Live Nation Entertainment, Inc. (LYV)

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Live Nation, Inc. (LYV)

Q4 2008 Earnings Call

March 2, 2009 5:00 pm ET

Executives

Michael Rapino – President, Chief Executive Officer & Director

Kathy Willard – Chief Financial Officer & Executive Vice President

Analysts

David C. Joyce – Miller Tabak & Co., LLC

Mark D. Wienkes – The Goldman Sachs Group, LLC

Benjamin Mogil – Thomas Weisel Partners, LLC

Tuna Amobi – Standard and Poor’s

Alan S. Gould – Nataxis Bleichroeder, Inc.

David B. Kestenbaum – Morgan Joseph & Co., Inc.

Presentation

Operator

My name is Maggie and I will be your conference facilitator today. At this time I would like to welcome everyone to the Live Nation fourth quarter and full year 2008 earnings conference call. All lives have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question and answer period. (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 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 measure in the earnings release on their website. The release, reconciliations and other financial or statistical information can be discussed on this call can be found on www.LiveNation.com/investors.

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

Michael Rapino

Welcome to our 2008 fourth quarter and yearend conference call. I am joined by my CFO Kathy Willard. Our operating and financial performance in the fourth quarter of 2008 capped an outstanding year for Live Nation. We successfully executed on our strategic plan and generated improved results across the majority of the metrics used to evaluate our operating and financial progress.

Highlights of the fourth quarter include our total fourth quarter adjusted operating income was $28.4 million which was ahead of expectations. For the full year period we delivered 20% growth and adjusted operating income. We believe this performance is well ahead of all of our peers. We grew the number of shows we produce by 33% in the fourth quarter and increased total attendance by over 14% during the same period. We also increased total sponsorship revenue by nearly 14% during the quarter while average revenue per sponsor increased by nearly 15% for the year. Excluding the impact of the goodwill impairment charge our North American Music operating income nearly tripled to $43 million for the full year.

Overall, we believe these results are outstanding given the severe global economic downturn. Millions of fans have continued to attend live concerts to support their favorite artist despite the challenging times. This trend has continued in to the current quarter as ticket sales are pacing in line with last year. Artists continue to rely on touring as a primary driver of their income and we believe our pipe will match the levels we achieved in 2008.

As a sampling of the super stars touring in 2009 include Cold Play, Jonas Brothers, Madonna, Nickelback and ACDC, just to name a few of the many artists who will perform in 2009. 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.

Let me briefly update you on the execution in 2008. Growing our core business model has two labors: filling our pipe; and monetizing the pipe. On our first strategic imperative of filling our pipe we continued to fill our distribution pipe by buying artist rights more effectively and at the right price securing both near and long term revenue streams while minimizing our risk. We promoted almost 7,000 events with over 13 million attendees during the fourth quarter compared to 5,200 events with nearly 12 million attendees a year ago, an increase of approximately 14% in attendance and 33% in events.

For the full year we promoted over 22,000 events with over 52 million attendees compared to 17,000 events and 46 million attendees in 2007 an increase of 12% in attendance and 32% in events. We continue to add ancillary rights in order to provide our artists a broader array of services and expand our exposure to higher margin revenue streams. We have secured approximately 850 ancillary rights in 2008.

Madonna’s tour concluded on December 21st and was hugely successful exceeding our forecast model. Upon its conclusion the tour became the number one largest grossing tour in history by a solo artist and with 58 shows in Europe, North America and South America generated over $280 million in ticket sales. In January, Madonna announced that she’s extending her tour and going back on the road beginning July 4th in London. This is the first time that Madonna has ever extended her tour which speaks to the remarkable demand worldwide. Madonna will be visiting 22 markets overall in 2009 leg of which is already sold out.

Monetizing the pipe; so there’s no doubt we succeeded in filing the pipe in 2008 and we expect to do the same in 2009. Here’s an update on how we grew and monetized the pipe. Our first strategy is always to expand the pipe. In 2008 we extended our geographic footprint by entering Latin America through an exclusive distribution deal with CIE. We entered the market of Dubai through the acquisition of Mirage. In addition we expanded our venue platform by acquiring the Heineken musical in Amsterdam, opened our new House of Blues in Houston and finishing our expansion of the highly successful Point in Dublin which is now reopened. In February of this year the House of Blues in Boston opened.

Read the rest of this transcript for free on seekingalpha.com