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Public live cos add nearly $6bn since March crash

The main publicly listed live entertainment companies have added US$5.75 billion – or nearly $1bn a month – to their collective value since the worst of the Covid-19-induced stock-market crash in March, new analysis reveals.

Combining the market capitalisations of Live Nation, CTS Eventim, DEAG, Time for Fun and Eventbrite, as well as a relevant percentage of Vivendi’s business, shows the six companies were worth nearly $6bn more on 21 September than 20 March, in spite of the six-month-and-counting shutdown of nearly all live experiences.

As in previous IQ coverage of live music’s (pre-coronavirus) stock-market performance, Live Nation Entertainment – the world’s biggest live entertainment business – is the biggest mover, growing its market cap by nearly 60% in the period analysed.

Worth $7.29bn on 20 March, with a share price of $33.97, Live Nation (LYV)’s market cap stood at $11.55bn six months later, with most financial analysts confident the concert behemoth will bounce back strongly post-pandemic. As of 9 September, of the 12 firms covering Live Nation stock, seven have assigned it a ‘buy’ rating, one a ‘strong buy’ and one a ‘hold’, with none recommending a ‘sell’.

While the recovery of Live Nation – which has made an estimated $600m in savings this year, believed to include widespread redundancies globally – is impressive, five of the six businesses included have rebounded strongly over the last six months, with only DEAG shares having declined in price as of 21 September.

Berlin-based Deustche Entertainment AG (LOUD), which trades on Frankfurt’s Xetra exchange, had around $11 million (€9.4m) shaved off its market cap after the value of its stocks fell from €3.48 on 20 March to exactly €3 on 21 September. As of the latter date, DEAG’s market capitalisation was €58.9m ($68.9m), down around 14% on €68.3m ($79.9m) six months previous.

Live Nation is the biggest mover, growing its market cap by nearly 60% in the period analysed

Yet DEAG stock, too, is strongly rated by market watchers: analysts’ ratings similarly lean heavily towards a ‘buy’, with even the most pessimistic financial observers giving the company’s stock a price target of €3.50 in the short term (while noting that DEAG should “return to pre-corona levels” by 2022).

Of the other four businesses, another German company, public pan-European concert and ticketing giant CTS Eventim, was the stand-out performer, growing its market cap more than $1bn by adding nearly €10 to its share price.

Compared to 20 March, when its share price was €31.78 and market cap €3.05bn, CTS Eventim (EVD) shares traded at €41.14 six months later, giving the company a market capitalisation of €3.95bn at the time of writing.

Brazil’s Time for Fun/T4F Entertainment (SHOW3) – the largest promoter in South America – has seen its value increase 42%, from R$131m ($23.8m) to R$186.1m ($33.8m), while US-based self-service and club ticketing specialist Eventbrite (EB) is up 61%, growing its market cap from $649.2m to $1.06bn in the same period.

French media conglomerate Vivendi (VIV), meanwhile, has seen its market cap rise from an estimated €20.9bn in March to €26.38bn on 21 September. The company’s Vivendi Village unit – which incorporates its live (Olympia Production, U Live, festivals and venues in France and Africa) and ticketing (See Tickets, Starticket, Paylogic) businesses – accounts for some 0.34% of the business: €26m in revenue, of €7.58bn total, per its H1 2020 report.

Many outside observers agree live music’s recovery will be complete by 2022

While it should be noted the industry is far from back to its pre-Covid-19 value – Live Nation stocks were once worth nearly $75, while Eventim shares hit a high of €60 in January – the rally bodes well for a sector often described as the first to close and last to reopen, and which has been hit particularly hard by the impact of the virus.

Additionally, the live music industry welcomed two newly public businesses – MSG Entertainment, spun off from the Madison Square Garden Company, and Warner Music Live/Umbrella Artists owner Warner Music Group, which floated in April and June, respectively – in the same period, and which would likely have pushed the $5.75bn figure even higher were those companies trading in March.

With so-called second lockdowns looming in many territories, it remains unclear how global markets will perform in the months ahead, as well as the effects, positive or otherwise, any volatility will have on live music stocks.

One thing, however, many outside observers seem to agree on is that live music’s recovery will be complete by 2022.

As IQ revealed earlier this month, financial consulting firm PricewaterhouseCoopers (PwC) is predicting a complete recovery by 2022, with the value of the live music market (public and private) set to reach $29.3bn – over $300m more than 2019’s $28.97bn – that year, while investment bank Goldman Sachs is similarly bullish, with its head of European media research, Lisa Yang, also heralding a return to normal in 2022.

Read PwC’s live music growth predictions here:

Live music down 64% this year – but will rebound in 2021


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Live stocks hit as coronavirus batters markets

The major publicly traded live entertainment companies have seen the value of their shares decline this week, as stock markets around the world reel from fears over the impact of the Covid-19 coronavirus.

