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| LYV > SEC Filings for LYV > Form 10-Q on 6-Aug-2009 | All Recent SEC Filings |
6-Aug-2009
Quarterly Report
"Live Nation" (which may be referred to as "we," "us" or "our") means Live Nation, Inc. and its subsidiaries, or one of our segments or subsidiaries, as the context requires. You should read the following discussion of our financial condition and results of operations together with the unaudited consolidated financial statements and notes to the financial statements included elsewhere in this quarterly report.
Certain statements contained in this quarterly report (or otherwise made by us or on our behalf from time to time in other reports, filings with the Securities and Exchange Commission, or the SEC, news releases, conferences, internet postings or otherwise) that are not statements of historical fact constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, notwithstanding that such statements are not specifically identified. Forward-looking statements include, but are not limited to, statements about our financial position, business strategy, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition, our pending merger with Ticketmaster Entertainment, Inc., the effects of future legislation or regulations and plans and objectives of our management for future operations. We have based our forward-looking statements on our beliefs and assumptions based on information available to us at the time the statements are made. Use of the words "may," "should," "continue," "plan," "potential," "anticipate," "believe," "estimate," "expect," "intend," "outlook," "could," "target," "project," "seek," "predict," or variations of such words and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those set forth under Item 1A.-Risk Factors in our 2008 Form 10-K, as amended and as updated by our Current Report on Form 8-K filed with the SEC on May 28, 2009, as well as other factors described herein or in our annual, quarterly and other reports we file with the SEC (collectively, "cautionary statements"). Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. We do not intend to update these forward-looking statements, except as required by applicable law.
Executive Overview
Our mission is to maximize the results generated by the live concert experience, driven by connecting to our artists, fans and sponsors. The highlights for each of our segments for the second quarter of 2009 were:
North American Music
• In North American Music, we are continuing to see the impact of our 2009 plan to reduce our less profitable events, thereby lowering our overall show count. This is reflected in the drop in the number of shows by 297 to a total of 2,360 events, with only a 53,000 drop in total attendance as attendance per event increased by 12%.
• We continue to focus on our key profit drivers from our shows. In the second quarter, as compared to the same period in the prior year, these results include:
• a 3.5% increase in ancillary revenue per fan at our owned and/or operated amphitheaters to $18.28 per person; and
• a 13% decrease in the average operating costs per attendee and a 20% decrease in the average marketing costs per attendee at all of our promoted events during the period resulting primarily from our cost-saving initiatives.
• We successfully launched a new program to help our fans buy tickets to our events through our 'No Service Fee Wednesday' promotion. Through this program, we have sold nearly 500,000 tickets to our shows in the second quarter. We believe that this program helps to sell a portion of what are otherwise unsold seats for events.
International Music
• International Music continues to show strong promotion activity. Events increased 33% over the second quarter of 2008 to a total of 1,264 promoted events.
• Festivals performed well in the second quarter, including the U.K. Download and Hard Rock Calling festivals, which experienced an increase in attendees as well as growth in food and beverage per attendee largely as a result of new concession agreements. We had three fewer festivals in the second quarter of 2009 as compared to last year, but total attendance at our festivals was only down 1%.
• We added to our international footprint through an exclusive promotion agreement with BIG Concerts International in South Africa.
Ticketing
• In December 2008, we launched our new ticketing platform to sell tickets to events at most of our owned and/or operated venues in North America. We also began selling tickets in some international cities in October 2008 through CTS Eventim.
• Since the beginning of 2009, we have sold 7.6 million tickets globally, including 4.3 million tickets sold in the second quarter of 2009 (excluding an additional 1.4 million tickets sold at the box offices directly for which Ticketing does not earn any service charges). Although we are currently selling tickets for events in future quarters, the ticket service charges are recognized as revenue only upon completion of the event.
• In June 2009, our LiveNation.com network was ranked 7th by Nielsen NetView among the most-visited domestic music websites, with 4.3 million unique visitors in the month.
