A wild thing happened on Monday, March 1st. The share price of Live Nation Entertainment hit an all-time high — even though the last time the concert company had hosted a full-scale live show was 12 months prior.
That stock-price peak sent the market cap of the Los Angeles-headquartered Live Nation surging above $20 billion for the first time. And this happened even as the company announced that, thanks to the prolonged Covid-19 lockdown, its fourth-quarter revenues for 2020 were just a tenth of the size they were in the same quarter of 2019 (a puny $237.3 million compared to $2.89 billion, to be exact).
Why does Live Nation look so powerful on Wall Street even as a pandemic cripples its core business at the knees? The company’s counterintuitive, irrepressible market cap is likely about two things: one, the steady management of the company through the crisis under veteran CEO and president Michael Rapino, and two, investors’ confidence that the world will bounce back quickly from being locked inside for a year — and that fans will be more ready to party than ever.
Having sold out a bunch of festivals in the UK due to take place in late summer, Live Nation is already beginning to get busy again in the US, even though it cautioned in its annual fiscal report that “a significant change in activity levels” is not expected until late 2021 and that it does not expect to begin generating operating income again until major global tours resume. Just last week, the company put on sale a 21-date US tour from comedian Bill Burr, taking place from July onwards. And it’s had the bonus political news that music venues in California could reopen as soon as June 15th.
In the pre-pandemic 2019, Live Nation hosted approximately 40,000 events worldwide — so, in 2021 and beyond, the firm will undoubtedly be looking not only to get back to that number and even exceed it. But concerts (and lots of them) aren’t the only thing Live Nation is looking to rev up, recent events would indicate. Here’s where I see the live entertainment giant heading in the year ahead.
1. A huge acquisition begets further acquisitions
The pandemic put paid to a ton of couldda-happened music industry headlines last year, but there’s a truly transformational one that’s been oddly forgotten about: In summer 2019, Live Nation announced to investors that it had entered into a definitive agreement to buy 51% of Latin America’s largest concert promoter, Mexico-based OCESA, for around $460 million. Many suspected that regulators might block the buyout. But in April last year, Mexican anti-competition watchdogs gave it the green light.
A month later, however, Live Nation officially retreated from the deal, citing a need to batten down the fiscal hatches ahead of a global concert collapse. Live Nation pre-warned investors that OCESA’s shareholders might be a touch annoyed about this, and may “pursue any legal remedies available” to punish it for getting cold feet on a signed agreement. This hasn’t materialized — suggesting relations between the parties have managed to stay cordial. (Shortly before the pull-out, Michael Rapino had promised that “we are, long term, still bullish on [OCESA’s] business,” stressing that “want to be in business with OCESA and get the deal done.”)
At the close of 2020, according to its investor filings, Live Nation had $2.5 billion in cash / cash equivalents to play with, in addition to further debt capacity of $962 million. The company also revealed in those filings that, having borrowed its way through pandemic lockdown, its total indebtedness weighed in at a whopping $5 billion. But it added: “We may also incur significant additional indebtedness in the future.”
So long as business picks up for Live Nation, therefore, I’d expect the OCESA deal to get done and dusted sooner rather than later — and for additional acquisitions to follow. Having momentarily looked bruised and wrong-footed last year at the onset of the pandemic, Live Nation now finds itself as the cash-rich king of a global industry in distress.
Whether it’s independent venues, regional promoters, or other key areas of business, expect to see Live Nation hoover up smaller competitors from nation to nation in the months ahead.
2. The purse strings loosen again on hirings and promotions
A spate of acquisitions from Live Nation will likely go hand-in-hand with the end of a severe period of corporate austerity. In May 2020, spooked by the ever-worsening news from the pandemic, Rapino announced that the company would be cutting $500 million from its projected costs in the 2020 calendar year. By December, things had gotten rather more severe: Live Nation slashed no less than $950 million from its expected spending last year, according to SEC filings.
This was a brutal undertaking: Live Nation’s latest end-of-year report notes that the firm “implemented salary reductions for most of our employees, with salaries for senior executives reduced by up to 60 percent” during 2020. Rapino docked himself his $3 million annual salary from April onwards, and also forwent year-end bonuses in the multimillion-dollar realm.
Other cost-slashing exercises at Live Nation last year included freezing any hiring, cutting contractors, halting all spending on travel and marketing, and, sadly, terminating thousands of employees. At the close of 2019, SEC filings show, Live Nation employed 10,500 full-time employees. At the close of 2020, this number had been cut by 2,300 to 8,200 (a figure which includes furloughed staff).
As concerts begin winding back up, the live industry will be hoping to see those jobs sweep back into Live Nation. I’d guess Rapino would rather like to see his salary return at some point, too.
3. More intensity in artist management — but less of it in livestreaming
Before the pandemic, Live Nation had stakes in so many artist management companies that its annual report could only give ballpark figures: The company had “nearly 110 managers providing services to more than 500 artists” on its books in 2019, it said.
Live Nation didn’t provide an update for those figures in its 2020 annual review, but there is reason to suspect they have dropped somewhat. At the height of its Covid-era cost-cutting, the company agreed to part ways with legendary artist manager Guy Oseary, who’s worked with the likes of U2 and Madonna. Oseary was head of Maverick, the Live Nation-owned superstar artist management conglomerate established in 2014. The departure of the high-profile Oseary called into question the future of Maverick itself — and Live Nation’s commitment to investing in artist management more generally. (Artist management as a business line has never been particularly profitable for Live Nation, but it fuels direct relationships with key talent that is holistically beneficial to Live Nation’s core business.)
However, this month Live Nation sent out a signal of its enduring strategy to fund artist management: It’s partnering with Adam Leber, manager of the red-hot stars Lil Nas X and Miley Cyrus, on a new management venture called Rebel. Leber is no longer part of Maverick, but, crucially, he’s remaining part of Live Nation.
As Live Nation prepares for a jam-packed concert schedule in the near future, I predict more of these cherry-picked alliances with artist managers will follow. Especially as other in-person or virtual music companies fiercely compete for artist attention, Live Nation will be feeling more pressure than ever to get cosy with superstar talent.
But talking of virtual music companies, Michael Rapino’s view on this sector’s importance appears to have softened somewhat in the last year. Early on in the pandemic, the livestream quickly became an industry darling. And in a bid to reassure investors that the closure of concerts didn’t mean the end of Live Nation’s business expansion, Rapino said that his company hadn’t “focused enough on” the opportunities presented by the merging of real-life and digital concert experiences and that Live Nation’s tech-heads were “deep at work” on new livestreaming products, like Ticketmaster’s now-launched livestream ticketing service. In January, Live Nation acquired Veeps, the livestreaming company launched by members of Good Charlotte.
Yet by February 2021, Rapino was cautioning investors to cool their jets on how big livestreaming could become.
On a fourth-quarter earnings call, Rapino suggested that livestreaming could perhaps evolve into a useful “incremental” business for Live Nation, especially when selling VIP upgrade packages to fans that include the ability to watch or re-watch a concert on their phones. However, sticking a pin in the revolutionary rhetoric of livestreaming companies that burst out of the blocks during the pandemic, Rapino added that when it comes to viewing concert footage online, “Most people don’t want to watch two hours of their favorite band. They want to find that one great shot on TikTok.”
As the pandemic finally begins to turn a corner, you can bet that Live Nation will further retreat from niche businesses and double down on its tried-and-true money-maker: live shows.
Tim Ingham is the founder and publisher of Music Business Worldwide, which has serviced the global industry with news, analysis, and jobs since 2015. He writes a regular column for Rolling Stone.