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Live Nation Revenues Up in Third Quarter

Live Nation earnings releases are becoming predictable -- in a good way.

Live Nation earnings releases are becoming predictable — in a good way. Strong demand for concerts, continued gains in ticketing and growth in high-margin sponsorship and advertising revenue have the music behemoth’s diversified business model running smoothly and on-target.

Third-quarter revenues rose 11 percent to $2.5 billion while adjusted operating income — operating income without the affects of one-time and extraordinary items — increased 17 percent to $258.1 million. Net income in the quarter nearly doubled to $112.7 million compare to the prior-year period.

For the first nine months of 2014, Live Nation’s revenue rose 9 percent to $5.23 billion and AOI rose 11 percent to $482.7 million. On the strength of the third quarter, net income in the nine months ended September 30th was $111.1 million.

The concerts division had the biggest gains in dollar terms in the seasonally strong third quarter. Its revenue grew $198.5 million to $1.93 billion and its AOI jumped $12.1 million to $82.8 million. “Fan demand [for concerts] remains strong,” said chief executive Michael Rapino during Thursday’s earnings call. In terms of percentage gains, Artist Nation, buoyed by an increase in the number of artist managers, fared best with an 18-percent revenue gain and a 73-percent increase in AOI.

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Sponsorships & advertising had modest gains — 4 percent revenue and 6 percent AOI — but its AOI of $88.3 million and AOI margin of 77 percent were the highest of Live Nation’s divisions. One new development in this division is the partnership with Yahoo, in which Live Nation provides concert videos for online streaming. Rapino explained during the earnings that the Yahoo partnership helps the sponsorship division by providing video ads units where previously none existed. Ticket sales are believed to be a secondary benefit. “The more we scale and bring a high-quality live experience to the fan, and add a buy button, we know it’s also a great conversion mechanism for our core business,” said Rapino.

Gains in North American events helped drive the concerts division’s gains. In North America, the number of events rose 6.2 percent to 4,102 and the number of fans grew 15 percent to 17.1 million. Due to fewer shows and lower attendance, international events dropped 12.7 percent and international fans declined 21.4 percent.  

Ticketing revenue rose 8 percent to $386.1 million. Live Nation singled out the success of TM+, its platform that combines primary and secondary tickets on the same screen. TM+, utilized for over 13,000 events since September 2013, helped lead a 44% year-over-year gain in secondary gross ticket value through September. The number of primary tickets sold declined 2.6 percent to 36.6 million.

Without naming the company, Rapino addressed speculation it’s interested in acquiring a stake in C3 Presents, the promoter behind Lollapalooza and Austin City Limits, among other events. “We’ve been very clear we’ve been underserviced in our festival business in the U.S., [which leaves] a big hole in our business which really drives our ticketing and sponsorship,” said Rapino. “I can’t comment on the rumors, but it would make sense we’d be looking to acquire a strong festival company in the U.S. … and we’re going to continue to evaluate.”

The quarterly results appeared to meet expectations. Immediately following the earnings release, shares of Live Nation were up 0.5 percent in after hours trading.