Live Nation finished the year with a loss of $158 million, which included $5.5 million in cost related to the departure of Live Nation Chairman Irving Azoff.
The loss was nearly double last year’s operating loss of $83 million, and CEO Michael Rapino said he is optimistic about the promoter's future as concert ticket sales inch back up.
In a conference call with investors explaining Live Nation’s end-of- the year financial results, Rapino said overall revenues at the company were up 8 percent which “demonstrate the strength of our platform and the resilience of the live entertainment business.”
The exit of former chairman Azoff included 26 employees from the company’s Artist Nation division and 12 artists managed by the group. Live Nation’s financial filings with the SEC said that without the one-time costs for the exit, the company’s overall loss would have improved 13 percent over the prior year.
“These costs were a mix of severance and writing off contracts that run through 2013,” said COO Joe Berchtold on the investor call. “Second, we had a no payout (clause), which was an acceleration of payments that would have otherwise been made through 2013 that increased expense by $5.2 million.”
Berchtold also said the loss to future revenue to the company was estimated at $63 million based on the value of the artists' contracts lost in the move. Live Nation bought the final 25 percent of Azoff’s management company Frontline in 2011 and Berchtold said projections are still rosy for the remaining artists on the roster — “we continue to expect a return on this investment above our cost of capital due in part to the tax shield benefits.”
Live Nation will continue to operate Artist Nation as its main management and merchandising arm, said Berchtold. The company enters its ninth consecutive year ending in a loss, but Rapino said his long-term strategy is to roll out more events, increase ticket sales and convert more fans into repeat buyers. Practically all of the company's consumer-facing revenue streams were up in 2012:
- Live Nation’s shed business had a 15 percent concert ticket sales increase for North America, with total number of events up 12 percent. Berchtold noted that newer artists are driving much of the growth — half the artists who toured in 2012 had their first hit after the year 2000.
- Acquisitions helped the company grow its global festival business. Total attendance for 2012 was approximately 3.5 million, a 30-percent increase compared to 2011. The purchase of L.A.-based HARD Events helped Live Nation double its attendance for EDM events to 1.4 million.
- Ticket sales for Live Nation’s 2011 merger partner Ticketmaster were up 5 percent and the company maintained a strong renewal rate, offsetting some losses to the rollout of AEG’s AXS Tickets with new clients. In August, Ticketmaster announced plans for a league-wide deal for the National Basketball Association that included a resale platform.
- Sales for 2013 are up over this same time last year. As of Dec. 31, Live Nation concert ticket sales for 2013 events were up by 3.5 million tickets, with a 36-percent increase in North America.
Rapino said the company’s European division did see a 15-percent drop in average attendance after the company boosted the number of shows on the continent in 2013. Things appear to be on the mend for 2013 — European ticket sales are up 80 percent over the same time last year thanks in part to upcoming tours by Rihanna and Bruce Springsteen. Sponsorship and advertising income were up nine percent while Artist Nation’s management division was down 20 percent.
Sounding bullish on the economy back home, Rapino said, “The U.S. is starting to bounce back,” noting that fan return rates are continuing to improve with 90 percent of live music consumers attending more than one concert a year.
The focus for 2013 is increasing conversion rates on upsells that improve the fan experience and increase overall individual concert attendance, the CEO said. Rapino rolled out a series of initiatives in 2012 to boost conversions that included shifting more ad spending into digital media and launching several new products including a major upgrade to Ticketmaster due out in 2014.
Contact: (310) 975-6860