The prospect of live entertainment company Live Nation possibly going private received a shot of adrenalin this week when Liberty Media Chairman John Malone publicly came out in favor of the move.
Malone, speaking at an Allen & Company investors’ conference in Idaho today, July 7, told reporters that he believed Live Nation could be stronger as a private concern instead of a publicly traded one. Liberty Media owns nearly 22 percent of Live Nation, and it would team up with Chairman Irving Azoff to launch a buyout. Azoff owns nearly 2 percent of Live Nation stock, and the two would require additional funding to secure a deal.
“There are arguments that they would be a better business as a private company,” Malone was quoted by the New York Times as saying — one of many publications covering the event.
“It would probably be very nice for that company to be private for a period of time, to settle down, to consolidate the operations. Keep in mind, that was a merger of three different businesses.”
Last year, concert giant Live Nation merged with ticketing colossus Ticketmaster to form Live Nation Entertainment, the world’s largest live entertainment company. The merger also included Azoff’s Front Line Management, the artist management division that boasts more than 200 major recording artists as clients. Ticketmaster owned most of Front Line Management before the merger.
Despite Malone’s seal of approval, a move to take Live Nation private would face serious financial obstacles, in part because the company currently is saddled with about $1.7 billion in debt. Ben Mogil, the influential financial analyst and equity research director with Stifel Nicolaus & Company, was not optimistic last month when news of the potential buyout broke. The enterprise value of Live Nation, the value of its fully diluted shares plus the debt, totals about $3.8 billion, Mogil said, yet the company does not generate enough free cash flow to offset that much.
Malone acknowledged the potential difficulties of taking the company private. “Whether that’s feasible is a function of how the large shareholders and management feel about it, and the financing of a deal.”
Since news broke on June 9 of the possibly of the company going private, Live Nation stock has seen a dramatic uptick. Shares, which trade under the symbol LYV, closed at $10.30 on June 9 and as of today, July 7, the stock was selling at $12.29 at about 2:30 p.m. EDT, eclipsing the stock’s 52-week high which was $12.09.