Live Nation Inc. Q1 2009 Earnings Call Transcript

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Live Nation Inc. (NYSE:LYV) Q1 2009 Earnings Call May 7, 2009 5:00 PM ET


Michael Rapino – Chief Executive Officer

Elizabeth Willard – Chief Financial Officer


David Joyce – Miller Tabak

Ben Mogil – Thomas Weisel Partners

Alan Gould – Natixis

David Kestenbaum – Morgan Joseph

[Steven Pfeiffer – Wells Capital Management]


I would like to welcome everyone to the Live Nation first quarter 2009 earnings conference call. (Operator Instructions) Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to Live Nation's SEC filings for a description of risks and uncertainties that impact the actual results.

Live Nation will also refer to some non-GAAP measures on this call and in accordance with SEC Regulation G Live Nation has provided a full reconciliation for the most comparable GAAP measure in their earnings release on their website. The release, reconciliations and other financial or statistical information to be discussed on this call can be found on

It is now my pleasure to turn the call over to Mr. Michael Rapino, Chief Executive Officer.

Michael Rapino

Good afternoon everyone and welcome to our 2009 first quarter conference call. I'm joined today by my CFO Cathy Willard.

Our first quarter results were in line with our expectations on our key metrics that indicate that we are on track to deliver our 2009 plan. Our first quarter is historically the slowest period of the year but an important time as it provides a window into how the full year will end up.

While the quarter results themselves are not a significant factor in the final year results, we believe they are key metrics of deferred revenue from tickets sold in the quarter for the summer events, in venue spending and sponsorship are three trends that are very positive for this quarter that indicate a strong summer. Overall we are very optimistic about the full year given the strengths of these three core metrics in Q1.

Despite the challenges other media entertainment companies are having in 2009, we have built our 2009 plan to deliver growth and adjusted operating income. We plan to realize this growth through three levers.

The first is new operating income from our 2008 investments in the Point in Ireland and two new House of Blues in Boston and Houston. Second, we will increase international ticket sales and three, we'll increase per head spend on site in our North America amphitheaters.

Fourth, we had planned on offsetting these increases by a slight reduction in sponsorship and a reduction in North American music ticket sales netting a low double digit adjusted operating income growth overall.

To achieve growth in this economy is a testament to the resilience of the concert industry and our disciplined execution strategy. In 2009 we have two strategic priorities; deliver growth in our core business and increase cash flow.

Now let me take you through an update on the four main drivers of our core business; ticket sales, onsite revenue, sponsorship and ticket fees. First is ticket sales. During the quarter we delivered what we had planned. International music attendance was up 17% and North America was down 22% for a net concert decline of 10%.

We had planned and assumed North American concerts would be down slightly since we had increase concert attendance last year dramatically. Our total number of events was essentially flat with international music up and North America music down.

Looking ahead, our concert pipeline is robust and on pace ahead of last year as indicated by the nearly $700 million in our balance sheet in deferred revenue as of March 31, a 24% increase from last year. Due to our strong April sales, current ticket sales as of to date are at a pace in line with last year, so we have made up any of the gap from our Q1 decline.

So there is no doubt the fans are continuing to come out to shows as we anticipated. We have a very strong line up this year. U2's 360 Tour has generated incredible demand, selling 2.5 million tickets. Madonna's extended leg in Europe has been another sell out smash and artists such as Nickleback, AC/DC, Coldplay, Aerosmith, Jimmy Buffet and the Jonas Brothers are well on track to sell out some strong shows.

To stimulate incremental sales in North America amphitheaters we are executing multiple promotions to provide value and provide low cost tickets for fans in this tough economy. This summer we have over 3 million lawn tickets priced under $30 and have expanded our four pack to 70% of our shows.

We're also running extensive price promotions with corporate partners such as City and Seven-Eleven and working to expand the number of onsite offering tickets to affiliate programs to drive ticket sales to our site.

