Live Nation Entertainment, which acknowledged throughout 2010 some of the challenges the company experienced, is facing more questions as it prepares to release its fourth quarter and year-end financials on Monday, February 28.
According to published reports based on analyst information from FactSet, the live entertainment and ticketing giant’s fourth quarter loss is expected to double, compared to the same period in 2009, to cost $0.18 per share on projected revenues of about $1.12 billion. The news appeared to have no negative impact on Live Nation stock today, February 25, which saw a slight increase; the stock trades under the symbol LYV, and the price was up over $10.50 per share at 3:45 p.m. EST. The stock opened at $10.47.
Live Nation’s concert business was off in 2010, primarily due to the economy, and company vowed to seek savings in 2011 by reducing artist guaranteed payments for its tours, a potentially tricky proposition. Live Nation is not only the nation’s largest concert promoter and ticketing company, through its Ticketmaster division, but also the largest artist management company through its acquisition of Chairman Irving Azoff’s Front Line Management. The relationship could pose problems because an artist’s manager and promoter are often at opposite ends of the negotiating table.
Analysts on Monday will likely look for evidence of how those negotiations are going, in addition to other moves the company is planning in 2011 to avoid a repeat of 2010.
In addition, analysts might be curious to know how Live Nation’s Ticketmaster division intends to ward off competition from rival Anschutz Entertainment Group (AEG), which teamed up with former Ticketmaster head Fred Rosen and Outbox Technology to make a full-throated move into ticketing. Outbox instantly became the nation’s second-largest ticketer after Ticketmaster, because Outbox will handle ticket operations for more than 100 AEG facilities, in addition to making plays for Ticketmaster clients that might be itchy to leave.
Stifel Nicolaus & Company analyst Ben Mogil wrote in an investor report today that Live Nation is walking a bit of a tightrope as it heads into 2011.
“The balancing act for the company is that with the bulk of its concert (legacy
Live Nation) EBITDA generated from the amphitheaters, the company needs lots of product at these venues to drive attendance/in-venue spend but has to be mindful that some markets are simply too limited in terms of how much product they can realistically support and to minimize concert losses,” Mogil wrote. “In an environment where employment for their key ampitheatre demographic continues to be high (16-24 year old unemployment levels remain at 18%) and as oil nears $100/bbl, these are key concerns heading into the summer selling season.”