Live Nation Entertainment, Inc. (LYV)

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Live Nation Entertainment (LYV)

Q4 2012 Earnings Call

February 26, 2013 5:00 pm ET


Michael Rapino - Chief Executive Officer, President, Director and Member of Executive Committee

Joe Berchtold - Chief Operating Officer

Elizabeth Katheleen Willard - Chief Financial Officer and Executive Vice President


Benjamin E. Mogil - Stifel, Nicolaus & Co., Inc., Research Division

Martin Pyykkonen - Wedge Partners Corporation

Douglas M. Arthur - Evercore Partners Inc., Research Division



Good afternoon. My name is Carrie, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Live Nation Entertainment Fourth Quarter and Full Year 2012 Earnings Conference Call. Today's conference is being recorded. [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 risk and uncertainties that could cause actual results to differ, including statements relating to the company's anticipated financial performance, business prospects, new developments and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on Forms 10-K, 10-Q and 8-K for a description of risks and uncertainties that could impact the actual results.

Live Nation will also refer to some non-GAAP measures on this call. In accordance with SEC Regulation G, Live Nation has provided a full reconciliation for the most comparable GAAP measures in their earnings release. 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 Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead.

Michael Rapino

Good afternoon, and welcome to our fourth quarter and full year 2012 conference call. I am joined today by Joe Berchtold, our COO; and Kathy Willard, our CFO. Let me start with overall 2012 financial performance.

We delivered revenue and AOI growth across our 3 core businesses of Concerts, Sponsorship and Ticketing. For the company, revenue grew 8%, AOI was up 5% and free cash flow increased 36% for the year. Underlining the solid financial performance is growth in ticket sales and market share in both Concerts and Ticketing businesses with global ticket sales for the year up 4% for Concerts and 5% at Ticketmaster.

Our success in 2012 following our growth in 2011 is demonstrating the strength of our live entertainment platform and the resilience of the live business. On a global basis, the industry grew and North America has bounced back from the economic slowdown of a few years ago. We continue to see strong fan demand and growth last year across concerts, sporting and family events, and our market research showing that 90% of fans who attended one of these events last year plan on going to the same or more events this year. From both our results and what the fans are saying, live events continue to show they are inherently non-duplicatable, in high demand and globally transferable.

Our business model is based on maximizing ticket sales in the broader ecosystem around the live event. We grow the business by increasing our Ticketing market share and driving these adjacent businesses. As a result, we continue to see 2 core growth opportunities, increasing our 400 million ticket base, which drives our entire vertical economics. We've already have shown strong market positions in North America and Europe and have shown over the past 2 years our ability to continue to grow market share in these markets. And we see further high-growth opportunities and incremental ticket sales in EDM and festivals, secondary ticket and emerging markets, 3 areas we will continue to focus on.

The second key to building on our more than 400 million ticketing base is increasing conversion. We've talked before about the 30% of fans that miss the show because they didn't hear about it and the number of tickets that go unsold for most shows. The increase in conversion is the most direct return on our business. Adding one more ticket sale to the 200,000 events across Ticketmaster and Live Nation drops right to our bottom line.

As we indicated last fall, we've aligned our business against 5 initiatives to deliver on these core opportunities of increasing market share and conversion. Our first objective is -- has been to grow market share in Concerts and Ticketing by 5 million tickets, through new organic events, global expansion and higher per-event conversion. Second goal is to drive Ticketing conversion per event by shifting our advertising from traditional to more efficient social and digital. Third, we want to grow our market share in secondary, and we will achieve this through our new online mobile product launch this year. Our fourth initiative is to continue to grow our advertising base through higher audience and CPMs. And finally, reduce our ticketing costs by transitioning 400 million tickets on to our updated Ticketing platform starting in 2014.

In 2012, we delivered on both market share and conversions objectives. And in 2013, after 2 years of investment in new technology, we will launch new products in the marketplace that will excel these results, and I am confident we're on track to deliver our 3-year plan and I'm reaffirming our guidance of 30% to 35% AOI growth by 2015.

I'll now turn this over to Joe Berchtold, our COO, to take you through the performance of each of these initiatives across our business segments and our outlook for 2013.

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