The second lever that drives our business is onsite per head. Total revenue per attendant in the quarter was $66.48 versus $62.91 in the prior year which indicates fans are spending when they show up at the venue. In North America, our in venue ancillary revenue increased $3.06 per head compared to last year.

One of our core strategies in 2009 is to drive in venue spending in North America. With the reduced attendance expected throughout the year in North America we knew driving more dollars from each fan was a key strategy. We believe we'll achieve this in two ways; first through higher margins on food and beverage that will be an outcome of our new concession deal with SMG Airmark which will increase profits by 10%.

The second way we expect to drive per head is through a host of new onsite initiatives including reducing the items sold and focusing on the most popular, profitable increasing points of sale, portable hawking to sell foot and beverages directly to the patrons in their seats, and finally increasing products and adding new products like souvenirs photos, early access passes and bundling to create incremental revenue.

Our third business driver is sponsorship. During the quarter, our sponsorship revenue recognized increased with our average revenue per sponsor by 103%. This follows a 14% increase in our sponsorship revenue from 2008.

Our integrated live music platform continues to attract larger more profitable advertising marketing campaigns as evidenced by the Starwood partnership we announced in February as well as the new sponsorship agreements with GTI, Anheuser-Busch and Comcast.

During the first quarter, total sponsorship revenue dollars was paced ahead of 2008 by 17%. No doubt we are very pleased with the progress we are making in growing this portion of the business. However, despite these healthy trends we continue to believe sponsorship is the one big challenge we have in 2009 given the broader advertising downturn.

The fourth lever of our profit is ticket fees executed through Consumer traffic to our website continues to increase and to date we have sold over 6 million to over 2,300 shows since our launch in December, including 5.8 million tickets sold in the first four months of 2009. Our ecommerce division is focused on ways to increase sales, up sell and for direct relationships with our concert fans.

Our second priority this year is to maximize our cash flow with the goal of deleveraging our balance sheet over time. We spent the last three years building our integrated platform. With all the pieces now in place, we've essentially transitioned to run the core more effectively and reducing our capital expenditures.

During the quarter our consolidated direct operating expenses declined 6.5% and our consolidated fixed costs 4.6%. Our direct operating expenses for North America music along declined 4% and our average profit per show rose 10%. We believe that these operational benefits, when added to our new revenue streams will result not only in higher adjusted operating income for 2009 but also substantial improvements in our free cash flow from operations.

Turning to capital expenditures, we remain on tract to decrease our total CapEx in 2009 by 70% to approximately $55 million, a significant decline from the $187 million we spent in 2008. Our debt reduction efforts will be supported by the proceeds of the sale of our remaining on core assets.

We recently entered into an agreement to sell our interest in Boston Opera House, in Boston for a total consideration of $22.5 million plus an earn out. We are also exploring the sale of our U.K. theaters as well as some of our other non core real estate holdings.

With or without the additional sales we believe that we'll be well positioned in 2009 and beyond to meaningfully reduce our debt and strengthen our financial profile.

To conclude, our first quarter results were in line with our expectations and reflect the season's slowest period of the year for us. We have now entered the busiest season of concerts and top line trends remain healthy as demonstrated by our deferred revenue, concert ticket sell pacing, per head spend and sponsorship.

We are driving further efficiencies across our platform and we're operating with very sharp discipline this year. As a result, we currently expect to drive strong free cash flow in 2009 and believe this will allow us to reduce our debt and strengthen our financial profile.

Finally, as you are aware in February we announced and entered into a merger with Ticketmaster Entertainment. Upon closing, we believe that the combined company will accelerate the execution of our vision and strategy to build an artist direct company that provides a full service connection between the artists and fans.

We believe the combination will provide us with significant strategic and financial benefits and we continue to work hard to close this merger. We still expect we will close in the third or fourth quarter of the year.

And now, I'll turn it over to Cathy for the financial outlook.

