LIVE NATION EYES A STRONG 2021

Instead of emphasizing numbers with investors, under the present circumstances, Live Nation President/CEO Michael Rapino used his quarterly report to talk about recent moves and the future.

Rapino said Live Nation’s top priority in Q2 has been strengthening its financial position to ensure that the company has the liquidity and flexibility to get through an extended period with no live events. The company predicts that live events will return at scale in the summer of 2021, with ticket sales ramping up in the quarters leading up to these shows.

“We’re playing long on this one,” Rapino said on a conference call with analysts. “”You’re going to see a creative boon. A lot artists are calling to ask ‘when will it be safe to go back out? I’ve got new music.’ Regardless of the quarter, whether it’s ’21 or ’22, these will be record years. [Artists’ need touring] economically and they’re powered by a creative backlog.”

Encouraged by efforts to develop vaccines and treatments for COVID-19, Live Nation President Joe Berchtold said he believes Live Nation will be able to start selling tickets by the end of the year to newly booked summer 2021 shows.

“This is a place where our management of a large number of buildings comes to our advantage—we can manage the [safety and health] process faster than we would otherwise,” he said. Rapino expects a “high utilization of amphitheaters” next year between new tours and rescheduled ones.

The key is being safe, Rapino noted: “We won’t be doing DJ sets in the Hamptons anytime soon.”

In multiple instances, Rapino and Berchtold referenced one stat: 86% of all ticketholders have held onto their tickets for rescheduled 2021 shows after being given the option of a refund. In addition, two-thirds of fans are keeping tickets for canceled festivals to next year’s show. In addition, festivals in the U.K. next summer, Download and Isle of Wight for example, are pacing ahead of 2020 sales.

One other advantage, Rapino noted, was that any shows booked for 2020 that weren’t selling well have been canceled, leaving next year’s schedule filled with shows that were “selling well and high demand.”

In terms of numbers, Live Nation targeted cost cuts of more than $800m and reduced cash usage by $1.4b in Q2. Between 4/1 and 6/30, the promoter staged 24 concerts in North America, compared to 7,213 in the same period a year earlier, due to the pandemic.

The company had total cash and cash equivalents of $3.3b, which includes $1.8b of free cash as of 6/30. The company also has $966m of available debt capacity. The estimated gross burn rate has been reduced to $185m per month.

In the second quarter, Live Nation’s only income was $141.8m in concert revenue and $18.4m in sponsorships and advertising. Ticketmaster refunded $110m in service fees.

While Rapino said the company would be looking at new products and services without giving any details, he did note that virtual concerts would be sticking around. More than 18,000 virtual concerts from Live Nation were viewed 67m times in Q2.

Rapino reports, “we are seeing the potential for livestreaming to become an additional long-term component of our concert business, allowing fans in other cities, or those who can’t attend, to enjoy the concert as well.”