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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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DEAG reports 24% organic growth in Q1

Deutsche Entertainment AG (DEAG) has reported that its financial year 2019 is off to a strong start, showing high rates of organic growth and an increase in earnings compared to the previous year.

The German promoter and ticketing company recorded sales amounting to €25.5 million in Q1 2019 and a rise in EBITDA (earnings before interest, taxes, depreciation and amortisation) to €1m, compared to €800,000 in the same period of the previous year.

For the remainder of the year, the executive board expects that investments in companies in the three core markets of Germany, England and Switzerland will generate further growth in sales and EBITDA. The investments are currently close to completion.

According to DEAG, the increase in sales in Q1 equates organic growth of almost 25%, after adjusting the previous year’s figure (€27m) for the sales contribution of Raymond Gubbay Limited (€6.5m).

DEAG sold its shares in UK-based show producer Raymond Gubbay Live to Sony Music Entertainment International Limited in 2018.

“The board expects that investments in companies in Germany, England and Switzerland will generate further growth”

The DEAG report states that all five of its divisions – rock/pop, arts and exhibitions, family entertainment, classical and jazz and ticketing – have contributed to growth.

The “excellent start” to the 2019 financial year follows a successful 2018 for the Berlin-based company. Preliminary figures show revenue amounting €200.2m, a 25% increase on the previous year, and a significant 123% growth in EBITDA.

In 2018, DEAG eliminated most of its minority holdings and joint ventures, acquiring all remaining shares (50%) in Swiss classical music promoter the Classical Company, as well as taking full control of DEAG Classics and ticketing platform MyTicket – the first ticketing agency in Germany to allow payment via Amazon Pay.

According to the International Ticketing Yearbook 2018, DEAG promotes around 4,000 concerts and events each year, selling more than five million tickets annually.

DEAG will publish its complete quarterly financial statement on its website tomorrow (Wednesday 29 May).


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LN reports strong start to 2019, Q1 revenue up 17%

Live Nation’s first quarter earnings show 2019 is off to a strong start, following the company’s eighth consecutive year of record annual results in 2018.

In the first quarter of 2019, revenue was up 17% to US$1.7 billion in comparison to Q1 2018 and adjusted operating income (AOI) was at its the highest-ever for a first quarter at $115 million. The entertainment behemoth ran at an operating loss of $24m.

Live Nation states that its concerts segment is the “engine that powers the overall growth” of the company. Almost 15 millions fans attended Live Nation concerts during Q1, up 22% year-on-year. As of mid-April, the company had sold over 49m tickets so far this year, up 5% from Q1 2018.

The company’s arena and theatre shows led this growth, each up over a million fans. Concerts revenue was up 27% and operating loss for the segment improved by 7%. Live Nation notes that demand has not diminished despite an increase in pricing of 30% over the past two years at arena and amphitheatre shows.

“We expect that Live Nation will deliver double-digit operating income and AOI growth for the full year”

Ticketing revenue was down 9% from Q1 2018, although Ticketmaster delivered its fourth highest gross transaction value quarter ever. Live Nation puts the decrease down to the moving forward of on sales to Q4 2018. By mid April, Ticketmaster had sold four million more concert tickets for 2019 shows than at the same time last year.

Typically the “lowest activity quarter for sponsorship”, sponsorship revenue increased by 1%, operating income by 3% and AOI by 2%. The company expects growth in this area to be driven by festival and strategic partners, including Rogers Communications in Canada and Diageo in Europe.

“We are pleased with our first quarter results as a start to what we expect to be another year of growth in 2019,” says Live Nation chief executive, Michael Rapino.

Rapino predicts further acceleration of growth in Q2. “With the combination of this near-term view plus concert ticket sales for the year, sponsorship commitments, and the continued success of the Ticketmaster platform, we expect that Live Nation will deliver double-digit operating income and AOI growth for the full year,” says the Live Nation boss.


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LN Q1: Ticket resale still biggest growth area

Ticketmaster’s biggest-ever month and high-profile tours including Beyoncé’s Formation, Coldplay’s A Head Full of Dreams, Rihanna’s Anti, Drake’s Summer Sixteen and the Guns N’ Roses reunion contributed to double-digital revenue growth for Live Nation Entertainment in the first quarter (Q1) of 2016.

The multinational concert, ticketing, management and sponsorship giant reported a 10 per cent increase in revenue to US$1.2 billion and seven per cent rise in adjusted operating income in its Q1 financial results, released yesterday, although losses were also up: $34 million compared to $24m in Q1 2015.

Ticketmaster was the biggest success story of the three months up to 31 March, increasing its gross transaction value (GTV) by 18 per cent on a constant-currency basis, driven by continued strength in its ticket resale operations: GTV for Ticketmaster/Live Nation-owned secondary-ticketing marketplaces, such as TicketsNow and TicketsExchange in North America and Get Me In! and Seatwave in the UK, was up 43 per cent, reflecting a trend seen in Live Nation’s record-breaking 2015 yearly results.

Ticketmaster sold over 17 million tickets globally in February – its most in a single month ever.

In the concerts business, ticket sales for shows are up 10 per cent, with over 35 million already sold. Live Nation is also promoting 13 per cent more shows than in the same period last year

In the concerts business, ticket sales for shows are up 10 per cent on the last four months of 2015 (up to 29 April), with over 35 million already sold. Live Nation is also promoting 13 per cent more shows than in the same period last year.

“At the same time, we are expanding our global footprint, most recently adding South Africa as the 37th country we promote in and our acquisition of Founders Entertainmentwhich builds our presence in New York and adds Governors Ball to our global festival portfolio,” said CEO Michael Rapino in the earnings release.

The sponsorship/advertising business reported revenue growth of 13 per cent on a constant-currency basis.

Rapino concluded: “2016 is on track to be another year of growth and record results for the company. All of the leading indicators for our concerts, sponsorship and ticketing businesses are performing ahead of last year and we expect each of the businesses to deliver revenue, AOI and free cashflow growth this year.

“Our results are demonstrating the fundamental strength and growth trajectory of live events and Live Nation’s positioning to deliver long-term profit and cashflow growth.”