Elizabeth Willard

Good afternoon and thank you everyone for joining us. Before reviewing our results for the first quarter, I want to highlight the beginning of 2009 we have changed our reportable segments. Our reportable segments are now North American Music, International Music and Ticketing.

Prior to 2009 we also report an Artists Nation segment which historically recorded global tours and providing other services to artist with events occurring both domestically and internationally. We are now allocating these activities to our North American Music and International Music segments based on where the profits are being generated. This change has been made to reflect how we are now managing our business.

Now to our results. During the first quarter, consolidated revenue was $499.3 million which was down $33.4 million driven by foreign currency movements as compared to revenues of $532.7 million in the same period last year. This revenue decline was due to the impact of $48.6 million in negative foreign exchange movement primarily in International Music. On a constant currency basis revenues would have been $547.9 million during the first quarter a 3% increase over last year.

Positive revenue impacts included an increase of $11.1 million related to acquisitions, primarily in International Music and $17.2 million in International Music due to increased promotion activity.

Adjusted operating loss was $34.4 million during the first quarter of 2009 compared to a loss of $31.4 million during the first quarter of 2008. This increase loss was due to a $1.2 million decline related to negative foreign exchange movement and a $2.3 million decline in our Ticketing segment driven by increased costs as we were beginning development of our Ticketing platform in the first quarter of last year and therefore were not operating at a full cost base as compared to being at full operations during the first quarter of 2009, and also due to the impact of the timing of revenue recognition as ticket service charge revenue is not recognized until the event takes place regardless of when the ticket is sold.

We had offsetting positive movements in adjusted operating income through a $4.7 million improvement in International Music driven by the results of strong arena, theater and stadium events.

Our operating loss in the first quarter was $84.4 million compared to a loss of $70.3 million in the first quarter of 2008. This year over year decline was driven by increased depreciation and amortization expenses primarily due to a $7.7 million impairment charge related to the sale of the three Boston venues along with a slight increase in adjusted operating loss previously discussed.

Also negatively impacting our operating loss was $3.8 million of acquisition transaction costs primarily related to the merger. Due to a change in accounting rules related to business combinations, costs related to completing an acquisition must now be expenses as incurred rather than capitalized as part of the purchase as we have done in the past These new rules are effective beginning in 2009. In calculating adjusted operating income the company is now adding these costs back so that the results are comparable.

Our net loss was $102.7 million as compared to a net loss of $37.2 million in the first quarter of 2008. The net results for 2008 include a benefit of $31.4 million of income from discontinued operations plus $20.6 million from other tax benefits related to the gain on these discontinued operations. The other significant impacts to our net loss are the impairment charge and acquisition costs previously discussed.

Turning now to other key financial information, as of March 31, our cash and cash equivalents balance was $357.1 million. Our free cash which is essentially cash less event related items was a negative $103.5 million. This negative free cash balance is due to payments made during the quarter for longer term artist advances including the May hold to Madonna to settle her start guarantee.

Our negative free cash flow during the quarter which is our seasonally lowest quarter and total net debt payments primarily on the revolver and term loans of $22.7 million. As many of you know, we generally receive cash related to ticket revenues at our owned and our operated venues in advance of the event which is recorded in deferred revenue until the event occurs.

At March 31, 2009, our deferred revenue was $696.2 million as compared to a balance of $564.4 million at March 2008 reflecting an increase in the amount of ticket sales for future shows as of the end of the quarter.

We had negative free cash flow of $51.9 million during the first quarter of 2009 which is slightly improved compared to negative free cash flow of $52.2 million in the first quarter of 2008.

Total capital expenditures during the first quarter were only $12.6 million, just over half of our total capital expenditures of $23.1 million during the first quarter of 2008. CapEx in the quarter consisted of $2.9 million in maintenance expenditures and $9.7 million related to revenue generating projects.

Overall we currently expect total capital expenditures to decrease significantly in 2009 to approximately $55 million compared to total CapEx of $187 million during 2008.

