Live Nation's first quarter earnings call reflects a company that is still very much in transition. The focus over the first quarter has been in reducing wasteful spending, hiring appropriate staff for the venues, and putting the necessary maintenance into the venues for the busy quarters ahead. This period has been referred to as Phase 1 of Live Nation's strategic plan.
In today's call, CEO Michael Rapino outlined the companies 3 divisions/priorities which are:
1) Events - promoting and producing events
2) Venue Management
3) Digital/ Brand Initiatives - boosting the company's online presence towards more effective marketing and advertising
On the events side, the company reported an increase in profits and believes that profits will be even greater for the next two quarters. Live Nation CFO, Alan Ridgeway, stated that the first quarter is "the quietest quarter" due to weaker content and the fact that they are not able to use many Live Nation-owned venues (which are primarily ampitheatres) in those first 3 chilly months. Revenue will ramp up as the summer season rolls out with concerts by Madonna, Jimmy Buffett, Kelly Clarkson, and many other big ticket acts.
Venues, which are the company's biggest source of revenue, had a 4% increase up from 1Q05 to $48million, primarily due to the acquisition of majority stake in Mean Fiddler (the largest promoters in UK). Moving forward, venues should show an even more impressive increase in profits with big name acts rolling through this summer and early fall. Additionally, Live Nation is rolling out many enticing new test products and services during this season including more diverse food offering, wired venues, value priced meals, "aggressive sales of beer, soda, water" (yikes!), and a global staff newly trained in customer service (a company first!). Rapino also noted that they have relinquished all of their interest in Planet Hollywood Las Vegas as well as interest in the touring productions of Phantom of the Opera and Cirque du Soleil's Delirium. These divestments have freed Live Nation to make investments in more fruitful areas.
With regard to the digital/brand initiatives, the company is working to poise itself as a more visible and trustworthy brand. While the company has an exclusive deal wherein Ticketmaster sells 100% of the tickets to Live Nation events, the company has increasingly been using their site as the storefront for the sales. The deal with Ticketmaster is due to expire in 2008, at which point Live Nation will have to sit down and have a "long discussion" (Rapino's words) with Ticketmaster. Whether Live Nation will jump into the ticket selling arena remains to be seen.
Rapino reported that he is very pleased with the progress the company has made in only four months; and he continued to stress that the hope is that Live Nation can build a relationship with the customer "beyond a 2 hour event".
A link to the recording of the call can be found here.
Friday, May 05, 2006
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