Live Nation CEO Michael Rapino is very sure of the company’s strategy. In the company’s Q1 2009 earnings call, the concert promoter’s long-term plan to sustainable profits was on display. Per-head spending was better, just as Rapino predicted. Ticketing has taken off, right on schedule. Fans are still going to shows, just as Live Nation said they would.
Live Nation has succeeded in gaining sponsorships, creatively addressing excess inventory, performing well in the international division and improving concession margins. But, for all the positives, the large drop in North American ticket purchases and continued negative operating and net income cannot be overlooked. Like its fellow companies on the recorded music side of the industry, Live Nation has a strategy that will take time to gain traction and has the unfortunate economic situation to accentuate its challenge.
Read Live Nation’s SEC filing here.
North American operating margin improved to 8.2% from 7.1% while revenue dropped 3.8% to $322.2 million. Per-head revenue improved 10.5% and on-site, non-ticket revenue jumped 27%. Ticketing fees and non-ticket revenue is a focal point of Live Nation’s growth plan. The company is growing into its new role as ticketing provider but said it has reduced those goals by a few million dollars after it scaled back a more aggressive plan for the secondary ticketing market.
Deferred revenue – money collected from ticket sales for concerts in future periods – was $696 million. That Q1 increase in deferred revenue was $139 million greater than in Q1 2008. Growth in deferred revenue suggests an improved demand for summer concerts, but the company admitted that part of the increase in deferred revenue was a result of consumers buying tickets earlier. Live Nation is being aggressive about selling bundles of concerts at amphitheaters. Bundles result in an increase in revenue that is not realized until the time of the concert. There are mixed indications that this summer’s concert season could be healthy. Attendance at Coachella and Jazzfest were strong, but a handful of other festivals, such as Langerado in Florida, have been cancelled.
