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MarketScreener Homepage  >  Equities  >  Nyse  >  Live Nation Entertainment, Inc.    LYV

LIVE NATION ENTERTAINMENT, INC.

(LYV)
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LIVE NATION ENTERTAINMENT : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

11/05/2020 | 04:39pm EST
"Live Nation" (which may be referred to as the "Company," "we," "us" or "our")
means Live Nation Entertainment, Inc. and its subsidiaries, or one of our
segments or subsidiaries, as the context requires. You should read the following
discussion of our financial condition and results of operations together with
the unaudited consolidated financial statements and notes to the financial
statements included elsewhere in this quarterly report.
                 Special Note About Forward-Looking Statements
Certain statements contained in this quarterly report (or otherwise made by us
or on our behalf from time to time in other reports, filings with the SEC, news
releases, conferences, internet postings or otherwise) that are not statements
of historical fact constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act of 1934, as amended, notwithstanding that such statements are not
specifically identified. Forward-looking statements include, but are not limited
to, statements about our financial position, business strategy, competitive
position, potential growth opportunities, potential operating performance
improvements, the effects of competition, the effects of future legislation or
regulations and plans and objectives of our management for future operations. We
have based our forward-looking statements on our beliefs and assumptions
considering the information available to us at the time the statements are made.
Use of the words "may," "should," "continue," "plan," "potential," "anticipate,"
"believe," "estimate," "expect," "intend," "outlook," "could," "target,"
"project," "seek," "predict," or variations of such words and similar
expressions are intended to identify forward-looking statements but are not the
exclusive means of identifying such statements.
Forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties that could cause actual results to differ
materially from those in such statements. Factors that could cause actual
results to differ from those discussed in the forward-looking statements
include, but are not limited to, those set forth below under Part II-Other
Information-Item 1A.-Risk Factors, in Part I-Item IA.-Risk Factors of our 2019
Annual Report on Form 10-K, as well as other factors described herein or in our
annual, quarterly and other reports we file with the SEC (collectively,
"cautionary statements"). Based upon changing conditions, should any risk or
uncertainty that has already materialized, such as, for example, the risks and
uncertainties posed by the global COVID-19 pandemic, worsen in scope, impact or
duration, or should one or more of the currently unrealized risks or
uncertainties materialize, or should any underlying assumptions prove incorrect,
actual results may vary materially from those described in any forward-looking
statements. All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the applicable cautionary statements. You are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date on which they are made. We do not intend to update these
forward-looking statements, except as required by applicable law.

