NEW YORK (Reuters) - Live Nation Inc (LYV.N: Quote, Profile, Research, Stock Buzz), the world's largest concert promoter, expects fan attendance to increase more than 10 percent this year, but no additional growth in 2009 due to the weak economy.
Chief Executive Michael Rapino said current ticket sales for concerts in early 2009 remain unaffected by the recession, and in some cases are up year over year as more bands get on the road. The next big test will be in April, when summer concert tickets go on sale.
"We expect next year to hold its own," he told the Reuters Media Summit on Thursday. "I'm not going to predict a boom."
Rapino also said the company's strategy to move into ticketing and merchandising, as well as signing major name artists like Madonna to long-term deals, is beginning to boost profit margins.
Live Nation's shares have plunged nearly 60 percent in the last month even after it posted strong quarterly earnings as investors have worried that the company will have a difficult 2009 as consumers cut back on going to concerts and theaters.
The stock fell another 1.91 percent, or 8 cents, to close at $4.10 on Thursday.
Rapino argued that his business will be able to weather the worst because consumers only visit one or two big shows a year, and they will always save up to see their favorite artists even in a downturn.
"We're not going out there saying we will grow the business next year," he added. "If we can get through the economic crisis on a flat comparable basis on inventory that would be an incredible win."
He said 2008 consumer spending would be equal to or up slightly from last year.
Live Nation does not recognize ticket sale revenue on its income statement till after a fan has watched a show and most of its tickets are sold several months in advance.
Rapino said he did not think artists will raise ticket prices, which average $49 per show, as fans faced more difficult times head.
He said the company has had "intense conversations" with promoters around the world about showing price sensitivity to consumers in 2009: "I don't think you'll see 2009 being the year when artists or their promoters look to increase ticket prices."
"I think you'll see a lot of middle men look to figure out how to reduce prices to drive sales," he added.
Live Nation, which ends its long-running partnership with Ticketmaster (TKTM.O: Quote, Profile, Research, Stock Buzz) in January, has started to move into the ticketing business with its own service to sell tickets at its own venues. In September, it signed a seven-year multi-venue deal with SMG for arenas, stadiums and theaters in the United States and Canada.
The company has been trying to boost it low concert promoter margins by diversifying into adjacent businesses including ticketing, which has margins as high as 25 percent compared with average 4 percent margins from concert promotion. Continued...
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