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DEAG rebounds as UK business boosts Q3 earnings

Berlin-based Deutsche Entertainment Group AG (DEAG) has reported a 126% increase in sales for Q3 2021, thanks largely to the performance of its UK business.

After the first six months of the year were severely impacted by the pandemic, sales in the third quarter soared from €4 million to €16.7m, while EBITDA rose by 617% from €600,000 to €4.3m.

The upturn is mostly attributed to the UK, DEAG’s operating most important market outside Germany, where concerts are already taking place again at full capacity. Its Kilimanjaro Live subsidiary has organised sold-out concerts and tours by the likes of Gorillaz in the region. The first events have also been held in Germany.

Sales revenues amounted to €24.1m whereas, in the nine-month period in 2020 when the first quarter was only slightly affected by the pandemic, revenues were €39.1m.

DEAG and the entire live entertainment industry are finally gaining momentum again

“DEAG and the entire live entertainment industry are finally gaining momentum again after well over a year without concerts and events,” says company CEO Peter Schwenkow. “We look forward to offering our visitors hundreds of concerts and events in the months to come and expect to achieve a significant increase in earnings in the fourth quarter.

“In the meantime, the situation with the epidemic in Europe is leading to a daily reassessment of the current situation in all national markets. We are adequately protected against possible risks arising for us from the currently rising corona figures by extensive measures taken by the respective country governments and our insurance coverage. Our very robust financial position and a uniquely high event density for 2022 show our excellent positioning for growth in the coming year.”

The group also credits its ticketing platforms, the companies acquired in 2021 as part of DEAG’s acquisition and integration strategy, together with the provision of new services, for the improved performance. In addition, it mentions the enormous cost-cutting programme in the group as well as inflows from subsidy programmes, which DEAG has taken advantage of in all national markets, and its continued full insurance coverage.

DEAG, which reports strong advance sales for events in 2022, has expanded its successful Christmas Garden format to 18 locations – eight of them in other European countries – in the 2021/2022 season. New additions in Germany include Cologne, Frankfurt/Main and Hanover, as well as internationally in Paris, Barcelona and Windsor Park in London.

“Based on these, the significant revival in the UK and growth impulses from the companies acquired in 2021, DEAG expects another significant increase in earnings with high visibility in the fourth quarter of 2021,” concludes the report.

Last week, Munich-based live entertainment giant CTS Eventim posted “encouraging” financial results for Q3 2021, powered by improved ticket sales.

 


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CTS Eventim reports strong Q3 results

Live entertainment giant CTS Eventim has posted “encouraging” financial results for Q3 2021, powered by improved ticket sales.

The Munich-based pan-European promoter and ticketing company saw consolidated revenue rise by 279.2% to €114.7 million, compared with €30.2m in the same period last year. Revenue for 2021 to date fell 21.3% year-on-year to €180m, since Q1 2020 was barely affected by the pandemic.

Revenue from the company’s live entertainment segment soared by 351.2% to €55.7m in the third quarter of 2021 (up from €12.4m in the equivalent period last year), while ticketing surged 225.5% to €61m, compared with €18.7m in Q3 2020.

Ticket sales accelerated at the start of the second half of 2021, boosted by presales for tours by major international artists including Ed Sheeran, Genesis and Coldplay, as well as German rock act Udo Lindenberg.

Around 400,000 tickets have been sold for Sheeran’s German dates alone, the firm reports. However, the coronavirus situation meant the number of events was still down sharply compared with pre-pandemic levels.

We recorded an encouraging increase in revenue in the third quarter

“We recorded an encouraging increase in revenue in the third quarter,” says CTS Eventim CEO Klaus-Peter Schulenberg. “In recent months, we have also forged ahead with our international expansion plans and ensured that CTS Eventim is even better prepared for the future by launching new digital products.”

Normalised EBITDA was €105.4m compared to a loss of €17.7 million 12 months earlier. The firm attributes the turnaround to “cost savings, an improved operating business and the government aid programmes introduced in Germany and other countries”.

CTS received “extraordinary” Covid-19 financial aid from the German federal government for November and December 2020, with €102m in government funding awarded “to strengthen the result for the current financial year and the company’s liquidity”.

