Live Nation says concerts business is stabilized
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The live music business, which last year faced a crisis of audience apathy that resulted in empty seats and canceled engagements, has stabilized this year and is expected to remain healthy into 2012, said Michael Rapino, chief executive of Live Nation Entertainment Inc., the nation’s largest concert promoter and ticketing company.
“Live events are a strong … consumer proposition, despite the tough economic times,” Rapino told analysts during a discussion of the company’s third-quarter results Thursday.
The renewed vitality of the concerts business is good news for Beverly Hills-based Live Nation, which derives most of its revenue from promoting live events and selling tickets.
Last year, the company posted a $228.4-million loss as the tight economy discouraged people from venturing out to costly shows. Compounding that was a surfeit of high-priced amphitheater concerts, like those featuring Rihanna and the Eagles, which audiences shunned in favor of newer and smaller arenas with more amenities.
This year, Live Nation and other promoters have scaled back the number of shows, lowered prices for concerts in amphitheaters and trimmed ticketing fees.
The strategy appears to have paid off so far. Although revenue was down 2.5% to $1.79 billion in the quarter ended Sept. 30, net income improved 1.4% to $51.7 million. More significantly, net income for the first nine months of the year rose to a $16.5-million profit, reversing a $104-million loss for the same period last year.
Live Nation’s adjusted operating income, which excludes acquisition and other expenses, was $203.6 million for the quarter, narrowly beating analysts’ expectations of $202 million.
“They clearly selected more profitable concerts this year,” said David Joyce, an analyst with Miller Tabak & Co. in New York. “This demonstrates that, in good times or bad, people still go to at least one concert a year.”
For the fourth quarter, Live Nation said the NBA lockout could affect the estimated 700,000 pro basketball tickets it sells through its Ticketmaster business. A $10-million drop in revenue could result if the impasse between players and team owners ends in the cancellation of all games for the year.
Looking ahead, Rapino said in a statement, “we believe the stabilization of consumer demand for live events will continue into 2012.”
Still, the entertainment giant is looking to grow its business by finding ways to reach ‘casual’ fans. This year it set up an online discount service with Groupon to sell surplus tickets. It has also started to roll out ticketing kiosks at Wal-Mart stores. Collectively, the initiatives have sold a combined 1.5 million tickets through Sept. 30, Rapino said.
Live Nation shares rose 20 cents, or 2.1%, to $9.57 on Thursday.
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-- Alex Pham