Live Nation Entertainment, Inc. (LYV)

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Live Nation Inc. (LYV)

Q3 2008 Earnings Call

November 6, 2008 5:00 pm ET


Michael Rapino – President and Chief Executive Officer

Elizabeth K. Willard – Executive Vice President and Chief Financial Officer


David Joyce – Miller Tabak and Company

Alan Gould – Natixis

Jim Boyle – CL King

David Kasbaum – Morgan Joseph

Steven Pfeiffer – Wells Capital Management

Mark Wienkes – Goldman Sachs

[Robert Burns] – [Pace Advisory]

Tuna Amobi – Standard & Poor Equity Group



(Operator Instructions) At this time I would like to welcome everyone to the Live Nation Third Quarter 2008 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer period.

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 risk 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 could impact the actual results. Live Nation will also refer to some non-GAAP measures in this call. In accordance with the SEC Regulation G, Live Nation has provided a full reconciliation for the most comparable GAAP measures in the earnings release on their website.

The release reconciliations and other financials or statistical information to be served on this call can be found on under the About Us section. 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 2008 Third Quarter Conference Call. On today’s call I’ll provide a summary of Live Nations strategic progress. Kathy Willard our CFO will then provide an update related to the company’s financials.

We reported solid financial and operating results for the third quarter despite the global economic slow down. We executed on our strategic plan and delivered substantial progress across the majority of metrics used to evaluate our business.

We believe our performance was among one of the best in the global music industry. We continue to see improved fundamentals in our core business as a result of our laser focus on exiting non-core businesses and building excellence in execution in our core business.

Our performance in the third quarter supports this. Our revenue and adjusted operating income margins grew during the quarter and our highlights include: we produced over 4,800 concerts compared to 4,100 last year, representing a 17% increase, total attendance grew by 6% to over 17.5 million; total sponsorship revenue and average revenue per sponsor demonstrated strong growth during the quarter up 13% and 5% respectively.

North America music operating income increased 10 million over the year and total ancillary revenue per fan at our amphitheaters and also total revenue per fan were both compared to last year.

Live Nation’s mission is to maximize revenue generated by the live concert experience. Our business model is driven by monetizing our global distribution pipe. During the quarter was all about execution.

We continued to demonstrate tangible progress executed against our three strategic priorities: growing revenue and adjusted operating income in our core business; investing in developing our online ticketing platform for our 2009 launch; and strengthening our balance sheet through additional sale of non-core businesses.

And now I’ll update you on the three priorities. Growing our core business model has two key levers. The first lever is filling the pipe; the cost to acquire the live show. We continue to execute our strategy to fill our distribution pipe by a more effective buying of our artist’s rights at the optimal economic price and locking in both near and long term revenue streams while minimizing our risk.

During the quarter we were successful in that we acquired over 4800 live concerts versus 4100 which represents a 17% increase in show count. We’re looking at ancillary rights to the core live rights we’re acquiring to feed our artists service platform. We have close to over 800 ancillary rights that we acquired in the third quarter of 2008.

Our concert lineup is solid for the remainder of the year and 73% of our total expected North American music shows and 65% of international music shows were completed as of the end of September. Our remaining concert schedule includes the North American leg of Madonna’s current tour, and fall dates for Coldplay’s tour.

Demands for artist touring later in the year, including Coldplay, AC\DC, Elton John, and New Kids on the Block, remains robust. Madonna’s current tour started August 23rd in Europe and generated over all solid reviews, sellouts and added dates.

Ticket sales and fan demand for the tour have been strong around the globe. Tour highlights include the highest grossing sale of all time at Wembley Stadium, the largest audience ever for a music concert in Switzerland, an incredible fan interest in South America that has resulted in multiple dates in every market.

All in all Madonna’s tour has experienced a phenomenal global response and we continue to believe this tour will be Madonna’s biggest ever with the potential of grossing over $290 million in revenues versus $190 million from her 2006 tour.

The second lever of our business model is now monetizing the pipe. With our pipe full our job is to maximize our distribution pipe to generate strong returns. We generate strong returns in the pipe by executing five strategies.

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