×
You will be redirected back to your article in seconds

Live Nation Stock Climbs After Analyst Calls Merger With Liberty/SiriusXM ‘Inevitable’

Live Nation’s stock climbed more than 1% in pre-market trading today after BTIG Research’s Brandon Ross upgraded the stock to buy and predicted a merger between the live-entertainment giant and Liberty/SiriusXM.

“We and a growing group of investors have come to believe a nearer-term combination of SiriusXM and Live Nation is inevitable,” he wrote. “We believe Liberty President and CEO, Greg Maffei, has long desired to combine Sirius and Live Nation into a single music distribution company and has encouraged a marriage of his two music industry interests in the past.” Long-percolating rumors about a possible merger between the two companies began heating up over the past couple of weeks; reps for Live Nation and SiriusXM declined comment or did not immediately respond to Variety’s requests for comment.

Ross said a potential deal is attractive to Sirius because the company appears to have a “terminal value problem” as it lacks logical places to employ its free cash flow. Live Nation, which is the world’s largest live-entertainment promoter, owns TicketMaster and also operates venues, “is near maximum leverage.”

“Live Nation’s flywheel continues to turn with increased velocity,” he wrote. “On top of its vertical integration, the company has built an insurmountable competitive moat especially in the United States, allowing it to find new ways to win every year.” The company boasted a bullish first-quarter earnings report in May.

He enumerated the reasons why a merger makes sense. “We believe Liberty President and CEO, Greg Maffei, has long desired to combine Sirius and Live Nation into a single music distribution company and has encouraged a marriage of his two music industry interests in the past.

“So what has changed to make us think a merger is coming closer to reality?,” he continued. “To start, we do not see an acquirer for SiriusXM, especially after AT&T / Time Warner has closed. … A Sirius acquisition of Live Nation could help solve Liberty’s problems by helping to (at least optically) protect SiriusXM’s terminal value, giving that company a better use of capital, and at the same time improving some of the forces that have led to a senseless tracking stock discount (currently sitting at 25%).”

However, he says that Sirius “will have to pay a significant premium to get a deal done,” and points to Amazon and “even Spotify” as potential competitors to acquire Live Nation.

“Music remains a top priority for Amazon and that company is constantly looking for additional businesses to add to its own flywheel and enhance Prime. They also could significantly improve Ticketmaster.”

But, he notes, “Spotify is the most intriguing to us, even if it is a longer shot and has antitrust risk. The potential synergies and value unlock could be immense. We love Spotify stock (link) and are extremely bullish about its global subscriber growth and future share of listening. But, there is still one major question surrounding the company’s future: how much it can move its gross margins through improved deals with the major labels.”

He concludes by saying “we still believe a SiriusXM acquisition of Live Nation would benefit the Liberty complex, especially under certain structures (in addition to giving Maffei the end-to-end music distribution company he has long desired),” and notes that Live Nation’s board — led by Maffei — and management, with CEO Michael Rapino (pictured above), are in the driver’s seat in terms of a potential deal. It also predicts that Rapino would become head of the combined company, since SiriusXM CEO James Meyer is expected to step down at the end of the year.

 

 

 

 

 

More Digital

  • Amazon

    Amazon Music’s Free Tier Is More Advertising Play Than Spotify Killer, Analysts Say

    When news began to spread last week that Amazon Music’s long-anticipated free streaming tier was imminent, headlines emerged about its threat to Spotify and Apple Music, with some stories saying that Spotify’s stock price dropped in response to the news. But not only was today’s launch of the free tier basically a soft one — [...]

  • Gay Chorus Deep South

    Why Airbnb Produced Documentary 'Gay Chorus Deep South,' Its First-Ever Film (EXCLUSIVE)

    The latest player to hit the film-festival circuit may be a bit unexpected: Airbnb, the travel-accommodations booking marketplace, developed, financed and produced documentary film “Gay Chorus Deep South,” set to premiere at the 2019 Tribeca Film Festival on April 29. It’s the company’s very first feature film. Directed by David Charles Rodrigues, “Gay Chorus Deep [...]

  • Amazon

    Amazon Music Launches Free Streaming Tier, Through Alexa Only (for Now)

    Amazon Music today basically soft-launched its free streaming tier, in which U.S. customers of its Alexa voice assistant will have access to top Amazon Music playlists and thousands of stations, at no cost. The limited access that the new free service provides — it’s only available through Alexa, and when the listener requests a song, [...]

  • Ben Silbermann, Evan Sharp. Pinterest co-founder

    Pinterest Shares Up Close to 29% on IPO Day

    Shares of the social pinning service Pinterest closed at $24.45 — 28.6% above their IPO price — on the company’s first day at the New York Stock Exchange Thursday as investors were looking to get in on the latest tech listing. Pinterest’s shares opened at $23.75, 25% above the IPO pricing of $19 per share, [...]

  • Netflix Logo

    Netflix to Open Production Hub, Expand Offices in New York City

    Netflix plans to move into a bigger new office in Manhattan and open a Brooklyn production hub — all told, bringing up to $100 million in investments to New York City and resulting in hundreds of new jobs, according to New York State Gov. Andrew M. Cuomo. Netflix’s new corporate offices in the Big Apple [...]

  • MoviePass card

    MoviePass Has Lost Over 90% of Its Subscribers in Less Than a Year (Report)

    MoviePass users apparently hit the exits en masse after it scaled back the number of movies users could see each month: The flailing cinema-subscription provider has seen its subscriber rolls plunge from a peak of more than 3 million to just 225,000 in under a year, according to a new report. The numbers were reported [...]

  • The Nashville, Tenn. downtown area and

    Nashville City Council Sides With Songwriters Against Streamers’ CRB Appeal

    Nashville city leaders have sided against the streaming services Amazon, Spotify, Google and SiriusXM/Pandora in the appeal of the Copyright Royalty Board’s decision that would give songwriters a pay raise. The Nashville Metro Council adopted the resolution as part of its consent agenda earlier this week, although the move is “purely symbolic” and the streamers [...]

More From Our Brands

Access exclusive content