Live Nation Entertainment, Inc. (LYV) Earnings Call Transcript & Summary

Okay. On the refurbs, how substantial an opportunity is there for your domestic amp or theater footprint, right? A lot of these venues kind of are older. They came through Live Nation as both original predecessor company back in the '90s.

Yes. Well, a lot of it ties in with when we do lease extensions, right? I mean it's just simple math. Jones Beach with some place we hadn't put a lot of money into for quite a while outside in New York. Well, you get to a point where you can't put money in because you have a lease that's going to expire. So you're not going to put a lot of capital in. And gosh, maybe they'll give me credit. So we had to wait until we had with the state went through the process, had a substantial extension of the lease, and that led us putting the money and get the returns. So all of these amphitheaters we're looking at now, how long is the term, can we go? And extend the term so that we have the flexibility to invest the money. So it's going to be in pieces over time as we get those extensions. In the meanwhile, we'll keep on with some of the tactical very rapid return steps that we can take, whether it's in the parking lot or adding bars or adding some straightforward refurbishments that gives us some other hospitality.

Anything to tease around Jones Beach, what we could look forward to?

I think it would be a totally new experience. I mean it opens up next month. I'll get out there and take a look, but all the reports I've heard are great.

Maybe separate to the internal investment, what's the venue opportunity on the acquisition side, right? What does the market look like at any given time for venue deals? And how are you positioned against like an AG or no AG.

Yes. I think the way I think about it is I think about it in terms of cities. There are -- pick your number, 100 cities outside the U.S. that today are at a scale, you'd love to have an arena and you'd love to be touring. So you have to look at the city and you have to say what are the options there? Is there an existing arena? What shape is it in? If it's -- if there's a new arena in great shape, and it fulfills the full needs of the market, okay, you move on. But often, you say, okay, there is nothing. So that's a -- I mean you have to build it. How can I build it? Is there land? How do we develop it? Is there an existing building who owns it? What refurbishment does it need? Are there opportunities for us to acquire it? Can we partner with the existing person? Is there somebody else who we should be working with? So every situation is going to be a function of just what's in that city now and who can we work with to try to move to a position that we can operate that building and control it and drive the improvement to make it a world-class music arena, so we can bring a lot more shows there, right? The first thing is get the infrastructure in place, put it -- bring more shows than we operate and we continue to improve the performance of the building as we've learned how to do.

I want to jump to ticketing. So in your releases, you always continue to highlight new enterprise ticket signings. Most of this coming from abroad, maybe impact the drivers there. Are these regions where you've kind of recently opened like Brazil? Or is it more where you've been a long time?

Yes. It's -- I mean, it's what you'd expect, right? It's a mix of all of the above. I think we've talked to about 70% of our new tickets being in international markets. Half of those are in U.K. or Europe, some of the more established markets. But I think 20-odd percent of it is down in South America, a much newer and then the rest would be Asia and some of the other markets scattered around. So you see a pretty broad mix. We're having a lot of success going into new markets. But as we've talked about for the past couple of years, I think as we really enhanced our international platform through the course of COVID, that has now differentiated itself, and we're continuing to see a lot of success in established markets internationally because of the functionality that I was talking about earlier.

So let's follow up on that because we sometimes get the question, right, what considerations does the venue have when they sign you as an enterprise partner? And what should investors know about Ticketmaster versus [indiscernible] competitor on sales, marketing, fraud prevention?

Yes. I mean you get into the details, but I think at the highest level, what they care about are 2 things. One is, is the platform going to sell the most tickets for me. It's going to sell the most tickets for me, then, a, I will collect the most service fees that I keep the bulk of and b, that's really helpful when I'm debating with -- forget when it's Live Nation, when I'm debating with some other promoter about do I get to show or to somebody else, that's what's going to matter first and foremost, the content is who's going to be able to sell the tickets. And then secondly is just what are the financial terms of the deal. So those are the biggest. Now you have a lot of the sub-pieces that particularly roll into these, is it going to sell the most tickets? Is it a system that it can be effective in marketing. Does it do a good job pricing? Is it easy for my staff to learn how to use and deploy? Do they have all the tools so that I can manage against spots and make sure fans are getting tickets and to stop fraud and a lot of that specific functionality. But I think if you just stop the manager on the street and said, when you're thinking about what building you want your artists to go into, and they say, well, what's going to sell the most tickets and grows the most money for my artist? And so if you're a venue in a competitive world trying to get those shows, you know that's what's going to ultimately really matter to your decision.