As of March 31, 2009 our total long term debt including our outstanding redeemable preferred stock was $840.3 million compared to total long term debt of $864.1 million as of December 31, 2008, a decrease of $23.8 million.

For 2009 the company implemented new accounting rules that changed the accounting for certain convertible debt instruments including our 2.875% convertible senior notes. Under the new rules, the company must now separately account for the liability and equity components of the debt in a manner that reflects our non convertible borrowing rate.

The effect of these new rules for our notes is that the equity component which is the debt discount is included in additional capital and the debt is now recorded net of this discount which is $59.5 million as of March 2009. Also, interest expense also includes additional non cash interest as the discount is amortized. This new standard was applied retrospectively so the December balances have been restated as well.

As we have previously stated we have no significant debt securities under our primary debt instrument until June 2012. We continue to remain comfortably in compliance with all of our debt covenants and also remain focused on all of our cash flow parameters.

These key parameters can be broken down into three components; working capital, free cash flow and debt reduction. The working capital one benefit we have been capitalizing on in these tough economic times is around the timing of our artist advances. Historically when an artist was signed for a tour, a significant amount of the guarantee, in some instances up to 50% might have been paid at signing although the tour may not be occurring for many months into the future.

We have drastically reduced this practice and are now timing advances much closer to the start of the tour and saving the payments of advances as the tour progresses. This has had a positive effect on our working capital and reduced reliance on our credit facility.

We currently expect that free cash flow will be positive in 2009. After adjustment for transaction costs related to the merger, exceeding last years free cash flow adjusted for discontinued operations on a double digit basis. Free cash flow has been an important focus for us over the last two years as we have realigned our business away from non core activities and have grown our core businesses.

As we have previously stated, we are at the end of our major capital investment initiatives which will reduce the use of our cash. Our free cash flow this year will be used to fund the last non payments under our All Right Shield, the make hold payment under Madonna's guarantee and revenue generating capital expenditures of approximately $35 million.

After adjusting for these incremental payments and investments, our adjusted free cash flow for 2009 is still expected to be slightly positive. Moving into 2010, we current expect to substantially out perform our free cash results for 2009 based on our current asset mix as we see further gains from our investment activity. In addition, we will see further benefits from the acceleration of the recoupment of payments under our all rights deals in 2010.

We recently completed a review of our debt with the rating agencies as part of the merger process. As a result of that detailed review of our projections, both S&P and Moody's have left our ratings unchanged with S&P moving us to positive watch.

As we have indicated, we have entered into an agreement to sell certain assets in Boston, and 50% of those net proceeds will go against our term loans in the third quarter. From a covenant perspective we have very solid head room. Based on the visibility of our current projections for adjusted operating income, show counts and cash on hand, we easily expect to meet all covenant tests for 2009.

Based on the timing of show related items, the second quarter is a tighter quarter, but it would still take a significant drop in adjusted operating income in Q2 before we even get close to a covenant threshold issue. Moving into the third and fourth quarter and looking forward from there, we expect covenant head room to have over a 20% EBITDA cushion.

Finally, based on the investments we've made over the last three years, we currently believe that we will deliver adjusted operating income growth in the low double digits for the full year in 2009 as we continue to grow our core operations and realize the impact in these investments in venues, artists and our ticketing operations.

With that, I will open up the call for questions.

Question-and-Answer Session


(Operator Instructions) Your first call comes from David Joyce – Miller Tabak.

David Joyce – Miller Tabak

Can you talk about any dynamic pricing initiatives that will drive the ticketing for the summer and secondly if you can talk about any cannibalization that took place as you moved to larger sponsors or have you maintained some smaller relationships?

Michael Rapino

I'll talk to the second first on sponsorship. No cannibalization at all. We've got a lot of sponsors, over 800 but we still think that number should be dramatically higher in the big picture so we haven't bumped into any cannibalization. We find there are basically three different type of sponsors.

