Friday, May 24, 2013

Online Ticketing Upstarts Challenge Live Nation's Concert Kingdom

Investors might want to rethink their enthusiasm for Live Nation (LYV-$13.78). To be sure, this new embrace of all-things digital has helped the company deliver on growth in ticket sales and operating results – ticketing profits have more than doubled since 2010, coming in at $122.8 million last year. But the live concert part of the equation continues to underperform:  The company makes little money at the door. Additionally, though ancillary net revenue per attendee at North American events rose 45 cents to $18.56 year-over-year, concert segment net losses increased another $15 million to $(120.1) million in 2012.

Although Live Nation is unmatched in its global reach – and has new technology that makes it cheaper to sell tickets – operating margins at its concert promotion’s segment could face further pressure as smaller rivals look to scale up and compete directly against the company in higher-margin electronic dance music (EDM), festival and arena-sized events. For example, online ticketing vendor Eventbrite offers software that helps event organizers cheaply manage all aspects of a concert or film-festival, from marketing and online sales to ticket purchases and payments. 

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

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