WME parent boosted in Q2 by return of live events
WME parent Endeavor has reported continued growth across its portfolio in the second quarter of 2022, prompting the company to increase its full-year forecast for adjusted EBITDA.
Endeavor, which also owns sports agency IMG and the Ultimate Fighting Championship (UFC), among other properties, generated revenue of US$1.313 billion for the quarterly period ended 30 June, 2022.
Net income came to $42.2m while adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) totalled $306.4m.
The agency’s representation business (comprising WME, sports agency IMG and Endeavor Content) generated revenue of $358m for the quarter, up $29.7m or 9% compared to the second quarter of 2021.
The segment’s adjusted EBITDA was $111.2m for the quarter, up $49.5m or 80% year over year.
According to the company, the growth was primarily driven by the continued strong demand for talent, including the recovery of music and comedy touring, as well as increased corporate client spending.
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.
Elsewhere, the Events, Experiences & Rights segment revenue was $627.9m for the quarter, up $99.2m or 19% compared to the second quarter of 2021.
“We benefited from strong growth globally across our segments in the second quarter”
Increases were primarily driven by the return of full-capacity live events including music festivals, the Masters, and the NCAA Final Four, as well as the inclusion of the Madrid Open and NCSA acquisitions.
The segment’s adjusted EBITDA was $108.1 million for the quarter, up $71.3m or 194% year over year.
Owned Sports Properties segment revenue was $331.9m for the quarter, up $73.1m or 28% compared to the second quarter of 2021.
Growth was primarily driven by an increase in media rights fees and live event, partnership, consumer product and licensing revenues at UFC, as well as higher revenues at PBR (Professional Bull Riders), and the inclusion of Diamond Baseball Holdings.
The segment’s adjusted EBITDA was $161.3m for the quarter, up $29.0m or 22% year over year.
The upswing in each segment has prompted Endeavor to slightly adjust its full-year forecast for adjusted EBITDA to a range of $1.13bn to $1.17bn, which is up from the estimate of $1.1bn to $1.15bn offered in May with Q1 results.
Revenue for 2022 is expected to be between $5.235bn and $5.475bn, as estimated in the Q1 results.
“We benefited from strong growth globally across our segments in the second quarter,” said Ariel Emanuel, CEO, Endeavor.
“While we recognise there are broader macroeconomic forces at play, given the quarter’s performance and our line of sight through the end of the year, we’ve once again raised our Adjusted EBITDA guidance. We remain focused on our long-term strategy – leveraging the diversity and scale of our businesses to drive maximum value for our shareholders, our clients and our owned IP.”
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LN Q2 results: live biz back ‘bigger than ever’
Live Nation CEO Michael Rapino has declared the live business is back “bigger than ever”, with the company’s Q2 financials showing 2022 ticket sales are outperforming pre-pandemic levels.
LN’s share price had risen 12% in the last month in anticipation of yesterday’s results, and closed at $97.63 last night.
The firm attained its highest quarterly attendance ever, attracting more than 33 million fans across 12,500 events, as revenue soared to $4.4 billion – up 40% on the same period in 2019. In addition, operating income was up 86% to $319 million, while AOI rose 50% to $480m.
“We have sold over 100 million tickets for our concerts this year, more than we sold for the entire year in 2019”
“The second quarter confirmed that live entertainment industry is back globally and bigger than ever,” says Rapino. “Live Nation led this return and continues to deliver the best global network to support artists as they play shows for the fans around the world.
“We have sold over 100 million tickets for our concerts this year, more than we sold for the entire year in 2019.”
Ticketmaster also delivered another record quarter, with AOI up 86% and transacted GTV increasing 76%. The figures account for the three months ending 30 June.
“Ticketing had another very successful quarter, delivering $231 million of AOI, making it the most profitable quarter ever for ticketing, beating the record set just last year in the fourth quarter and nearly doubling the Q2 2019 AOI results of $124m,” says CFO Joe Berchtold. “Our growth came from both primary and secondary ticketing with transacted ticketing GTV up 69% and 141%, respectively.”
Berchtold suggests that indications are pointing towards “a very strong Q3 for concerts”, with more shows and a higher attendance.
“As we prepare for 2023… we are actively routing into all markets with the largest artist pipeline we have ever seen at this point in the year”
Rapino adds that next year is shaping up to be a similarly impressive year.
“As we prepare for 2023, everywhere globally is open for concerts, and we are actively routing into all markets with the largest artist pipeline we have ever seen at this point in the year,” says Rapino. “For the 2023 tours we have put on sale so far, all signs continue pointing to strong fan demand.”
Amid the controversy over “dynamic” ticket prices for Bruce Springsteen’s 2023 tour, where the top priced tickets surpassed $5,000, Rapino reports that market-based pricing is being widely adopted by most tours.
“We expect to shift over 500 million from the secondary market to artists this year, continuing to support those who created the concert and ensuring they are benefiting from it,” he says.
“We work for the artist. Our job is to provide all the tools, platform and services to help them succeed in that tour”
Rapino elaborated further on the issue when speaking to investors during yesterday’s earning call.
“We’ve been saying for a few years that over time, we believe that that secondary [ticketing] $10 billion, $12 billion, depending on what number you see globally, has to start getting captured by the artist at some level,” he said. “It’s just too transparent. The more they see all of the online pricing while they work so hard to put that show on. So… artists are looking at us saying, ‘I’d like to count some of it in the front end. I don’t want to be sold out at 10.01am at $200 to have someone else make $2,000.’
“Fans are not getting a deal anyway, they’re spending $2,000 from somebody else. So I do think they’re looking and saying, ‘the front of the house, can we capture some demand?'”
“We’ve got a global product and we’ve got lots of opportunity to keep growing”
He added: “We work for the artist. We’re a B2B business. Our job is to provide all the tools, platform and services to help them succeed in that tour.
“They’re genius brand managers. They have to balance the needs of their fans, supply, demand and pricing. And some brands, like the Rolling Stones, have been very good at always saying expensive experience and we’re that proud and enable to deliver that brand position. But I think artists are always trying to find a fine line on how do I make the show accessible? How do I make sure all my fans can show? How do I price it fairly versus how much money can I make? So I think they see that.
“Today, while the technology is advancing and they’re starting to look at more technology and more pricing data, I think they can now [price] 1-2% of the house higher and achieve some of those economics versus the scalper, while still pricing 98% of the house at a very stable brand position. So we can achieve both.”
Rapino also addressed the company’s global strategy in the wake of recent moves in Thailand and the Philippines.
“We look at Asia as really undeveloped territory, low market share, huge opportunity,” he said. “Like everyone else in the world, we look at Asia, we look at Latin America, and we’re looking to the Middle East and Eastern Europe as areas where we have no real market share. But that consumer now on TikTok knows that Drake dropped the video last night, whether they live in Singapore, India, Cape Town. So we’ve got a global product, and we’ve got lots of opportunity to keep growing.”
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