Three months after reporting a 98% year-over-year decline in revenues in Q2 2020, Live Nation‘s latest financial results highlight just how badly the pandemic continues to affect the global concert business.
In Q3 2020 – i.e. the period ended September 30 – Live Nation generated revenues of $184 million, marking a 95% year-over-year decline compared with the $3.77 billion it generated in Q3 2019 from concerts, ticketing and sponsorship.
The firm told investors in its Q3 filing: “We estimate the lost revenue impact from the global COVID-19 pandemic in the third quarter and first nine months of 2020 to be approximately $3.7 billion and $7.0 billion, respectively.”
In even more wince-worthy news for shareholders, Live Nation also revealed: “A total of 5.2 million tickets were refunded in [Q3], amounting to just slightly over $500 million of gross transaction value… [and] a total of 23.3 million tickets have been refunded year-to-date, amounting to nearly $2.3 billion of gross transaction value.”
This explains how Live Nation’s specific ticketing revenues were once again negative in Q3, at -$19.8m. In short, it paid out more in refunds than it took in from sales.
In the prior year quarter (Q3 2019), Live Nation’s ticketing sales – the majority of which come from Ticketmaster – were $388.5m.
Specifically within the concerts category, Live Nation’s revenues also fell 95% year-over-year in Q3, hitting $154.8m. That was down from $3.17bn in Q3 2019.
Sponsorship and Advertising revenues fell 78% year-over-year, from $215.2m in Q3 last year to $47.9m in Q3 2020.
Live Nation Entertainment President and Chief Executive Officer Michael Rapino sought to reassure investors yesterday (November 5), writing that “we continue to maintain a strong cash management discipline, while planning for the ramp up to resume live shows as soon as possible”.
He added: “We also continue to see strong fan demand across the board. Our sales and survey data tell us fan demand will be there when the time is right.
“Our refund rate on rescheduled shows remains consistently low, with 83% of fans globally keeping their tickets. Our recent global survey indicates that 95% of fans are planning to return to live music events when restrictions are lifted, the highest point of confidence since the start of the pandemic.”
“We are confident that our actions taken to cut costs and increase liquidity will provide us with the runway we need until the time is right to bring shows back.”
Joe Berchtold, Live Nation
In April MBW reported that Rapino, would be giving up his $3m-per-annum salary as part of measures put in place by the company to slash expenditure by $500m this year amid the COVID-19-driven shutdown of the global live music industry.
In August, the company’s President, Joe Berchtold, revealed that Live Nation was then on course for over $800m in cost savings this year, with a reduction in annual cash usage of $1.4bn.
Yesterday, the company upped that cost-saving target yet again. Live Nation told investors that it now has a $900m cost reduction program target in 2020.
Speaking on the company’s Q3 earnings call, Berchtold said “we are confident that our actions taken to cut costs and increase liquidity will provide us with the runway we need until the time is right to bring shows back”.
He added: “As part of this, we have further reduced all discretionary spending by another approximately $100m and have now lowered to us for this year by over $900m and reduce our cash usage by $1.5bn relative to our pre-COVID plans.”
Live Nation reports that its global refund rate for concerts that are rescheduled and are in or have gone through a refund window is 17% in 2020 through the end of Q3 2020 – meaning that 83% of ticketholders have declined to apply for a refund and are instead waiting for postponed shows.
Festivals have generally canceled their events for this year, but for festivals where fans can retain their tickets for next year’s show, approximately 63% of fans are keeping their ticket, according to Live Nation.
Across both concerts and festivals, since March Live Nation reports to have refunded $282m for its rescheduled/postponed shows, and has refunded $698m for cancelled shows.
In total, that stacks up to nearly a billion dollars ($980m) in consumer refunds.
Of that $980m total, $350m has come from funds held by third-party venues, with Live Nation-held funds on the hook for $630m.
The company forecasts approximately $74m in additional fan refunds in Q4 from Live Nation-held funds.
“We still expect shows at scale next summer, but recognize that the exact timeline of this return will vary by region, and so we continue to focus on remaining flexible.”
Michael Rapino, Live Nation
Added Rapino: “Festival on-sales for next year have been strong, with EDC Las Vegas 2021 sold out in less than 24 hours at a higher capacity than last year, and with ticket sales for Reading, Creamfields and Isle of Wight festivals in the UK all pacing ahead of last year at this time.
“And we are encouraged by the enthusiasm for the recent events and gatherings that have started to take place, including our first sold-out arena tour with 20,000 fans in New Zealand, where business is headed back to normal.
“We are working on our roadmap to get back to live safely. We are encouraged by progress on testing technology, treatments and vaccines, which helps us build our plans. We still expect shows at scale next summer, but recognize that the exact timeline of this return will vary by region, and so we continue to focus on remaining flexible.”
At the end of the Q3 2020, Live Nation had total cash and cash equivalents of $2.6bn, which includes $951m of free cash.
This free cash, along with $963m of available debt capacity, provide the company with over $1.9bn in available liquidity.
Live Nation told investors that it “believes this level of liquidity provides it with the ability to fund operations until the expected return of concerts at scale in the summer of 2021, preceded by ticket sales earlier in the year.”Music Business Worldwide