running in 2016, growing turnover 15% to $8.4 billion.

However, Brandon Ross, an analyst for financial services firm BTIG, warns the profitability of Ticketmaster could be undermined in the long term by Amazon Tickets, which is gearing up for expansion in the US and strengthening its ties with Live Nation rival AEG.

He notes Amazon “has the aptitude to become [a music] industry player, if it can gain access to US tickets market”,  and can “target casual shoppers from its large userbase, bundling tickets with other products”.

 


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