Live Nation Reports Strong Growth As Coronavirus Pummels Stock Price
Live Nation Entertainment has reported fourth-quarter and full-year results for 2019, with the concert giant’s revenue handily beating analyst estimates for the year. But there are dark clouds ahead.
For 2019, Live Nation delivered its ninth consecutive year of growth, reporting total revenue of $11.54 billion, up by 8% from the previous year.
Operating income and adjusted operating income was up as well, with Live Nation reporting operating income of 272.5 million for 2019, up 19% from the previous year. Adjusted operating income saw more modest gains, with Live Nation reporting an improvement of 7%, up to $272.5 million.
Breakouts for the fiscal year showed that revenue from its Concerts division was up by 8% while Ticketing lagged behind, reporting venue gains of just 1% from the previous year.
“concerts remain a great deal for fans relative to other live experiences”
Live Nation’s President & CEO Michael Rapino noted that its gains in the live sector were driven in part by increases in ticket pricing as well as developing trends in ticketing such as dynamic pricing and enhanced VIP experiences.
“Average ticket prices for our amphitheater and arena shows are up double-digits since 2017, while sales of dynamically-priced Platinum tickets were up 66% for the year across 3,000 shows, as artists want more of the best seats in the house sold at market value at the onsale. Even with these increases, concerts remain a great deal for fans relative to other live experiences – our average ticket for a concert at one of our amphitheaters was $46 in 2019 relative to about $75 for an NBA game and over $100 for an NFL game,” Rapino said in the company’s earnings release.
“consumer demand for live entertainment has grown by 7% annually over the last 5 years”
Live Nation also noted that the overall consumer demand for live entertainment has grown by 7% annually over the last 5 years. In 2019, almost 98 million fans attended Live Nation concerts, up by 5% for the previous year with almost 500 million tickets sold.
Live Nation also touched on their aggressive expansion in 2019, with the addition of 38 new venues, including six new festivals and 18 new theaters & clubs.
“As we have gotten better at on-site hospitality over the past several years, this opens up more opportunities for us to operate more buildings where we make more money per fan, which then accelerates the on-site part of our flywheel,” Rapino added.
Live Nation’s Sponsorship & Advertising division proved to be a big revenue driver for 2019, with the sponsorship unit reporting revenue of $590.3m, up 17% year-over-year.
“In our high-margin sponsorship business, we grew revenue by 17%, operating income by 17% and AOI by 16% in 2019. Venue sponsorship was a key growth driver in the year, up double-digits globally, with broad growth across amphitheaters, festivals, and theaters & clubs,” Rapino said.
“Festivals had a particularly strong year. With the addition of Rock in Rio to our portfolio of marquee festivals, sponsorship revenue in this segment was up over 50%. Our top strategic sponsors have also been a key driver of our sponsorship segment, with 88 sponsors collectively spending approximately $400 million to reach our fans, and revenue from this group up 19% in the year.”
Long Term Debt An Issue
However, Live Nation is also carrying considerable long-term debt to the tune of $3.27bn, adding more than $500 million in 2019 alone.
As well, the cost of the company’s rapid expansion is reflected in the balance sheet with Live Nation reporting $1.3 billion in new long-term operating lease liabilities for 2019.
“In summary, 2019 was another strong year for Live Nation – building our global concerts business and driving growth in our high-margin venue, sponsorship and ticketing businesses,” Rapino said.
“Looking at 2020, we believe that our double-digit fan and show count growth so far this year against a backdrop of very high artist activity across all venue types and markets sets up our flywheel to deliver another year of strong global growth,” he added. – CelebrityAccess
UPDATE: Coronavirus Fuels Future Concerns
With coronavirus quarantines and fears already causing cancellations and concerns, Live Nation’s stock has taken a beating, falling 23%% in the last 5 trading days to close Thursday at $57.75.
Billboard is publishing a rolling list of global concert cancellations here.