Last month, CTS strengthened its position in the access control market with the acquisition of software and hardware developer Simply-X, one of the leading providers of event management products in Germany. The firm also announced its expansion into the North American ticketing market in September.

At the time of writing, CTS’ share price was down 2.64% to €62.04.

 


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Live Nation share price hits all-time high

Live Nation‘s share price has rocketed to an all-time high less than 24 hours after the firm released its Q3 financial results.

Stock in the company was up 16% to $122.13 at press time, having peaked at $125.88 earlier in the day following chairman and CEO Michael Rapino’s bullish projections during yesterday’s earnings call. The share price broke $100 for the first time only last month.

Rapino told investors that 2022 was on track to be a record year after the company reported revenue of $2.7 billion (€2.3bn) for the quarter. He said ticket sales for the 2021 summer season “reflected tremendous pent-up demand”, with 17 million fans attending Live Nation shows.

The promoter, which recorded a $19.8m loss for the same period in 2020, returned to positive operating income and AOI for the first time in two years, with a company-wide operating income and AOI of $137 million and $306m, respectively.

“Festivals were large part of our return to live this summer with many of our festivals selling out in record time, and then overall ticket sales for major festivals was up 10% versus 2019,” said Rapino, who referenced upcoming sell-out tours by Harry Styles and Chris Stapleton.

“Through mid-October, we have already sold 22 million tickets for our shows in 2022 and demand has been stronger than ever for many of these on sales, with a million tickets sold for each of the Coldplay and Red Hot Chili Peppers tours, and several other tours already selling over 500,000 tickets,” he added.

No industry has so proven the durability of its demand in the face of such disruption

Live Nation’s Ticketmaster division, meanwhile, delivered revenue of $374.2m for the quarter and has already sold 65m tickets for next year.

“As we get close to turning the page in 2021, I remain more convinced than ever in the power and potential of live entertainment, and the strength of our position,” added Rapino. “No industry was more impacted by the pandemic over the last two years, and no industry has so proven the durability of its demand in the face of such disruption.

“I fully expect we will continue to have bumps in the road in the coming months. And it will take some time for international artists to be touring on a truly global basis. But the fundamental strength of live entertainment and Live Nation has proven out and expect we will only continue to grow from here.”

Speaking on the company’s earnings call, Live Nation president and chief financial officer Joe Berchtold said the resurgence had been driven by the UK and US.

“These markets accounted for 95% of our fans in Q3 versus 75% in Q3 of 2019,” he said. “And they represented 90% of fee-bearing GTV in Q3 versus 80% in Q3 of 2019.”

With concerts in North America and the UK already back in full flow, Rapino discussed when the rest of the world was likely to open up.

The good news is ’22 is going to probably be a record year

“Europe will be fully open by the end of the year, so we’ll have most of the main markets open into January,” he said. “Pacific Rim, Latin America, all looks positive in terms of being open fully for international artists by April. We think internationally, on a global basis, by April the world will be moving around again.

“It doesn’t overly affect our business short-term because most of the outdoor stadium festival business is summer time, so that will be all fully up and rolling. We have Lollapalooza starting in April in Latin America and Australia festivals. So we think we’ll be open for prime season and we’ll be rolling around indoors in the main markets of US, Europe, Canada, and the UK between now and April.”

Rapino also expanded on his expectations for 2022 and beyond.

“The good news is ’22 is going to probably be a record year, but there’s only so many Fridays and Saturdays and artists are pretty smart about how they route their tours and how they look at the world and find their right positioning, so it kind of self-regulates itself,” he said.

“You’re never going to have a bunch of tours on the same weekend piled on. So that just meant we have a more inventory to spread into ’22, ’23, and we’re talking ’24 now. So I would say we have a backlog that needs to still work through the system in ’22, ’23, which will be incredibly strong years. And then we continue to get back to regular.

“We’ve had over the year, double-digit growth in the live entertainment space ongoing. We project that to continue both on pricing and global volume as demand and supply continues to grow around the world.”

In a further sign that investor confidence in live music is returning, shares in CTS Eventim have risen from €63 to €72 since the start of the week.

 


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