There's a local sponsor that just wants a lower deal in his local market. There's a regional company that has a geography platform that maybe wants a west coast deal, and then there's a national company who's looking for a more national campaign, and those are three very distinct categories.

We're keeping all of our local and regional on track and what we've just really done in the last two years is built up our national division and started to take advantage of the bigger brands that have a bigger budget for a national campaign.

In terms of dynamic pricing, I wouldn't say we've made a ton of headroom yet. I think that is still the how hanging fruit that we have to get to. First as you know our priority in 2009 was become the e-commerce platform that can sell the tickets and get that job done. And after a couple of hiccups at the beginning, we're now over 6 million tickets. It's a non news event. We're selling tickets every day fast, strong and confidently.

So first priority is just to get the sales pipe working, establish a relationship with the customers. We're doing some tests. No doubt Jim is a progressive manager and we priced the house very smartly versus a traditional three scale model and that's provided some great learning and increased revenue.

Coldplay is giving out CD's at the concert. I would say the appetite for the artist to sit down with us now and explore all ideas on how do I sell my concert ticket differently, how do I participate in the higher end, how do I bundle, is coming to life full steam as we've just now entered into the ability to be able to do it.

So we'll test some this summer but by next year this will be an ongoing change in how we sell with all of the different options.


Your next question comes from Ben Mogil – Thomas Weisel Partners.

Ben Mogil – Thomas Weisel Partners

On sponsorship, obviously tracking up in the quarter, can you give us a sense where year to date you are in terms of sponsorship?

Michael Rapino

We've been pretty good this year on trying to give some guidance on sponsorship to help everybody because it's the one area. To simplify our sponsorship, we built a plan this year that we end up doing about $120 million a year in sponsorship EBITDA. That's our base from last year.

We built a plan this year that said given all the news we were hearing back in November, we didn't think it would be realistic that we would match $120 million so we built a plan that said we can grow our operating income if we're down $20 million in sponsorship and hit $100 million.

And I would just say to you as of right now, we are in striking distance of hitting the $100 million. Our only debate will be do we do better or are we $4 million off the budget of $100 million. But we're tracking close to the $85 million to $95 million range of that $100 million right now, so within striking distance.

Ben Mogil – Thomas Weisel Partners

That $100 million you're referring to is in EBITDA, am I correct?

Michael Rapino


Ben Mogil – Thomas Weisel Partners

I want to understand a little bit better on the deferred revenue and the growth that we saw there. You sold 4.2 million tickets so far year to date for your ticketing system of which 2.7 was your owned and operated venues, is that correct?

Elizabeth Willard

That was as of March 31. That's correct. Michael gave more current numbers which are the six million numbers through basically today.

Ben Mogil – Thomas Weisel Partners

What I want to get a sense of, if you were ticketing yourself at your owned and operated venues last year, let's say a $50 average ticket price, what would last year's deferred revenue account be in March 31 or sub out what you have in the deferred revenue line at your own operated venues this year. I want to get a sense of what the change is, how you'd be doing ticketing in both years.

Elizabeth Willard

The only difference really in the way you're thinking about it is that we would have the service charge on the piece of the tickets that we're selling which we wouldn't have had last year that would have been in Ticketmaster's.

But remember our deferred revenue also includes tickets sold in third party buildings too if we receive the cash. So it's not just the tickets sold through our own ticketing operations.

Ben Mogil – Thomas Weisel Partners

So the difference would be the ticketing surcharge, right?

Elizabeth Willard

Yes, that's really the only difference between the two. The rest is timing on sales and the amount of tickets on the events that are on sale.

Ben Mogil – Thomas Weisel Partners

So if that were the case should we be looking that the adjustment, I think your delta was about $130 million from year over year and maybe of that call it like $15 million to $20 million is because of the change at Ticketmaster and the rest is all growth in the business. Is that correct?

