Live Nation Takes 3Q Hit

Live Nation’s net income fell to $51.4 million or 30 cents per share, from $69.2 million or 78 cents per share from one year ago – a 25.6 percent drop in what should be the year’s busiest quarter – the company announced in a Nov. 4 earnings call.

It wasn’t entirely unexpected, though analysts had expected net income of 36 cents per share. Live Nation CEO Michael Rapino, CFO Kathy Willard and Executive Chairman Irving Azoff had lowered earnings expectations in previous calls and investor meetings.

Live Nation’s financial report showed that revenue still rose 2 percent to $1.84 billion from $1.79 billion from 2009. But if Ticketmaster’s revenue were added to last year’s total, combined revenue was down 14 percent from $2.14 billion.

While Willard stressed that despite the disappointing quarter, Live Nation is still “comfortably within debt convenants” despite debt soaring to almost $1.7 billion.

The results showed the impact of heavy discounting of summer shows. Live Nation said in a statement that it was taking steps to cut costs next year.

Concert attendance fell 16 percent to 16.4 million in the third quarter, and total ticket sold – including to non-concert events – fell 4 percent to 32.3 million.

During the earnings call, Rapino noted that attendance at live events was down across the board during 2010, with major events like NFL football, NASCAR and pro basketball all reporting lower attendance while consumers cut back on discretionary spending on “leisure entertainment.”

Rapino said the show count was up 3 percent during the summer, but the fans pulled back. The company will have to make up for the loss of attendance in the areas of ancillary revenues, e-commerce and sponsorships.

For what appears to be the first time, Live Nation made public its ancillary income per person above and beyond the ticket price at its amphitheatres – $17.53 per head.

Rapino noted that once a fan commits to buying the ticket and entering the building, money gets spent on beer and popcorn no matter how down the economy. “Once you get inside the restaurant, you’re still going to have the steak,” Rapino said.

Neither Rapino nor Azoff sounded particularly enthusiastic about 4Q 2010, with few top tier artists on the road through the end of the year.

Azoff noted, however, that prospects for early 2011 are good with early onsales for Neil Diamond, Eagles, Kid Rock and a “Glee” tour waiting in the wings.

There were a few nuggets of other news to be gleaned from the earnings call.

Expect next summer’s shed season to be all-in across the board, Rapino said. “We will absolutely go to an all-in ticketing model at all amphitheatres and wait for the rest of the industry to catch up,” he said.

Azoff announced that former chairman of the board Barry Diller has sold all his shares in the company, some 2.5 million, to supposed rival John Malone’s Liberty Media. Azoff also announced that Sugarland and manager Gail Gellman have joined the Front Line Management Group of companies.