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LYV - Live Nation Entertainment


merkhet
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I've started doing some preliminary research into Live Nation Entertainment, and I thought it was strange that it didn't have its own thread.

 

 

Based on the coin I've personally been forking over to Live Nation, it's at least interesting.

 

 

-Steve

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  • 7 months later...

Anyone done work on this idea? I don't question their competitive positioning, but I do have a few higher level questions that I hope to find an answer in:

- What is the “fixed” cost base of LYV’s concert business (i.e. if let’s say all the artists don’t go on tours, how much will it cost LYV a year?). Wouldn’t having a higher fixed base here affect LYV’s ability to negotiate prices against the artists? I don't think 8%+ margin is ever realistic given that it's the artists that own the monopoly, not Live Nation.

- How hard of a bargain are promotors, venues, and artists driving these days? As the 3-5 year contract lapse since the 2008 days, how is the servicing fee sharing agreement shaping up? Is LYV still signing upfront-payment + profit-sharing exclusive deals with promoters and venues?

- As a follow-up to the last question, if the heavy profit-sharing continues to be true to remain at the top, will LYV ever have the powerful operating leverage of a tech company?

- What is the “standard” sponsorship payment / attendee? I'm thinking $3-6 bucks / attendee; is it realistic to project much higher?

- I would be interested in seeing if there is a polarization of concert dynamics - I.e. top concerts crushing it, yet small concerts increasingly can't make ends meet because the ecosystem without LYV is inhospitable

 

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This is a great blog post that may help with some of your questions:

 

https://punchcardblog.wordpress.com/2015/03/05/live-nation-entertainment-an-unregulated-monopoly/

 

LYV is certainly on my list to do considerably more work on as a potential standalone position as I own some via LMCA/K.  The one thing that I can say is that the Ticketmaster business has quite a formidable competitive position.  As for the other components of the business and the ability to generate operating leverage, I have yet to do enough work.

 

 

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Here's what I've gathered so far:

 

1- The concert business is extremely, extremely competitive.  Many people are attracted to the business because it's sexy.  That drives down pricing.

 

2- The artists hold most of the power.  Live Nation is kind of like a low-cost provider in a commodity business.

 

3- Live Nation's advantages come from scale.

- Advertising is something that benefits from scale.

- The Ticketmaster platform is all about scale.

- They're building out their website and hopefully that scales well.  They are looking into things like using customer email addresses to advertise other concerts.

 

4- Live Nation used to be poorly managed, that's why it has so little retained earnings.  Another Malone turnaround play.

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This is a great blog post that may help with some of your questions:

 

https://punchcardblog.wordpress.com/2015/03/05/live-nation-entertainment-an-unregulated-monopoly/

 

LYV is certainly on my list to do considerably more work on as a potential standalone position as I own some via LMCA/K.  The one thing that I can say is that the Ticketmaster business has quite a formidable competitive position.  As for the other components of the business and the ability to generate operating leverage, I have yet to do enough work.

 

Thanks for the link -- it's exactly the post that prompted my interest.

Upon doing more work (strongly recommend the book ticket masters for anyone interested), I find myself trying to answer more questions than fully subscribing to the bull case Punchcard laid out.

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Here's what I've gathered so far:

 

1- The concert business is extremely, extremely competitive.  Many people are attracted to the business because it's sexy.  That drives down pricing.

 

2- The artists hold most of the power.  Live Nation is kind of like a low-cost provider in a commodity business.

 

3- Live Nation's advantages come from scale.

- Advertising is something that benefits from scale.

- The Ticketmaster platform is all about scale.

- They're building out their website and hopefully that scales well.  They are looking into things like using customer email addresses to advertise other concerts.

 

4- Live Nation used to be poorly managed, that's why it has so little retained earnings.  Another Malone turnaround play.

 

Glenn - thanks for your thoughts. Here is what I think so far:

- When Sillerman slapped the Live Nation backbone together in the late 1990s, he had the illusion that owning the pipes, so to speak, gives him leverage against the artists. It turned out not to be the case. The good artists sit back, look at Sillerman paying all his fixed cost everyday, and demand a 90-10 split. Maybe the consolidation gives LYV leverage against the smaller guys, but I think it doesn't make the negotiation with the nameplate guys any easier -- in other words, scale is more like a necessity to start a conversation, and I completely agree with you that this is a commodity business. Now this joker is trying to do it again in SFXE, good luck to him -- I don't see another sucker like Clear Channel coming over the top anytime soon.

 

- For Ticketmaster, I would note that it's not built by the internet guys (so the code probably sucks). The business model is very clever -- pay the venue and promoters so well up-front and share the profits, such that TM's positioning will always be at the top. This reminds me of the GDS vs. the airlines, where since the GDS pays the travel agents so well and the travel agents own all the corporate clients, the airlines had no choice but to pay GDS to route tickets. Same thing is happening here, the shared interest between the venues / promoters and TM is so strong that the renewal rate is > 100%. That's why they aren't getting disrupted by Dick and Harry at Silicon Valley, which I like. But I do see a "problem" with this aside from the clear benefits - the operating leverage simply isn't that big if you are sharing your profits, and that takes away a lot of the appeal. They don't disclose what the agreements look like, but I would imagine that's why this business's margin always hovers around 20% aside from the infrastructure problem they cite. They also don't give much info about their fixed tech cost base.

 

- TM+ is a great concept. If they simply make the platform better and gain scale, I can easily see them crushing Stubhub...

 

- What's everyone's view on Rapino? Also I think the IR leaves much to be desired.

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The recently announced (well been talked about forever but finally filed it) spin of MSG's sports and entertainment division could be an interesting comp for LYV I think.  I realize the Knicks/Rangers, etc. will be included in the SpinCo, but it will be interesting to see what value the market assigns to the live entertainment/venue management/entertainment and sponsorship aspects of the biz.  Not a lot of good comps for LYV at the moment

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  • 2 years later...

LYV Q1:

 

http://www.prnewswire.com/news-releases/live-nation-entertainment-reports-first-quarter-2017-financial-results-300451901.html

 

Highlights (year-over-year):

 

Revenue Up 17% for the Quarter to $1.4 Billion

Operating Income Improves 36% for the Quarter to $(21) Million

Adjusted Operating Income Up 25% for the Quarter to $92 Million

Concert Ticket Sales for 2017 Shows of 46 Million, Up 25% through April

Sponsorship & Advertising Contracted Net Revenue Up Double Digits through April

Ticketmaster Fee-Bearing GTV at Constant Currency Up 18% through First Quarter

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