Michael Rapino

The last thing I want to do is let your inaccurate math take any of the shine off the deferred revenue story which is for most of the people who have been following the stock know that if you have that level of deferred revenue today, we sold tickets. That means the pipe is full for the summer versus last year.

So I'll back you up. The deferred revenue just for everyone's clarity, last year we grew ticket sales double digits year over year, had a fabulous year in North America. So be standing today with deferred revenue ahead of last year would mean that we sold more tickets today than we did a year ago this day so that's a good indication.

And you are right; there are some service fees in there. And you're right they're a very small minority piece of that upside. So in the $10 million to $15 million range is a good approximate number to use to figure out what the rest is in terms of growth.

Ben Mogil – Thomas Weisel Partners

I got it. The sense that you were still booking as deferred revenue even money that was held by third parties. That's why the balance sheet last year was so high in the absence of your ticketing.

Michael Rapino

That's Europe. That's stadiums. That's anywhere in the world we're selling tickets.

Ben Mogil – Thomas Weisel Partners

Obviously some bands are selling well and some others, and always the case and you've obviously got a long history of knowing how different bands sell in different venues and get a sense of how to price them on the guarantee side as well. Are you seeing in any cases, do you have any flexibility in any cases with some tours that are simply not performing as you'd hoped? Do you have any kind of out or flexible clauses with artists on the guarantee to sort of the bang it down a little bit if certain thresholds aren't met?

Michael Rapino

Generally you have a contract with the band, you have a contract. But we both have the same motive. A band does not want to get on stage and have empty seats. So I would say to you that 99% of the time, if a tour goes on sale and it's not pacing well, you are sitting with the manager and agent coming up with creative ways to sell more tickets. Reduce the prices, do more promotion, excite the sale, and that end.

The good news is this. The reason we planned, and that's why I don't want any of the Q1 decline in North America to come across as consumer purchase behavior versus self implied. We knew that we had a really strong year in North America last year. We know that there's a certain amount of shows we need to fill the pipe, and then some of the shows above and beyond that are the gravy that help you deliver some higher profit or sometimes bring down your profit.

We went into 2009 with a very purposeful disciplined plan that said, let's not try to grow market share in North America this year. Let's go after the for sure bands, the for sure business. We'll leave a few bands on the table. We'll let Age's and others book a few that we might have historically chased harder.

So we purposely went out this year to say we'll fill the pipe to the level that we know we can drive our operating income. We will not go after all and every band. We'll reduce our risk and we'll go after the more for sure bands.

So we're sitting here right now and the good news I can tell, we're not sitting here right now with any tours or any shows of magnitude that are dogs, that are going to take a hit on our P&L in any big sense.

We've got a pretty solid line up of superstars and downward and we're happy with the level we have right now and we don't see any big losers this year that will impact our operating income.


Your next question comes from Alan Gould – Natixis.

Alan Gould – Natixis

My question is regarding the operating income guidance of low double digits. Can we get more granular? Are we talking 10% to 15%? Is that where we're looking for?

Michael Rapino

I'd love to but historically we don't even give guidance. But we thought that given a lot of the uncertainties in the market place around the sponsorship business, I spent the first three months of the year getting the question, what if no one comes this year.

Then now we've proven they're not only coming, they're coming at the same rate as last year. Then I spent the last two months saying, well what if they come and don't buy a beer. So I've now convinced you that the per heads are holding strong, and the only piece I want to be clear on is sponsorship, we built in a reduction and we'll deliver plan.

And we'll build in at the end of the year; International Music will be way ahead of last year. North America could be flat to 5% down if w planned right, could end up net overall flat to 3% to 5% down. That's the attendance numbers we built into our plan to deliver a growth over our $167 million last year.

So we typically don't even say we're going to grow. We don't typically give that. I think today we just wanted to give very strong signals that even in this economy, even with all the other issues that entertainment companies are having, we will grow operating income. I think we said just for clarity in the single digit growth and we were attacking the second and most important priority in this economy is generate free cash flow and de-lever.