Executive Overview


Due to the global COVID-19 pandemic, we ceased all Live Nation tours and closed
all our venues beginning in mid-March to support global efforts to mitigate the
spread of the virus. To ensure the safety of our artists, fans, and employees,
we held very few traditional events in the third quarter and had minimal ticket
sales. As a result, our overall revenue for the quarter decreased by 95%, from
$3.8 billion to $184 million. The revenue reduction was largely in our Concerts
and Ticketing segments as a result of almost no shows occurring globally in the
quarter and ticket sales for future shows sharply reduced given the uncertainty
around when live events will return. Our Ticketing revenue was also impacted by
refunds for cancelled and postponed events. The pandemic led to an operating
loss for the quarter of $504 million compared to operating income of $260
million for the third quarter of last year. For the first nine months of 2020,
our total revenue decreased by $7.0 billion, or 81%, as compared to last year.
The change was the same without the impact of foreign exchange rates. The
revenue impact of the global COVID-19 pandemic for the first nine months was
partially offset by normal operations from January through mid-March, when it
appeared we were on track for another record year. Our year-to-date operating
loss of $1.3 billion was partially mitigated by the results for the first two
and a half months of the year plus our cost savings initiatives, which began at
the end of March and generated $507 million of fixed cost savings for the second
and third quarters compared to our plan just prior to the onset of the global
COVID-19 pandemic. While the unparalleled disruption of the pandemic has had a
material impact on our business, as the leading global live event and ticketing
company, we still firmly believe that we are well-positioned to provide the best
service to artists, teams, fans and venues once business resumes. Twenty years
of global growth demonstrates the resilience of fan demand for the live
entertainment experience. We are actively taking steps to ensure that when the
time is right for us to do so, we will be ready to ramp back up and once again
connect audiences to artists at the concerts they are looking forward to.
Our Concerts segment revenue for the quarter decreased by $3.0 billion, or 95%,
as compared to last year. The unfavorable results were almost entirely due to
the impact of the global COVID-19 pandemic. Show count for the quarter was down
96% compared to last year to 367 events, which included a few socially distanced
club shows in Europe, events in New Zealand (which has recently re-opened for
shows), as well as drive-in concerts and some rentals to third parties in North
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America. A total of 269 thousand fans attended these shows. Concerts had an
operating loss for the quarter largely due to lost business resulting from the
global COVID-19 pandemic and from sunk costs, such as advertising expenses,
associated with shows cancelled or rescheduled to 2021 due to the pandemic. For
the first nine months, our Concerts segment revenue decreased by $5.8 billion,
or 82%. By the end of the third quarter of 2020, Concerts had cancelled over
5,000 concerts impacted by the stoppage of events starting in mid-March of this
year, equating to approximately 15 million tickets. In addition, we had nearly
6,000 shows, equating to approximately 22 million tickets, that have been
postponed and rescheduled into 2021 or were in the process of being rescheduled
at the end of the third quarter.
Our Ticketing segment revenue fell below zero for the quarter as a result of
refunds being processed for tickets that were sold in previous quarters. Third
quarter revenue was $(20) million, compared to $388 million for the third
quarter last year. Before refunds, our fee-bearing tickets were 6.5 million for
the quarter, a reduction of 48.8 million tickets, or 88%, compared to last year.
A total of 5.2 million tickets were refunded in the quarter, amounting to just
slightly over $500 million of gross transaction value. The decline in operating
results for the quarter was largely driven by the lack of ticket sales as well
as refunds processed for cancelled and rescheduled events. For the first nine
months, our Ticketing segment revenue fell by $919 million, or 84%. Before
refunds, we had sold 52.1 million fee-bearing tickets year-to-date, a reduction
of 67% compared to the first nine months of 2019. A total of 23.3 million
tickets have been refunded year-to-date, amounting to nearly $2.3 billion of
gross transaction value.
Our Sponsorship & Advertising segment revenue for the quarter decreased by $167
million, or 78%, as compared to last year. For the first nine months, our
Sponsorship & Advertising segment revenue decreased by $285 million, or 65%, as
compared to last year. After a very strong performance for the first 10 weeks of
the year, there has been a significant reduction to Sponsorship & Advertising
revenue and operating results due to the lack of shows and ticket sales
resulting from the global COVID-19 pandemic.
We are currently focused on mitigating the financial impact of the shutdown. We
have undertaken cost-savings initiatives across the organization, including
salary reductions, hiring freezes, furloughs, termination of certain employees,
as well as eliminating costs for consultants, travel and entertainment and
repairs and maintenance for our facilities. We are also protecting our liquidity
by tightly managing cash outflows associated with all our major expenditures:
operating expenses, capital expenditures, acquisitions, and advances in both our
ticketing and concert businesses. The length and severity of the impact to live
events and our related sponsorship and ticketing businesses is still uncertain.
Currently, we do not anticipate a significant change in activity levels through
next year. The magnitude and pace of the recovery will depend on each market and
their containment efforts, the nature of the events being held, and ongoing
efforts to develop rapid testing technologies, effective treatments and/or
vaccines for COVID-19. We remain optimistic about the long-term potential of our
company and the unique power of live shows to unite people. We believe our
aggressive cost-savings and cash management programs, combined with a strong
liquidity profile, position Live Nation to manage through the global COVID-19
pandemic and its impact on live events and provides us the flexibility to scale
up quickly when our shows resume.

Our History
We were incorporated in Delaware on August 2, 2005 in preparation for the
contribution and transfer by Clear Channel Communications, Inc. of substantially
all of its entertainment assets and liabilities to us. We completed the
separation on December 21, 2005, and became a publicly traded company on the New
York Stock Exchange trading under the symbol "LYV."
On January 25, 2010, we merged with Ticketmaster Entertainment LLC and it became
a wholly-owned subsidiary of Live Nation. Effective with the merger, Live
Nation, Inc. changed its name to Live Nation Entertainment, Inc.

