As a seasoned gamer and concert-goer with memories of waiting hours for tickets to sell out, I can’t help but feel a mix of anticipation and apprehension regarding the ongoing Live Nation saga. With every new development, it feels like we’re on a never-ending quest for that elusive perfect ticket.
In the face of a Department of Justice lawsuit aiming to dismantle it, Live Nation’s Chief Financial Officer, Joe Berchtold, remains hopeful regarding the legal proceedings and the company’s business prospects
Berchtold expressed his confidence that we’re going to succeed at a Bank of America conference on Wednesday. He doesn’t foresee significant changes in our operational methods during this process. However, he acknowledged that there are certain political factors beyond our control, so we’ll simply focus on strengthening each of our businesses as best as we can while navigating through the Department of Justice review
He noted that there’s ongoing dialogue with the Department of Justice, but it’s more like a back-and-forth. Next year looks like a time for fact-finding and witness statements, and if no settlement is reached before then, the trial will likely start in early 2026
A legal action initiated in May by the DOJ along with 39 states and the District of Columbia claims that Live Nation has exploited its status as the leading concert promoter, ticket vendor (following its acquisition of Ticketmaster), and venue owner to suppress competition. The lawsuit proposes a separation between Ticketmaster and Live Nation, in addition to other corrective measures
Inquired about the significance of Ticketmaster within Live Nation’s business structure, Berchtold described it as a “convenient addition,” yet emphasized that the company operates its two ventures independently
“He stated that it’s a thoughtful gesture. In our view, this helps us potentially make greater profits from organizing the concert, considering the risks involved, which we consider to be fair.”
In spite of an ongoing legal dispute, Bank of America began covering Live Nation Entertainment on Wednesday with a ‘buy’ recommendation and a 12-month target price of $125. They based this decision on the trend of consumers spending more on experiences, persisting demand for live events and artists, and increasing sponsorship opportunities, among other points. The report also mentioned that any potential company split is already factored into the stock’s current trading value, which hovers around $95
According to our analysis, the possibility of the company splitting appears to be largely factored in. We think that Ticketmaster alone might trade at around 12.5 times Adjusted Operating Income (AOI), while Live Nation on its own could fetch approximately 14x AOI. Although growth might slow down a bit, we still anticipate it to be strong for both companies if they were to separate, considering their sound fundamentals and numerous positive factors at play
At the conference held on Wednesday, Berchtold mentioned that so far, there’s been no indication of fans reducing their ticket purchases. In fact, he noted a consistent flow of artists eager to embark on tours, and even plans for growth on a worldwide scale
However, fans were recently grumbling about the troublesome experience of buying tickets for the Oasis tour reunion. Fans infamously had issues buying tickets to the Taylor Swift: Eras Tour in November 2023, which led to a Senate hearing and further scrutiny.
Berchtold didn’t mention Oasis directly, but suggested that the business should strive to enhance consumer satisfaction by becoming more open about pricing from the get-go and taking stronger measures against automated accounts (bots)
Berchtold expressed that they strongly advocate for artists having greater control over ticket distribution and resale, with improved communication and transparency being the foundation. He emphasized the importance of keeping fans informed about the event details and what to expect. In an ideal world, he’d love for everyone to have a front-row experience at a reasonable price, but that’s not feasible. So, he understands that Ticketmaster may face criticism when millions of people want tickets for a single event, leaving most disappointed. However, they can definitely work on refining some aspects to manage fan expectations better
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2024-09-04 20:11