So I think the message today for all of the analysts that are building their models, we will grow the business from the $167 million and all the metrics from Q1 in isolation mean nothing when combined with deferred, sponsorship and new heads and the new data that I've given you today that says we've now caught up on ticket sales versus last year through a super strong April sales.

We will deliver a fairly strong year in an economy where most people aren't delivering growth at all.

Alan Gould – Natixis

Can you just refresh my memory, the ticketing cost you, was it $15 million on ticketing last year?

Elizabeth Willard

A little bit less than that. We ended the year about $13 million in comps.

Alan Gould – Natixis

And opposed to January a similar amount of profit this year?

Elizabeth Willard

That was based on the presentation we did when we were first rolling our ticketing. It's still in that range, somewhere in the $10 million to $15 million dollar range.

Michael Rapino

I would say just so we're clear, it will be a spectacular feat because we will grow into the positive so we'll grow a $15 million swing from negative to positive. The only two pieces that will slightly affect our dream of getting to $15 million in the first year is you've heard a lot of noise about the secondary business.

We had planned in there to have a more aggressive secondary strategy this year that we're now kind of put on the back burner as we understand that market better, so that took a few million off our plan, and we also had a few million in our sponsorship that as we said earlier could come to some risk.

So we think we'll deliver the core driver of that division, the service fees times ticket equals profit. We'll be off plan on secondary revenue and sponsorship revenue within that $15 million which will be the only two pressure points against delivering that exact number.

Alan Gould – Natixis

With regard to the Ticketmaster deal and the timing of it, isn't it closing by the end of this year a little bit aggressive and what are the milestones we should look for from this point forward?

Michael Rapino

We're into second review as we've announced which is just an extensive data collection period. So all indications we're getting from our advisors is that fall is a very reasonable close and time period. In terms of our business right now, we're pretty much focused on executing the core, the milestones; we're into Ticketmaster's into some, refinancing our bank debt.

That's going well. We assume that will get done soon, and I guess we'll have a shareholder vote late July, maybe early August would be the next milestone. And then after that you would just look for the close.

Alan Gould – Natixis

So we should expect a proxy early June?

Elizabeth Willard

By late May, early June is where we're timing right now.


Your next question comes from David Kestenbaum – Morgan Joseph.

David Kestenbaum – Morgan Joseph

I just want to go back to deferred revenue. I'm a little confused because you had said that ticket sales were kind of in line with last year, but with the deferred revenue up so much, I'm a little confused by that. Are you just selling the tickets a little earlier this year or are you just understating that you're going to have a strong summer.

Michael Rapino

A bit of both. I've kind of given you guidance which I don't typically do on where we think we'll end up on attendance by the end of the year. So you can look at our historic 52 million tickets last year or all in and figure out where we'll be.

We built a plan this year that said the economic crisis has to affect you somewhere. We know though that we had a super strong slate because of the stadiums and Madonna and U2 and our festival business is on fire in Europe which is a really early on sale. So we knew International was going to have a strong year, so we knew we could look for growth from international.

We knew North America we had a super year last year in our amphitheaters and we didn't want to chase that exact market share in some of those shows and get ourselves into any risky shows to try to match that exact number.

So in overall, you're right. The numbers should suggest we've beaten the last year. We're looking at it as we were down in Q1. If you add in our strong April sales and our deferred revenue and you kind of trend it out for the year, we will be very happy at the end of the year if we're up internationally, down slightly in North America and overall pacing flat to a few points down, since we know how to make more money from an attendee year over year.

So we're just looking at the strong on sales. There's a little bit of head room. In this business it's all about there's not bad bands, there's just bad deals. So when you have a strong solid plan, you don't have to then chase a lot of extra which sometimes can get you in trouble.

So we're going to take all that on sale, all that extra win we have right now and we're going to just execute against that and extract what we can from that piece of the pie versus going for 5% extra sales which could work or could not work in this economy.

