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Share price holds steady in difficult Q2 for Live Nation

The promoter reports a 98% drop in revenue and $665m loss but remains optimistic about the future, predicting the business will return "stronger than ever"

By IQ on 06 Aug 2020

Live Nation Q2 results

Michael Rapino


Live Nation’s second-quarter earnings report depicts a tough period for the live entertainment group. With few live events taking place worldwide, LN has reported a 98% drop in revenue and US$665 million loss during the quarter.

The company’s revenue for the quarter was $74m compared to $3.2 billion last year – even after gradually reducing costs for this year by over $800m – taking the company’s current debt to $4.9bn with a weighted average cost of 4.4%.

The loss includes refunds issued by the company’s ticketing platform, Ticketmaster, which reimbursed money for 11m tickets across 42,000 shows and generated a loss of approximately $79m.

However, the company’s share price has been on a steady incline since the end of June, increasing from $42.64 to current value of $47.64, and its CEO Michael Rapino is optimistic about the future.

Speaking during Live Nation’s latest earnings call at 5pm ET (9pm GMT) yesterday (5 August), Rapino said the company will be focusing on new revenue streams around keeping fans connected to artists, citing the potential for livestreaming to become a long-term component of the business.

“Virtual concerts have proven to be a huge demand with fans, so we established a live-from-home platform to provide a convenient place for fans of all types to find the performances from their favourite artists,” he says.

“Virtual concerts have proven to be a huge demand with fans, so we established a live-from-home platform for fans to find the performances from their favourite artists”

LN had 67m fans see over 18,000 concerts and festivals globally, the vast majority of them online, in the second quarter – most recently the virtual Lollapalooza festival.

Though LN has launched socially distant shows when and where permitted, in New Zealand, France, Denmark, Spain, Germany, Finland and as well as cities across the US, Rapino says he expects live events to return properly in summer 2021.

On the call, the CEO expressed confidence in the fans’ desire to attend shows in the future despite uncertainty, reporting that 86% of concert fans are keeping their tickets for rescheduled shows.

However, it seems LN is still planning for a potentially tough festival season in 2021. In early June, a memo was leaked outlining the company’s intention to update its contract terms for artists.

The memo, sent to booking agency partners, proposed changes including a 20% reduction in guarantees from 2021 levels, minimum requirements for marketing activity and a stipulation that artists hold their own cancellation insurance in the event that the festival does not go ahead.

However, on the earnings call, Rapino said “the press got a hold of a work in progress,” and that largely the memo was a “wish list of things”.

“Artists keep calling me daily saying, ‘When can I go? When’s it going to be safe? When are we going to go?’”

“We wanted to make sure that going into 2021, if you are a headline artist that was going to play a certain festival this year and [both LN and the artist] wanted you to play it next year, the two things we wanted to make sure that we were protected in, and that we both shared some of the risk, was a refund reduction and insurance,” he clarified,

“Those are the two principles, if you take all the drama from the press, aside those are the two things we wanted to make sure that we weren’t stuck paying the same price in 2020 if we had a 31% refund rate on a festival.”

Despite the devastating impact Covid-19 has had on Live Nation’s, and the wider industry’s, business, Rapino told investors touring had “not had a structural change”, with both fans and artists keen to get back to shows as soon as it’s safe to do so.

“Artists keep calling me daily saying, ‘When can I go? When’s it going to be safe? When are we going to go? I am dying to go. I got new music. I want to drop new music,’” he added.

“So I think this is why we believe long term – regardless of what quarter we exactly scale at – that the business will be stronger than ever, with the creative push by all these artists who need to get on the road to drive their new music.”

 


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