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Live Nation Attendance Drops 22%. Is Live Music In Trouble Too?

Empty seats
Livenation221205 Conventional wisdom says that live music is exempt from recessions.  Even when times are tough - perhaps particularly when times are tough - people want to party. But that didn"t prevent Live Nation's first-quarter losses widened as the company saw a sharp drop in attendance for North American concerts.

Live Nation's quarterly earnings report showed a loss of $102.7 million, or $1.29 a share, compared with a Q1 2008 loss of $37.2 million (.50 cents per share.) The promoter also saw a 33.4 million loss of revenue that was due primarily to international currency rates. The losses were palliated by higher revenue from Sweden, Belgium and The Netherlands where stadium, arena and theatre events had a strong quarter.

The North American live music sector was particularly tough for Live Nation and they reported a precipitous drop of 22.6% in attendance at live events from the same period in 2008 although revenue per fan was up by 5.7%. Live Nation staged more concerts during the first 3 months of 2009 as well, up by 1% to 4,528 from Q1 2008.

Live Nation also posted an operating income loss of $58.1 million, a 27.7% increase from the same period in 2008. These losses underscore Live Nation's recent moves to try to divest themselves of some of their inventory of venues such as the Orpheum in Boston, which they characterize as "non-core" assets, in order to raise cash to grapple with their extensively leveraged position.

In spite of all the gloom, there were a few bright spots. Sponsorship revenue was up by 17%, despite a huge hit (42.4%) in the number of sponsors from Q1 2008. International concert attendance was up as well and Live Nation posted an increase in ticket sales of 17.4 from Q1 2008.

Investors also seem to have a little more confidence in the company as reflected in their stock price which has doubled since its March lows, closing Thursday at $5.13.

"Our first quarter results were in line with our plan and, despite challenging economic times, fans are buying concert tickets at a healthy pace," said Live Nation President/CEO Michael Rapino in a statement.

"During the quarter, several trends emerged that serve as an indicator for the year ahead. Deferred revenue grew significantly, highlighting the strength of summer ticket sales. Per head revenue grew, indicating that event onsite purchasing patterns of fans have remained strong. Our sponsorship revenue also increased in the quarter, despite the global advertising turndown. During the quarter, we cut our capital expenditures nearly in half and are on track to reduce our capital expenditures by approximately 70% in 2009. As a result, we expect to drive strong growth in our cash flows in 2009, which will allow us to begin to reduce our debt, to the benefit of our shareholders." Rapino added. - via CelebrityAccess

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