And on the financial terms, I mean you said that was the second...

It's a very competitive market, right? Don't let any of the press reports fool you. We -- every renewal that we have is what you expect in today's world, right? It doesn't get easier. It gets harder. And every venue does a good job of going out and getting multiple bids. And often at some point in the process, they tell you this is where we needed to be financially. And we like your platform. And if you can meet these financial requirements, then we want you to be our ticketing company.

You've talked more about Ticketmaster as a platform recently. I think for some time, the service fee is going to continue to be the center of the business. But what are the longer-term opportunities in terms of e-commerce, sponsorship partners looking to leverage your place in the ecosystem?

Yes, I think it starts with, I mean, a bit of what I just said, right? You know that every competitive renegotiation is going to get tougher. So when you run a business, you don't get to throw up your hands and say, oh, well, it's pretty tough. I guess I'm just going to make less money. No, your job, when you're running a business is to say, what are all the levers I have at my disposal. So I know I have some headwinds over here in terms of how I think about every negotiation I'm going to have for renewal with a venue. All right, I've got some benefit that if I can continue to scale, I can continue to get some leverage off of my fix. So that's one. We also have to be continually asking what are the other revenue sources? How do I continue to monetize that? So part of that is the services to the venues, services to the artists. What can I come up with there. And then the other half of that is like it's a great platform. I'm selling -- we just sold 130 million tickets already this year, over 320 or something million tickets last year, fee-bearing. So I've got those people going through a purchase transaction. What else can I do to monetize that relationship, either at the point of the transaction or later on because now it's a digital ticket, I know their identity and I can have a relationship with them. So again, some simple obvious things, but just maybe weren't historically the focus. About 1/3 of fans travel over 100 miles for the major shows. Well, if you travel over 100 miles, you might need a hotel room, right? You might need a restaurant reservation. And our platform can be a great source of leads, which we can monetize for those. You're buying a sports ticket. I don't know if you want to buy a jersey to, hey, you're going to see -- you're going into the playoff game in here tomorrow night. You're taking your kids. So do you want to get a jersey with that and have that delivered same day so that they can wear their favorite player's jersey. So there's all sorts of opportunities. And then once we have, as I said, post purchase, a lot of this now with our sponsors, where they see their opportunity. If I can figure out a way to add value to the fans experience, concert going, sports going, whatever it is, then I can use Ticketmaster as a way to connect with those fans and monetize, and we can monetize that. So we're continuing to look at that. Again, we've used the examples before with our amphitheaters. You're going to the amphitheater [indiscernible] wants to say, oh, you're a diamond medallion, when you go to VIP club on us? Or you're just a member [indiscernible] so they can use it to deliver different value to different segments of their population and get some value out of that. So a big focus for us, we've talked about now for the past couple of years is tracking how are we monetizing that non-service fee part of the relationship because we know driving that is a key part of the growth going forward.

Got it. Maybe just one more on ticketing. You put out some stats regarding all on pricing. I think there was an 8% increase in completed sales over the first half year of the program. Joe, can you help frame this? Was that better than expected, given some of your competitors didn't follow so and if the whole industry goes that way, how would that change?

Yes. Look, we were pleasantly surprised, right? The first thing, again, that I read into that is no negative. The big concern is we adopt some of these initiatives, what's the impact going to be. And so just -- so we're specific on what it was. It was an 8% increase in the conversion rate from putting something in your cart to buying it. So that showed that fans not being surprised by an add-on price down the road, meant that they were more likely to buy. I think that primary is a little different than secondary. We always had it still pretty available through the purchase flow. I think what happens a lot in secondary is they really wait. I mean, some sites, you have to put in your credit card just to get what your service fees are going to be to really drive it to the end. So they've been dragging their feet. Service levels tend to be higher in secondary. I think it's the right first step for us. I think it's the right step for the industry. If you look -- if you take a step back and what all of the conversation is over the past 1.5 years about ticketing, particularly on the legislative side, it went from us being the demons, the root of all evils in the industry to, I think a lot of education in the conversations today on the legislative side tend to be very different and they tend to be very focused on what are reasonable consumer protections around things like all-in pricing, elimination of spec tickets, elimination of deceptive URLs, tougher crack down on the bots, really things that tend to go to the secondary where you see the primary abuses taking place. And hopefully, we put out our proposals a year ago. We're starting to see just passed in the House last week, having components of that. I know you're getting a lot more visibility. There was a great article in billboard last week talking about Taylor Swift tickets and how it was actually cheaper to buy Taylor Swift tickets in France, fly there, stay there than it was to buy them here in the U.S. And it's because there are just some reasonable common sense, controls on secondary in a lot of European markets, controls to give a lot more to the artist in terms of what can happen with it. So I'm hopeful that we're now on a path all in ticketing being the first step of some pretty common sense reforms in ticketing that will be good for the fan, will be good for the artists, the content owners. And again, I feel good about where we're at with all-in pricing. I think chances are that may be actually something they can get passed as a bill. And again, it will be a good step for the industry to clean up.