David Kestenbaum – Morgan Joseph

On the international side you took a big hit on currency. Can you comment where that was, because the Euro didn't fall much against the dollar, though the pound did and obviously some of the South American currencies got hit pretty hard too?


Elizabeth Willard

The biggest currency impacts for us were the pound and then the Swedish Kroner. We had a little bit of Euro impact, but you're right. The biggest pieces came from that.

David Kestenbaum – Morgan Joseph

And do you see the international mix still remaining in those countries as you go into the summer?

Elizabeth Willard.

Yes. Our biggest countries are those plus Belgium and Holland so that's where you're going to see most of our activity.

David Kestenbaum – Morgan Joseph

As far as the disclosure on the Artist Nation, do you plan on doing some type of metrics and judge how the Artist Nation's doing in the future?

Michael Rapino

Absolutely we will. Probably towards the end of the year, Q3 or Q4 probably. I think once we have the entire Madonna tour cycle wrapped up, the U2 won't be wrapped by then but it will be in full motion. JZ will be in; hopefully Shakira will be staring to go out. So I think by the end of the year we'll be able to talk about how those bands did not only from a touring but a sponsorship, accessory sales and all of the pieces of how they all added up against our investment.

So we'll definitely, although not segment them out because we want them to be considered just part of our continued core touring strategy, but we will definitely provide investors that update.

David Kestenbaum – Morgan Joseph

I'm sure you've heard cable vision talked about closing the garden for some parts of the year for the next four years and that's certain sections. I know New York is an important market for North American business. Can you talk about what impact that could have?

Michael Rapino

MSG is the greatest venue in the world. Every band wants to play it. We love working with those guys, but like every other city there is always a venue down the street. So we have the Jones Beach which we focus on in our summer and as you know living in New York, there's a whole bunch of excess arenas now looking for dates every day of the week.

So at the end of the day, a bank likes to play MSG but if it's not open and they have to play Jersey, they're fine with that.


Your next question comes from [Steven Pfeiffer – Wells Capital Management]

[Steven Pfeiffer – Wells Capital Management]

I have some questions about the status of Live Nations ticketing efforts on the year and this part of what new business you're soliciting as part of the upcoming merger. As I understand it you're basically just doing ticketing for your own venues but not soliciting other outside venues, is that correct?

Michael Rapino


[Steven Pfeiffer – Wells Capital Management]

Is that under the planned business model going forward even after the merger?

Michael Rapino

No. We've been talking well before we announced this merger that the most important thing to do in 2009 was to execute against our inventory. We are the scale of our inventory is a big challenge. So we didn't have the capability and the resources to be chasing other people's businesses this year so our plan always was in 2009, let's make sure we can do the best job executing our inventory and by the end of the year as we can prove out to others that we know how to do it, our model works. This website works. Our platform works. Then we would look at third party business at that point.

[Steven Pfeiffer – Wells Capital Management]

And is that still the plan after the merger, to still have that happen?

Michael Rapino


[Steven Pfeiffer – Wells Capital Management]

Is there any sort of official contracted agreement with Ticketmaster to not do that or is that simply your own business strategy.

Michael Rapino

That was our business strategy well before the merger announcement. Merger or not we wouldn't be chasing new buildings this month. We've got a big summer season and selling our tickets and our amphitheater and maximizing every ticket sale we can is our number execution strategy right now.

[Steven Pfeiffer – Wells Capital Management]

So basically you're just going to show hey everyone look how we did it our own way in 2009 and 2010 you're going to go elsewhere to sell your opportunities. How is that going to work going forward when you're going to be competing basically one side of the house versus the other side of the house in 2010?

Michael Rapino

I'm going to leave all that merger stuff for another call because it's premature at this point on how the two will work together on a public basis. But we'll leave those for another call when we can get into that.


There are no further questions at this time. I would now like to turn the conference back to management.

Michael Rapino

Thank you everybody.

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