Live Nation Revenue Down 98% Due to Pandemic Shut Downs

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Live Nation Entertainment

The concert promoter reported an adjusted operating loss of $431.9 million on net revenue of $74.1 million in Q2 of 2020.

The coronavirus pandemic has shut down concerts across the world, amounting to hundreds of millions of dollars in losses for promoter Live Nation last quarter. The touring giant posted an adjusted operating loss of $431.9 million on net revenue of $74.1 million in the second quarter of 2020 -- the first full reporting period of the pandemic.

The concerts division’s $141.8 million of revenue was 95% lower than the $2.64 billion in Q2 2019. Ticketing’s negative revenue of $87 million, along with $18.4 million from sponsorships and advertising, gave Live Nation net revenue of $74.1 million -- 98% lower than the $3.16 billion a year earlier.

Through the first half of 2020, Live Nation had revenue of $1.44 billion, down 71% year-over-year. Adjusted operating loss through June was $431.9 million compared to operating income of $319.3 million in the first half of 2019.

The totality of the second quarter is clear in Live Nation’s concerts and ticketing figures: it had just 24 concerts in North America compared to 7,213 in last year’s second quarter. North American concerts brought in 8,000 fans compared to 15.84 million in Q2 2019. The promoter fared better in Europe, with 131 concerts, down from 3,309 last year, and 41,000 fans, just a fraction of Q2 2019’s 3,309 concerts.

The company’s all-important liquidity stood at $2.7 billion at the end of June 2020, a combination of $1.8 billion of free cash, $966 million of debt capacity. Deferred revenue of $941.3 million -- unrealized revenue for events happening in the next 12 months -- provides additional liquidity if necessary. 

Early on in the pandemic, once all global tours were grounded, Live Nation was quickly proactive in preparing for a worst-case scenario. To get through a prolonged drought, Live Nation has beefed up its liquidity considerably with a $1.2 billion note sale, an additional $130 million on an existing credit facility and temporary changes to its debt covenants to avoid default. Still, running a company of this scale is not cheap: Live Nation burns roughly $125 million of cash each month (notably down from $150 million at the end of the first quarter).

Live Nation also nixed a planned $480 million acquisition for a majority of Mexican promoter OCESA; the two parties went into arbitration soon after the cancellation. Cost-saving measures -- furloughs, layoffs and lower use of contractors, and executive pay cuts across Live Nation and Ticketmaster -- will help liquidity by saving about $1.1 billion this year, according to the company. 

Faced with a cash crunch, Live Nation will reduce its cash outflows by $1.4 billion in 2020, which includes the cash portion of $800 million in cost savings plus reductions in capital expenditures (e.g. venue maintenance), less acquisition activity and lower advances to artist and ticket clients.

While COVID-19-related deaths now exceed 1,000 per day in the U.S., Live Nation has been “pleasantly surprised” by developments in a coronavirus vaccine and advances in COVID-19 treatments. While some markets are doing better than others -- North America, Live Nation’s largest region, lags the rest of the world in reducing infections and deaths -- the company is confident concerts will return at scale in 2021. In the normal course of business, explained Live Nation president Joe Berchtold, “at scale” means “several thousands concerts a quarter for tens of millions of fans.”

Because concerts were suspended in March and artists have spent an unusual amount of time at home, CEO Michael Rapino said he frequently talks to artists brimming with ideas and eager to perform. The conversations are clues that “business will be stronger than ever with the creative push by all these artists that need to get out on the road to drive new music,” he said. Without predicting exactly the quarter Live Nation will return to normal scale, Rapino said he anticipates “2021 [and] 2022 will be record years.”

With a hoard of cash, debt and credit, Live Nation can afford to wait. “We won’t be doing DJ sets in the Hamptons any time soon,” Rapino said, taking a dig at a controversial Chainsmokers performance on July 25, before repeating the main theme from Live Nation’s first quarter earnings call: “We’re going to play long and play safe.”

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