[indiscernible].

Yes. Yes.

Just circling back to sponsorship. Growth was outsized in the quarter. You talked a little bit about traction in the southern Hemisphere. I don't know if that's South America and also Australia. What's going on there? Is that just an extension of the global relationships to some of the infrastructure you've built up?

Yes. It's heavily South America in the first quarter, but we're generally seeing between South America and Asia. If you look at our first and fourth quarters, which were historically lighter as we're starting to do more festivals, more big events in those markets, you're seeing just a higher growth rate. So I don't know you'll see higher growth, but higher growth rate given the smaller denominator of those quarters. Sponsorship is continuing to do great. I think we're probably 90% booked now, up double digits for the year. So as I talked to folks internally, like that's not the problem. I don't worry about that. They're going to deliver their double-digit growth this year, I think. So we're in good shape there. And yes, just as we're building Latin America market, it's a great sponsorship market.

Okay. On M&A, if we look at your lease cash outflows for acquisitions, been a little quieter in the recent periods. Curious, what are you seeing in terms of deal flow? What are the kind of target regions there?

Yes. Deal flow is great. It's the old adage, I think either do a good deal or a quick deal. So I don't obsess over doing quick deals. They'll bounce around and be somewhat chunky in terms of their timing and their size. But as I said, I think about it in terms of cities, particularly outside the U.S. So you'll continue to see us very active, particularly on the venue front, South America, Europe, Asia, all over as we continue to try to build that. I think you'll still see some promoter acquisitions. Again, South America, Asia as the primary targets on those as we further expand our footprint in those markets. So no slowdown in appetite or discussions, probably just a bit of bouncing in terms of timing.

I wanted to just go back to something you said on festivals. I think Michael was talking about less of a focus on broad multi-day tentpoles, more of a shift to shorter genre-based events. First, what's driving that? And then second, what's the implication coming out of that in terms of per caps or sponsorship?

Yes. I think that it's just we've got some creative people that have come up with some great festival ideas. And what they've done is they've really packed the agenda with who the artists are and then they run those on a multi-day basis. So the best example is When We Were Young, which we launched in Vegas, I guess, 1.5 years or so ago [indiscernible] I remember when the lineup came out, if you looked at all the social on the lineup, it was this has got to be fake. There's no way they can have this group of acts in one day. This is [indiscernible] festival. It's not going to happen. But so then what happened is set up as a one-day festival, but we did it 5 days. So we repeated it 5x because there was so much demand for it. So it's just a -- I think it's a complementary way with the Lollas of the world, ACLs, BottleRock this weekend, Sea.Hear.Now in New Jersey later this year. I mean you're still seeing a lot of these do well, but you've got this pop-up of there's levers and friends a few weeks ago. There's sort of the emergence of these new festival types. It's taking a minute to figure out how to work with sponsors on something that rather than mean a 3-day event is as many 1-day events with a new audience generally each day. So the good news for -- I always look at it as glass half full, that means more opportunity as we figure that out. That's another area of growth that we have. So I think that over -- it's better this year than it was last year, and next year, we'll push them to do a little better again as they figure out what's the model in terms -- again because you don't even necessarily know when you go on sale. Is it going to be 3 days or 5 days, how many of these are we going to do based on what the demand is. So we're still sorting that out.

Got it. All right. We're just about out of time. Joe, thanks for being here.

All right. Thanks.