Live Nation not so lively in Q4

Posted Mar 3rd 2009 8:20AM by Steven Mallas
Filed under: Earnings Reports, Apple Inc (AAPL), Amazon.com (AMZN)

Live Nation (NYSE: LYV), the big, famous concert promoter that counts Madonna as a member of its roster, reported dismal Q4 results on Monday after the bell. A huge write-down in goodwill related to a bad decline in market capitalization led to a loss per share of $4.33. That was many times more than the year-ago loss of 25 cents per share in the similar period. According to this source, Live Nation lost 89 cents per share on an adjusted basis. Wall Street was thinking that maybe the promoter would lose 22 cents per share. Quite the disparity there, eh?

Looking through the press release, I see that there's a lot going on in terms of acquisitions and adjustments. Overall, I came away less than thrilled with the business. I wasn't taken by the statement of cash flows, and I have to wonder how difficult it will be to close on the Ticketmaster (NASDAQ: TKTM) merger. There's talk of antitrust issues.

Live Nation has signed up a lot of talent in this era of digital downloads. As many pundits have observed, this isn't surprising. When you can buy single songs for cheap money from a platform like Apple's (NASDAQ: AAPL) iTunes or Amazon (NASDAQ: AMZN), you don't necessarily have a lot of incentive to buy a whole CD. Since artists can't make as much money on royalties derived from sales of physical media, they've become attracted to live shows as a way of keeping their income potential high. Live Nation has done a good job of assembling a portfolio of powerful talent by offering concert and merchandise deals. However, powerful talent comes at a price. For instance, Madonna's deal was worth over a $100 million. As we face the Great Recession, contracts like these may be risky. Douglas McIntyre commented last year on the risk of the Jay-Z bet.

I wouldn't enter a position in Live Nation. The stock is trading around $3 per share as of Monday's close, it didn't do much in the after-hours session after the Q4 report was issued, and I see no reason why anyone should argue with the market on this one. If you want to be a contrarian, be my guest. It won't be me....

Disclosure: I don't own any company mentioned; positions can change without notice.

Tags: AAPL, Amazon, AMZN, Apple, concert, douglas mcintyre, DouglasMcintyre, inthenews, jay-z, live nation, LiveNation, LYV, Madonna, music, ticketmaster, tktm

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Reader Comments (Page 1 of 1)

4-07-2009 @ 10:43PM

buck4u said...

Is it even possible for them to realistically pay down there debt? $1.7 billion between the two of them?
Could they be steering the combined company towards bankruptcy / shedding dept / and a sell to outside company?