Other Information
• As of June 30, 2009, we have 576 local, national and international corporate sponsors. Some of our new sponsorship arrangements in the second quarter of 2009 include Barclaycard, Microsoft IE8 and Comcast. Sponsorship revenue was flat in the second quarter of 2009 as compared to last year, at $45.1 million for the quarter.
• We continue the process of seeking regulatory approval for our pending merger with Ticketmaster Entertainment, Inc., which we announced in February 2009. We currently expect that this transaction will be completed in the fourth quarter of 2009.
Our Separation from Clear Channel
We were formed through acquisitions of various entertainment businesses and assets by our predecessors. On August 1, 2000, Clear Channel Communications, Inc., or Clear Channel, acquired our entertainment business. On August 2, 2005, we were incorporated in our current form as a Delaware corporation to own substantially all of the entertainment business of Clear Channel. On December 21, 2005, the separation of the business previously conducted by Clear Channel's live entertainment segment and sports representation business and the distribution by Clear Channel of all of our common stock to its shareholders was completed in a tax free spin-off. Following our separation from Clear Channel, we became a separate publicly traded company on the New York Stock Exchange trading under the symbol "LYV".
Segment Overview
Our reportable segments are North American Music, International Music and Ticketing. In addition, we have United Kingdom theatrical venue operations and other businesses which are included under other operations. Prior to 2009, we reported an Artist Nation segment, which is now reported in the North American Music and International Music segments. This change has been made to be consistent with the way we are now managing the business. Our business formerly reported as Artist Nation includes the promotion and/or production of global tours and also provides other services to artists. These artist relationships tend to be long-term and typically involve multiple revenue streams for an artist. We enter into these relationships in order to fill the distribution platform of our businesses with recurring events, both domestically and internationally. This is not a separate part of these businesses but rather is just one more facet of our North American Music and International Music segments. Therefore, we are now allocating these activities based on where the profits for services to these artists are being generated.
The segment results for all periods presented have been reclassified to conform to the current year presentation.
North American Music
Our North American Music segment principally involves the promotion of live music events in our owned and/or operated venues and in rented third-party venues and the operation and management of music venues primarily in the United States and Canada, as well as providing various services to artists. While our North American Music segment operates year-
round, we experience higher revenue during the second and third quarters due to the seasonal nature of shows at our outdoor amphitheaters, which primarily occur May through September.
To judge the health of our North American Music segment, we primarily monitor the number of confirmed events in our network of owned and/or operated and third-party venues, talent fees, average paid attendance, total revenue per fan and advance ticket sales. In addition, at our owned and/or operated venues, we monitor attendance, ancillary revenue per fan, premium seat sales and corporate sponsorship sales.
International Music
Our International Music segment principally involves the promotion of live music events in our owned and/or operated venues and in rented third-party venues, the operation and management of music venues and the production of music festivals outside of North America. While our International Music segment operates year-round, we experience higher revenue during the second and third quarters due to the seasonal nature of our international festivals, which primarily occur June through August.
To judge the health of our International Music segment, we primarily monitor the number of confirmed events in our network of owned and/or operated and third-party venues, talent fees, average paid attendance and advance ticket sales. In addition, at our owned and/or operated venues, we monitor attendance and ancillary revenue per fan. Because this business is conducted in foreign markets, we look at the operating results from our foreign operations on a constant dollar basis.
Ticketing
Our Ticketing segment manages our digital platform and the new Live Nation ticketing platform which was launched in December 2008. This segment is involved in managing our internal ticketing operations and online distribution activities, including the ongoing enhancement of our primary website, www.livenation.com, and our information technology operations.
To judge the health of our Ticketing segment, we primarily review the number of tickets sold through our ticketing operations, the percentage of visitors to our website that buy tickets, the number of unique visitors to our websites and the overall number of customers in our database.
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