Live Nation Entertainment, Inc. (LYV)

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Live Nation Inc. (LYV)

Q1 2009 Earnings Call

May 7, 2009 5:00 pm ET

Executives

Michael Rapino – Chief Executive Officer

Elizabeth Willard – Chief Financial Officer

Analysts

David Joyce – Miller Tabak

Ben Mogil – Thomas Weisel Partners

Alan Gould – Natixis

David Kestenbaum – Morgan Joseph

[Steven Pfeiffer – Wells Capital Management]

Presentation

Operator

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 www.livenation.com/investors.

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%.

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