At the end of Live Nation’s first-quarter earnings call on Thursday, CEO Michael Rapino fielded questions about the company’s finances, but mostly, as expected, about when and how the concert industry might begin to reopen from coronavirus lockdown.
Not surprisingly, the company’s earnings report revealed challenges, even though the lockdown began in the last three weeks of the quarter: Revenues were down 20% year-on-year, concert revenue was down 25% (from $1.318 billion to $993.4 million) ticketing was down 16% and, significantly, fan attendance was down 6.2%.
And while Live Nation alone has seen some 9,000 of its concerts impacted by the coronavirus pandemic, the company’s main theme of the day has been the fact that some 90% of fans are holding onto their tickets rather than seeking a refund. The executives have not mention that the number was doubtless affected by the company’s shifting refund policy — which was solidified less than two weeks ago — but they have taken it as a resounding vote of confidence in the future of the industry and fans’ confidence that the shows are worth waiting for.
Asked for his longview on business in general, Rapino said, “In a survey we just posted, we talked to 10,000 casual and ongoing ticketbuyers and the data is pretty compelling: 90% of fans are saying ‘I can’t wait to get back to the show,’ and I think our refund rate says everything — we’re running somewhere between a 5-10 refund rate right now on a global basis, that’s much lower in Europe [which is farther ahead in the recovery process], and that’s not out of line for when we reschedule a traditional tour [under normal circumstances]. Now we’re just going to [watch] the science and see when we can back out there on a safe manner.
Asked how long the company can continue to operate with an extended shutdown, Rapino directed the question to president Joe Berchtold. “We have $870 million in available cash, $900 million untapped, so that’s $1.7 billion in untapped liquidity to start with. So we can go through this year without doing any shows at scale without any concern, even though we’re not likely to have a huge volume of shows,” he said. “And in the fourth quarter we’ll have ticket sales in some large scale for next year — we’re already seeing the NFL schedule announced today and most teams are going on sale with their tickets, so that will help drive some of our ticketing and sponsorship businesses. Getting through this year without any additional liquidity is not a concern.”
Asked how the company has dealt with the shifting nature of rescheduling concerts, Rapino replied, “We have a lot of shows, and looking at this as a glass half-full, thankfully our shows are not time-dependent: Fans wanted to see Billie Eilish in March, but they’ll wait till October or until February, because the average customer goes to two-and-a-half shows a year. The industry has never come together this well, agents, artists, buildings, promoters, managers, we’re all in the same boat, and we’re all saying, ‘How do we move availabilities?’ The only challenge we’ve had with availabilities, and part of the reason we had to [delay] the refund policy, is the sports leagues — we need to understand what’s going to happen in arenas in the fall.”
Immediately following that question, Rapino was asked how much the company has renegotiated contract terms with artists on guarantees for these rescheduled shows (as detailed by Variety last month).
“It’s been a unique time but we’re all in this together,” he replied, “and I would say artists, agents and managers have been incredibly supportive.
“The reality is,” he continued, “in ‘20 and ’21, the promoter can’t take all the risk on the business, as we historically have. We need to share some of that, especially refunds on the guarantees. So while we don’t want to get into the what and how of the deals, we absolutely are getting great latitude from the artists and agents to look at the traditional business of high guarantees and all of our risk, and to help share that risk, going into ‘20 and ’21, to get the shows back on the road and help us absorb it, and not take all of the [financial burden] of refunds, sales, sponsorship, food, beverages and unknowns for the next 6-12 months. They’re helping to share some of that risk to help us get back and scale fast, and not worry about losing money on the show.”
Finally, Rapino was asked about the strategy and timing for resuming something resembling normal touring.
“Our global diversity is our greatest strength, it always has been, and unlike sports, we have very diverse sizes of shows: We did 15,000 club and theater shows in 40 countries last year,” he said.
“So over the next six months, we’ll be starting slow and small, focusing on the basics and testing regionally. But whether it’s in Arkansas” — which he may have mentioned because a socially distanced concert is scheduled there for May 15 — “or [another] state that is safe, secure and politically fine to proceed in, we’re going to dabble in fan-less concerts with broadcasts and reduced-capacity shows, because we can make the math work,” he continued.
“There are a lot of great artists that can sell out an arena, but they’ll do higher-end theaters or clubs. So you’re gonna see us [gradually reopening] in different countries, whether it’s Finland, Asia, Hong Kong — certain markets are farther ahead [in the recovery process]. Over the summer there will be testing happening, whether it’s fan-less concerts, which offer great broadcast opportunities and are really important for our sponsorship business; drive-in concerts, which we’re going to test and roll out and we’re having some success with; or reduced-capacity festival concerts, which could be outdoors in a theater on a large stadium floor, where there’s enough room to be safe.
“We think in the Fall, if there are no second hotspots, you’ll see markets around the world [reopening] — Europe, specifically, has talked about opening up 5,000-plus [gatherings] in September. And on the venue side, we’re dealing with federal, the White House, every government body you can imagine, and we’ve got a great task force around what we have to do with the venue to make you safe.
“So I think in the Fall you’ll see more experimenting and more shows happening in a theater setting, into some arenas. And then our goal is really to be on sale in the third and fourth quarters for 2021 at full scale.”
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