Rumors Heat Up That Liberty Media Will Buy Out Live Nation
— Another summer, another round of speculation that Liberty Media may buy out the remaining shares of Live Nation it does not already own. Liberty Media upped its stake in Live Nation to 25.6% in May.
A post at Barrons by two analysts at financial firm the Maxim Group reminds readers “the rumor occasionally surfaces that Live Nation Entertainment is better positioned as a private company.” And earlier this week, Liberty Media won a $965 million jury award for being misled by Vivendi – parent company of Universal Music Group – about its health at the time Liberty sold a large stake USA Networks in return for shares in Vivendi.
Live Nation’s share price increased 3.7% Wednesday, a healthy raise considering the Dow and the Nasdaq each rose just 0.7% It’s possible that small increase was due to speculation of a buyout. Investors bid up the price of a company when it becomes a possible target for acquisition. Because the buyer will need to pay a premium, investors know there is profit to be made between the current price and an eventual acquisition price.
The same rumor was in the news a year ago. Last summer Liberty Media chairman John Malone said that Live Nation would benefit from being taken private “to get everything working smoothly [and have] predictable financial outcomes.” Malone admitted such a deal would be financially “a little out of reach” at the time.
While this week’s jury ruling changes Liberty Media’s ability to make large deals, a $965 million windfall would be only a start. Live Nation’s enterprise value is about $2.5 billion (not counting any unfunded pension liabilities, employee stock options and other special considerations). However, landing $965 million would certainly make a buyout much easier.
So why hasn’t Live Nation’s stock been more active if a buyout is possible? Maxim Group believes that investors don’t care because Live Nation is a complicated business with many moving parts (promotion, ticketing, artist management) and slow growth. Whereas Sirius XM has relatively easy metrics such as subscriptions and average revenue per user, the analysts write, Live Nation investors must parse the differences between arena and amphitheater tours.
Exactly how Live Nation would benefit from Liberty Media ownership is not clear. Liberty Media also has large stakes in Home Shopping Network (HSN), QVC, Sirius XM Radio Inc and Barnes & Noble. There are obvious synergies between the two home shopping networks, HSN and QVC, but less obvious synergies elsewhere. If Sirius XM and Live Nation seem to have beneficial overlap, remember that Live Nation was spun off from radio giant Clear Channel.
At the very least, however, Live Nation could benefit from the privacy of being part of a large holding company. Publicly held corporations must meet quarterly goals and have their every move scrutinized by investors and analysts. Thus, it might be best for a company with long-term transitions in industries under transition to take place under the relative calm of ownership by a large conglomerate such as Liberty Media. ( Barrons)
Apple Overhauling iTunes by Year’s End, Report Says
— Apple will make some big changes to iTunes by the end of the year, according to a report at Bloomberg. The rumor is Apple will “more closely integrate” the iCloud file-storage service with the iTunes “so users can more seamlessly access and manage their music, videos and downloaded software apps across different Apple gadgets.”
In addition, Apple is said to plan new features to allow listeners to share music with others. If true, these features could roughly coincide with the demise of iTunes’ Ping social network. All Things D reported http://allthingsd.com/20120612/apples-ping-to-end-with-a-thud-in-next-release-of-itunes/ a couple weeks ago that Apple plans to shutter Ping, the two-year-old social network that resides within the iTunes platform, when iTunes gets a major upgrade this fall. Ping has been a major disappointment. The service’s tenure has coincided with the rise of social media-minded streaming services. iTunes has had to catch up as Facebook befriended everybody from Spotify to iHeartRadio to Ticketmaster. ( Bloomberg)
Artist Growth Named Best Music App at MTV O Awards
— Upstart Artist Growth has beat out Spotify, Live Nation, Spotify and Songza to be named the Best Music App http://www.omusicawards.com/vote/best-music-app in this year’s fan-voted MTV O Awards. The app, launched in February, provides artists with a tool for career and financial management. It does everything manage an artist’s merch inventory to search for industry professional in its database of contacts. In March, Artist Growth partnered with performing rights organization BMI to allow BMI artists to submit their set lists through Artist Growth.
Another young music startup got a surprising win this year when Myxer Social Radio was voted as the Most Addictive Social Music Service. Myxer beat out This Is My Jam, Chill, Mixlr and Soundrop.