Live Nation Entertainment, Inc. (LYV)

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Live Nation Entertainment (LYV)

Q1 2013 Earnings Call

May 07, 2013 5:00 pm ET

Executives

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

Analysts

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

John M. Healy - Northcoast Research

John Tinker - Maxim Group LLC, Research Division

Andrew Rittenberry

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

Presentation

Operator

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 First Quarter 2013 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, reconciliation 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 Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment.

Michael Rapino

Good afternoon, and welcome to our first quarter 2013 conference call. I'm joined today by Joe Berchtold, our COO; and Kathy Willard, our CFO. Let me start with a review of the first quarter. And I'm pleased that we delivered overall growth, with revenue up 6% and AOI up 10%, led by Concerts and Sponsorship double-digit growth year-on-year, in both revenue and AOI. We continue to see strong global demand for live events driving this growth, and giving us confidence that we'll have another strong year in 2013.

Through April, global ticket sales at Ticketmaster for events in 2013 were up 8%, with the Concerts segment up 18%. Our Live Nation Concert ticket sales were up 26%, outpacing the market, indicating we are continuing to build market share in Concerts.

On our last call, I outlined our 5 strategic drivers that will lead us to our 2015 AOI and cash targets. First, we will grow market shares in Concerts and Ticketing by 5 million tickets through new events, global expansion and higher per event conversion. With Concert tickets year-to-date up double digits, I expect that we will deliver over 1/2 of this growth in 2013 alone. It makes me highly confident we can deliver this target by 2015.

Second, we will drive event awareness and ticketing conversion by shifting advertising spend to more direct and efficient social and digital channels. This year, all of Live Nation's national tours are utilizing digital and social media. And through April, we almost doubled the share of spend in these channels to 20% of our total marketing spend. And we see this as a contributing factor to our double-digit growth in attendance per show in the first quarter.

Third, we will continue to deliver rapid growth in our Sponsorship & Advertising business through 2015. With 15% growth in Sponsorship AOI during the first quarter, we continue to distinguish our platform as the most effective way to connect brands with music trends.

Fourth, we will grow our market share in the secondary business. We are off to a strong start this year with our NFL, NBA and NHL secondary partnerships, with our gross transaction value through April up over 20% from last year. I expect this to accelerate further once we launch our Ticketmaster Plus, our new integrated inventory product this summer.

And fifth, we will reduce ticketing cost through our reap platforming project. We expect the project to be more than 75% complete by the end of 2013, with cost savings starting to be realized in 2014 and continue on plan to save $0.35 a ticket in North America from the project. Our first quarter results and ticket sales for 2013 events give me confidence in our ability to deliver 2013 AOI revenue and cash flow as expected with our 3-year plan.

I will now turn the call over to Joe Berchtold, our COO, who will take you through a divisional update.

Joe Berchtold

Thanks, Michael. First, on Concerts, Live Nation's Concerts revenue for the first quarter was up 14% and AOI improved by almost 50% versus 2012. The first quarter performance was driven by a 12% increase in global attendance, and in North America attendance was up 16% with a 33% increase in arena shows led by sellout tours with Lady Gaga, Rihanna and Maroon 5.

Internationally, attendance was up 7% with particular strength coming out of Australia, with Red Hot Chili Peppers and Cirque du Soleil and Girls Aloud in Europe.

Looking at our Concert ticket sales for all 2013 shows, we were up 22% year-on-year as of the end of the first quarter, with consistent growth in both North America and our international markets. We had 7 artists sell over 500,000 tickets each for our tours so far this year: Pink, Rihanna, Maroon 5, Jason Aldean, Luke Bryan, Bruce Springsteen and One Direction. And given this strong early start, we expect attendance at our Concerts to be up mid to high single-digits for the full year.

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