Concert Giant Live Nation’s 1stQ Earnings Report Shows Progress

Camille Acey reports on today’s earnings call by concert giant Live Nation in one of their first reportings since their spin-off from Clear Channel.  In this quietest season of the music year, the call reported:

• 16% revenue increase
• $8 million in operating income vs. a $28 million lost in 1stQ 2005
• cuts that should mean $20 million in cost savings

Camille’s report highlights include:

Live Nation’s first quarter earnings call reflects a company that is still very much in transition. The focus over the first quarter has been in reducing wasteful spending, hiring appropriate staff for the venues, and putting the necessary maintenance into the venues for the busy quarters ahead…

On the events side, the company reported an increase in profits and believes that profits will be even greater for the next two quarters…

Venues, which are the company’s biggest source of revenue, had a 4% increase up from 1Q05 to $48million, primarily due to the acquisition of majority stake in Mean Fiddler (the largest promoters in UK)…Additionally, Live Nation is rolling out many new test products and services in the next few months including more diverse food offering, wired venues, value priced meal, "aggressive sales of beer, soda, water" (yikes!), and a global staff newly trained in customer service (a company first!). Rapino also noted that they have relinquished all of their interest in Planet Hollywood Las Vegas as well as interest in the touring productions of Phantom of the Opera and Cirque du Soleil…

…(an exclusive deal) with Ticketmaster is due to expire in 2008, at which point Live Nation will have to sit down and have a "long discussion" (Rapino’s words) with Ticketmaster. Whether Live Nation will jump into the ticket selling arena remains to be seen.

Rapino reported that they are all pleased with the progress the company has made in only four months, and he continued to stress that they hope to build the relationship with the customer "beyond a 2 hour event".

Click below for Camille Lacey’s full report.  Her concert industry and music business blog can be read here. To hear a recording of the call

Camile Lacey’s full report:

Live Nation’s first quarter earnings call reflects a company that is still very much in transition. The focus over the first quarter has been in reducing wasteful spending, hiring appropriate staff for the venues, and putting the necessary maintenance into the venues for the busy quarters ahead. This has been referred to as Phase 1 of their strategic plan.

In today’s call, CEO Michael Rapino outlined the companies 3 divisions/priorities which are:

1) Events – promoting and producing events
2) Venue Management
3) Digital/ Brand Initiatives – boosting the company’s online presence towards more effective marketing and advertising

On the events side, the company reported an increase in profits and believes that profits will be even greater for the next two quarters. Live Nation CFO, Alan Ridgeway, stated that the first quarter is "the quietest quarter" due to weaker content and the fact that they don’t really get to use Live Nation ampitheatres in those first 3 chilly months. Revenue will ramp up as the summer season rolls out with concerts by Madonna, Jimmy Buffett, Kelly Clarkson, and many other big ticket acts.

Venues, which are the company’s biggest source of revenue, had a 4% increase up from 1Q05 to $48million, primarily due to the acquisition of majority stake in Mean Fiddler (the largest promoters in UK). Moving forward, venues should show an even more impressive increase in profits with big name acts rolling through this summer and early fall. Additionally, Live Nation is rolling out many new test products and services in the next few months including more diverse food offering, wired venues, value priced meal, "aggressive sales of beer, soda, water" (yikes!), and a global staff newly trained in customer service (a company first!). Rapino also noted that they have relinquished all of their interest in Planet Hollywood Las Vegas as well as interest in the touring productions of Phantom of the Opera and Cirque du Soleil. This will free them to make investments in more fruitful areas.

With regard to the company’s digital/brand initiatives, the company is working to poise itself as a more visible and trustworthy brand. While the company has an exclusive deal wherein Ticketmaster sells 100% of the tickets to Live Nation events, the company has increasingly been using their site as the storefront from the sales. The deal with Ticketmaster is due to expire in 2008, at which point Live Nation will have to sit down and have a "long discussion" (Rapino’s words) with Ticketmaster. Whether Live Nation will jump into the ticket selling arena remains to be seen.

Rapino reported that they are all pleased with the progress the company has made in only four months, and he continued to stress that they hope to build the relationship with the customer "beyond a 2 hour event".