Live Nation Entertainment, Inc. (LYV)

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Live Nation, Inc. (LYV)

Q2 2009 Earnings Call

August 6, 2009 5:00 pm ET

Executives

Michael Rapino – Chief Executive Officer

Kathy Willard – Chief Financial Officer

Analysts

Ben Mogil – Thomas Weisel Partners

David Kestenbaum – Morgan Joseph

Mark Wienkes – Goldman Sachs

David Joyce – Miller Tabak

Alan Gould – Natixis

Reed Walker – [Avascent Group]

Presentation

Operator

Welcome everyone to the Live Nation second 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. 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. Sir you may begin your conference.

Michael Rapino

Thank you. Good afternoon everyone and welcome to our 2009 second quarter conference call. I am joined today by our CFO, Kathy Willard.

Our second quarter results were largely in line with our internal expectations and despite the global economic downturn we are executing on strategy and remain on track to achieve our primary goals; generate growth from our core business and increase our adjusted operating income for the year.

We have entered into the third quarter, the most important period of the year representing 40% of our annual contribution margin. In comparison, Q1 and Q2 combined equal 40%. We are heading into Q3 with considerable momentum. Our deferred revenue from tickets sold to date for upcoming summer events and our in venue spending highlights the underlying strengths of our business going into our peak concert season. We are putting fans in seats and we are monetizing our platform.

As we discussed in our last call, we plan to generate growth in 2009 through three primary labors. First, we will grow international adjusted operating income through our 2008 investment in O2 Dublin, increased sponsorship and a strong stadium line up.

Second, we will increase per head spend on site in our North American amphitheaters with simplified menu selection, increased point of sale, focus on hawking and increasing attendance. Third, we will drive attendance in North America through aggressive fan focused promotions.

We also look to decrease show count in North America as we approach the tough economic times with a more disciplined risk/reward buying strategy. We are offsetting these increases by a slight decrease in sponsorship and a reduction in North American ticket sales. Given current trends and visibility into the third quarter we continue to believe that we will grow our adjusted operating income for the fourth straight year.

Let me give you an update on the four main drivers of our core business; ticket sales, on site revenue, sponsorship and e-commerce ticket fees. As far as ticket sales and concerts, ticket sales during the quarter experienced a decrease of 2.5%. Through June 2009 we sold 16.3 million tickets for events in June of this year. These sales exceeded our plan for that period by 1 million tickets. Across our global concerts we have sold 83% of our total planned tickets for the year as compared to 77% for the same time in 2008.

Concerts. We had expected the North American concerts to be down since we had increased concert activity last year. Our total number of global events was down 2% for the second quarter with international music up 19% and North American down 11%. Pollstar reported industry mid-year data showing total industry events were down 11.2% for six months so we are pacing ahead of the industry.

Overall, for the quarter our revenue per fan was $78.16 compared to $81.82 in the second quarter of last year. The drop of 4.5 is all because of declines in our revenue due to currency changes. On a constant currency basis our 2009 revenue per fan would have been $84.24, an increase of 3%.

Looking ahead, our concert pipeline is very active and we are pacing ahead of last year as indicated by the $894 million in deferred revenue on our balance sheet as of June 30th, a 14% increase over last year. We currently expect to end the year with international music ticket sales up around 6% year-over-year and North America is expected to decline by around 13%.

We have a strong line up for the third quarter including U2, Madonna, Jay-Z and Nickelback, all four of our 360 deal artists. U2’s current 360 tour is on track to sell 3 million tickets worldwide. Madonna extended her record breaking tour and by the end of the year we expect to sell another 1.2 million tickets. Nickelback has sold over one million tickets so far in 2009. In addition to that we have strong acts such as No Doubt. Phish, Blink 182, AC/DC, Cold Play, Depeche Mode, Tobey Keith, Rascal Flats, Kid Rock and Jonas Brothers among others.

Despite the economy the fans are coming out and we have seen a dramatic impact from our successful value priced ticket programs. In June we launched our no service fee Wednesdays to wide acclaim. Demand surged as reflected by our increased ticket sales. We have now sold over 600,000 tickets via these promotions this year. These sales represent an increase of 90% compared to historic Wednesday volumes. We believe our summer discount programs have shown a commitment to serving fans while expanding the recognition of Livenation.com.

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