Markets in Europe, Asia and the Americas are suffering their worst week since the global financial crisis of 2008, according to the BBC, with the spread of coronavirus affecting both the global supply chain and consumer demand.

Live Nation CEO Michael Rapino referred to the “resilience” of music fans in the company’s earnings call yesterday (27 February), stating that consumers are still buying tickets worldwide, despite the ongoing spread of Covid-19.

The company’s share price, which reached an all-time high of US$76.08 earlier this month, has fallen by 20% in the past few days, in keeping with the global stock market drop. Shares are back up 2% today, following the publication of strong 2019 financial results.

Shares for German ticketing and promotion powerhouse CTS Eventim have taken a similar hit, falling by just under 20% since last week. Eventim shares reached a record high of €61.30 ($67.27) on 24 January 2020.

“We’re confident that, long-term, the show will happen”

Fellow German company Deutsche Entertainment AG (DEAG), whose shares have climbed almost 30% to €6.30 ($6.92) since mid January, has seen a 22% drop since last week, whereas shares for New York-based Madison Square Garden Company (MSG) have decreased by around 17% in the past week, falling to $261.34.

In Latin America, Sao Paulo-based Time 4 Fun’s shares are also down 22%, from BRL5.41 ($1.20) to BRL4.24 ($0.94). Brazil recorded its first case of coronavirus on Wednesday, marking the virus’ arrival to Latin America.

It is not just live entertainment companies that have suffered in the wake of coronavirus. The S&P 500 index, a measure of the stock performance of 500 large companies listed on US stock exchanges, has fallen 15% from the record high it achieved just last week.

Although coronavirus has already caused the cancellations of thousands of shows across Asia and Europe, not all are worried about the long-term impact. “We’re confident that, long-term, the show will happen,” says Rapino. “The revenue will flow and the fan will show up.”

 


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Warner Music Group files for IPO

Label giant Warner Music Group (WMG), which owns a number of live assets in addition to its recorded music interests, has announced plans for an initial public offering (IPO).

The number of shares of common stock to be offered and the price of the offering have not yet been disclosed.

The announcement signals WMG’s return to the stock market, where it traded until 2011, before being bought by British billionaire Len Blavatnik through his company Access Industries for US$3.3 billion.

The news comes after the recent valuation of rival Universal Music Group at over US$30 billion, following Chinese entertainment giant Tencent’s acquisition of a 10% stake in the company.

The announcement signals WMG’s return to the stock market, where it traded until 2011

The Warner Music Group includes the records labels Warner, Atlantic, Elektra and Parlophone, publishing and global music distribution arms and is home to artists including Ed Sheeran, Cardi B, Dua Lipa and Bruno Mars.

WMG’s live music interests include concert discovery platform Songkick, Finnish promoter Warner Music Live and management company Umbrella Artists Productions, which it owns with promoter FKP Scorpio.

Morgan Stanley, Credit Suisse and Goldman Sachs are managing the flotation.

WMG’s filing with the US Securities and Exchange Commissions (SEC) can be read here.

 


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Eventbrite files $200 million IPO on New York Stock Exchange

Online ticketing platform Eventbrite has filed for an IPO on the New York Stock Exchange, confirming recent speculation. The San Francisco startup, founded in 2006 by husband and wife team Kevin and Julia Hartz, plans to raise $200 million.

While the company is presently unprofitable, revenues continue to grow, with net losses declining. Financial results from 2017 show sales increasing by 51%, from $135.5 million in 2016 to $201.6 million. Net losses decreased 4.7% from $40.4 million in 2016 to $38.5 million over that period.

Since 2006, Eventbrite has raised $332.3 million over nine funding rounds including a debt funding round for $1.5 million in 2008. The lead underwriter for the IPO will be Goldman Sachs, although a share price has not yet been set.

Last year the company processed 1.8 billion free event tickets, compared to 1.1 billion paid-for tickets.

Eventbrite’s self-service platform is popular with small events. In 2017, 97% of ‘creators’ stayed with the company, but revenues from service fees tend to be lower. However, the company estimates its market opportunity “to be 1.1 billion tickets generating $3.2bn in gross ticket fees, along with an additional 1.9 billion free tickets”.

In the last 12 months alone, Eventbrite purchased Ticketscript in the Netherlands, US-based TicketflyTicketea in Spain and most recently Picatic in Canada. One industry expert IQ spoke to points to the acquisitions of these traditional ticketing agencies as a means to sell higher value tickets and increase revenues.

Top of the risk factors listed in the S-1 filing is its reliance on third-party partnerships. “These third-party partners may terminate their relationship with us, limit certain integration functionality, change their treatment of our services or restrict access to their platform by creators at any time.”

When it lands on the NYSE later this year, Eventbrite will join other ticketing companies to have previously floated including Ticketmaster, CTS Eventim, StubHub, Vivendi Village and BookMyShow.

 


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