Can Live Nation and Ticketmaster Buck the Recession?

Yesterday Britney Spears kicked off her "Circus" concert tour in New Orleans Louisiana with ticket prices so high it seems the pop star and her managers have no sense that we're in a recession. For a good seat at most of Britney's 33 North America concerts, expect to shell out about $550 per ticket, plus service charges. But Ticketmaster, a company music fans love to hate, only sells tickets in pairs, so you're looking at $1,100 plus all those Ticketmaster extras.

These sky high prices—higher than Madonna's recent concert tour—raise real questions about the survival of the concert business through this downturn.

Can Britney command those prices in this economy?

Can the companies behind her, like Ticketmaster (TKTM), justify their fees?

And with these high prices can the two largest companies in the concert industry, Live Nation (LYV) and Ticketmaster convince regulators that their merger wouldn't raise prices and put consumers in a position of weakness?

Live Nation's quarterly earnings, out Monday night, are telling about the industry's strengths and weaknesses. The world's largest concert promoter posted a $338 million loss, dragged down by a $270 million write down. Without the charges losses would have totaled $67.6 million on revenue that was basically flat for the quarter, down less than one percent. Here are the really juicy numbers: attendance at Live Nation concerts in the fourth quarter grew 14 percent, but revenue per fan dropped 13 percent — which means more people are going to concerts, but they're spending less on merchandise and extras. Despite the fact that the number of sponsors fell nine percent, the company grew total sponsorship revenue 14 percent — surprising in this economic environment.

Live Nation and Ticketmaster have both told me that people go to so few concerts a year-- about one and a half on average, that they're likely to continue their annual indulgence for their favorite musician. That would be great news for the industry, the question is whether that average number of annual tickets will drop and how much all those ancillary revenues will plummet.

And now the real question is whether the two companies can convince lawmakers that together they wouldn't control too much of the industry. Hearings began February 26. Small venue owners and fans of smaller bands are worried they'll be shut out of a monopolistic system. Some players are already preparing for a merger. ShowClix, a two-year-old ticketing competitor is creating the "Fair Ticketing Fund" while TicketBiscuit is creating a $10 million fund, to help lure consumers away from the merged company. Both TicketBiscuit and ShowClix will be advertising the fact that they charge lower fees. One thing's for sure, the recession will put pressure on all the players to keep prices down. It'll be interesting to see how that affects the potential merger and the competition that ensues.

Comments

[itsaboutthefan:]

The market has swallowed way too much of the cool aid that Live Nation has been selling. It is funny to hear the same usual comments spun different ways. The average number of visits by a concert attendee has been 1.2 to 1.7 per year since 1996. The reality is that less people are going to see shows each year because of the ticket price. The ticket price either has them in or keeps them out. The TM fees are just the rub they don't like to pay for convienence and what was bricks and morter and morphed into technology, but too have become to noticiable/expensive. There are very few acts that create an "indulgent" buy. And that 40MM in merger efficency savings is just a 1/5th of the savings LYV needs to go the right direction.

Mar 04 07:55 AM

[Gregg Kelley:]

As somebody who has worked in small venues and has had their eye on this merger nobody is really attacking what the long term effect this merger will have on the current state of this industry. I think it is amazing that we live in the time we do and that is because their are more bands and groups touring now then ever in the history of this business. Now they say album sales are down because of online downloads and the truth is that might be true but also labels eliminated street teams and grassroot promotions which was a vital part of this industry.

Now if Ticketmaster and Live Nation merge not only are you merging a promoter and a ticketing house but also a management company as well. This would eliminate the need for management companies, record labels, and also booking agents like William Morris and Creative Artists. It will increase the unemployment rates and put 100,000 people out of work with inside of 2 years. In this time where our current president is trying to build up from a recession and the largest unemployment rate in 20 years I just do not see this being a positive things to happen.

Now i watched the C span coverage of the justice meeting and I have to tell you i believe the CEO of Live Nation to be one of the biggest liars I have heard. Now Live Nation does most of the larger and smaller concerts in the country and he claims " They are the largest Artist Development companies in the country" this is not true they do nothing to develop artists. This company does not embrace any unsigned bands in any of its markets. The House Blues the company they own really does not allow local bands to play on their stage if they do its rare. I say this living in Cleveland and witnessing it first hand. So i would love to hear how they develop anybody or even invest in anybody's future. The truth is Live Nation should be stripped down and forced to split its company.

Ticketmaster is in the business of ripping off fans now to make extra money because secondary companies like Stubhub exsist and they want their cut. So they intentionally redirect people to ticketsnow.com to have people over pay for tickets. The best part is they told the senate they quit this practice but go online and try to buy tickets for any concert that is featured and you will be redirected. This probably boosts an extra 10,000 -20,000 dollars in profit and this may not seem like allot but when you do it to 100 different show a day it ads up. So how are they losing money and reporting losses.

I find it great that the CEO of ticketmaster says they will have to fire people if this merger does not happen. Wow i think he might know the CEO of GM very well. These companies demand money because they are power houses and because profits are not soaring they need to fire people. They are all making money and are worth trillions of dollars but just like most companies lets lay off people instead of taking care of them like they took care of us..

Ticketmaster and Live Nation are corporate criminals and this merger is a monopoly like no other. I hope our government can open their eyes and see what the big picture truly is.

Just a regular guy with an opinion

Mar 04 01:57 PM

[ticketman420:]

Gregg Kelley's comments are more pointed then from just the average guy. He is absolutely dead on about the future of live entertainment should the TM/Live Nation deal go through.

Check out the latest news in regards to the secondary ticketing market with the TM subsidiary of TicketsNow. Not only will this continue, the entire process will go under ground and likely pop up as a Music Today service.
OMFG people - wake up. If this deal goes through - watch each and every politicican bring their daughters/grand daughters to Britney Spears and Miley Cirus, as gratis for their greasy deeds.

Let these two companies flex the capitalism process. No merger no way.
ticketrends.com - vote on our Quick Poll today - both Live Nation and TM are members/readers of the site and will see your voting results.

Mar 04 02:43 PM