Live Nation Packs Concert-Goers in Despite a Bad Economy

The pullback in consumer spending hasn't yet hurt the concert business. Live Nation (LYV) put on 17 percent more concerts in the past quarter and concert attendance rose 5.7 percent. Live Nation, the nation's largest concert promoter, reported strong earnings after the bell on Friday—its third quarter profit more than tripled to $139.9 million, on strong performance, the gain from selling its motor sports division and a tax benefit.

Looking just at continuing operations, earnings were $1.41 per share, up from 55 cents per share in the year-ago period. Revenue was up nine percent from the year ago period to $1.59 billion, but a bit less than analysts expected.

Still, Live Nation stock traded down in Friday's trading—finishing the day down more than 10 percent. Investors are clearly concerned that the downturn in consumer spending means the concert business will fall off a cliff. I had an exclusive interview with Live Nation CEO Michael Rapino who is more optimistic.

By Live Nation's estimates, the average concert-goer goes to about one and a half concerts a year. They are determined to see their favorite performers and they make it a special occasion, and a priority. Rapino cited Thursday night's Madonna concert in Los Angeles, which was packed, and Coldplay and AC/DC tickets selling out quickly.

The big test for Live Nation will come next year when it breaks off from Ticketmaster (TKTM), currently its partner, and becomes Ticketmaster's competitor, selling tickets itself and attempting to change the concert ticket landscape. Live Nation is slowly accumulating exclusive deals with different concert venues, including last month, the Roseland ballroom in New York. The real question is whether a vertical model for the music business makes sense—Live Nation has deals with big stars including Madonna, U-2 and Jay-Z to handle all their business from concert tours to recording. We'll see if this approach to the music industry can flourish despite the fact that traditional music sales have been tanking.

Comments

[Shareholder X]

Who are you kidding? Dodger Stadium had closed its' entire third deck. Ticket prices were in excess of $ 250...the public can only afford to go to one show a year. If the ticket prices continue to climb, the average of one and a half per year, will be less than one show per year.

This is a company that either holds leases or owns some of the largest dinosaurs on the planet, namely it's tired 18K seat amphitheatres... how many times can you pay to see the same old acts from either damaged sun-faded seats or ill-maintained lawn acres away from the main stage. Not to mention have the privilege to pay $ 15 for an over-priced beer served to you by a staff person, who could care less about you the customer.

Wall Street and Live Nation are hanging their collective hats on ticketing...yet, have you tried to find a show on their website lately... it is terrible! If you are able to find the show you want to go to, will you be able to purchase a ticket for a lower service charge than Ticketmaster...I highly doubt it.

Or then there is the infamous 360 model...the company has still not told you how they are going to deliver product to you... They spent fortunes investing in over the hill talent, namely Madonna and Jay Z...to try to carve a name for themselves... Wall Street got it, the moment the first 360 deal (Madonna) was announce almost a year ago, the stock plunged. You can't blame these savy artists though, they saw a pay day and took it.

I was suckered into buying at $ 17+ per share... I am just trying to get out and stay alive with this dog. Why I invested in a company that does not control it's product, namely talent, I do not know...

Good luck to future investors..

2008 Nov 10 05:13 PM