Segment Overview
Our reportable segments are Concerts, Ticketing and Sponsorship & Advertising.
Concerts
Our Concerts segment principally involves the global promotion of live music
events in our owned or operated venues and in rented third-party venues, the
operation and management of music venues, the production of music festivals
across the world, the creation of associated content and the provision of
management and other services to artists. While our Concerts segment operates
year-round traditionally, we typically experience higher revenue during the
second and third quarters due to the seasonal nature of shows at our outdoor
amphitheaters and festivals, which primarily occur from May through October. Due
to the unprecedented stoppage of our concert events globally beginning in
mid-March due to the global COVID-19 pandemic, we do not expect that any quarter
in 2020 will follow our typical seasonality trend. Revenue and related costs for
events are generally deferred and recognized when the event occurs. All
advertising costs incurred during the year for shows in future
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years are expensed at the end of the year. If a current year event is
rescheduled into a future year, all advertising costs incurred to date are
expensed in the period when the event is rescheduled.
Concerts direct operating expenses include artist fees, event production costs,
show-related marketing and advertising expenses, along with other costs.
To judge the health of our Concerts segment, we primarily monitor the number of
confirmed events and fan attendance in our network of owned or operated and
third-party venues, talent fees, average paid attendance, market ticket pricing,
advance ticket sales and the number of major artist clients under management. In
addition, at our owned or operated venues and festivals, we monitor ancillary
revenue per fan and premium ticket sales. For business that is conducted in
foreign markets, we also compare the operating results from our foreign
operations to prior periods without the impact of changes in foreign exchange
rates.
Ticketing
Our Ticketing segment is primarily an agency business that sells tickets for
events on behalf of its clients and retains a portion of the service charges as
our fee. Gross transaction value ("GTV") represents the total amount of the
transaction related to a ticket sale and includes the face value of the ticket
as well as the service charge. Service charges are generally based on a
percentage of the face value or a fixed fee. We sell tickets through websites,
mobile apps, ticket outlets and telephone call centers. Our ticketing sales are
impacted by fluctuations in the availability of events for sale to the public,
which may vary depending upon scheduling by our clients. We also offer ticket
resale services, sometimes referred to as secondary ticketing, principally
through our integrated inventory platform, league/team platforms and other
platforms internationally. Our Ticketing segment manages our online activities
including enhancements to our ticketing websites and product offerings. Through
our websites, we sell tickets to our own events as well as tickets for our
clients and provide event information. Revenue related to ticketing service
charges is recognized when the ticket is sold for our third-party clients. For
our own events, where our concert promoters control ticketing, revenue is
deferred and recognized when the event occurs.
Ticketing direct operating expenses include call center costs and credit card
fees, along with other costs.
To judge the health of our Ticketing segment, we primarily review the GTV and
the number of tickets sold through our ticketing operations, the number of
clients renewed or added and the average royalty rate paid to clients who use
our ticketing services. In addition, we review the number of visits to our
websites, cost of customer acquisition, the purchase conversion rate, the
overall number of customers in our database, the number and percentage of
tickets sold via mobile and the number of app installs. For business that is
conducted in foreign markets, we also compare the operating results from our
foreign operations to prior periods without the impact of changes in foreign
exchange rates.
Sponsorship & Advertising
Our Sponsorship & Advertising segment employs a sales force that creates and
maintains relationships with sponsors through a combination of strategic,
international, national and local opportunities that allow businesses to reach
customers through our concert, festival, venue and ticketing assets, including
advertising on our websites. We drive increased advertising scale to further
monetize our concerts platform through rich media offerings including
advertising associated with live streaming and music-related content. We work
with our corporate clients to help create marketing programs that support their
business goals and connect their brands directly with fans and artists. We also
develop, book and produce custom events or programs for our clients' specific
brands, which are typically experienced exclusively by the clients' consumers.
These custom events can involve live music events with talent and media, using
both online and traditional outlets. We typically experience higher revenue in
the second and third quarters, as a large portion of sponsorships are associated
with shows at our outdoor amphitheaters and festivals, which primarily occur
from May through October. Due to the unprecedented stoppage of our concert
events globally beginning in mid-March due to the global COVID-19 pandemic, we
do not expect that any quarter in 2020 will follow our typical seasonality
trend.
Sponsorship & Advertising direct operating expenses include fulfillment costs
related to our sponsorship programs, along with other costs.
To judge the health of our Sponsorship & Advertising segment, we primarily
review the revenue generated through sponsorship arrangements and online
advertising, and the percentage of expected revenue under contract. For business
that is conducted in foreign markets, we also compare the operating results from
our foreign operations to prior periods without the impact of changes in foreign
exchange rates.
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Key Operating Metrics

                                     Three Months Ended                   Nine Months Ended
                                       September 30,                        September 30,
                                 2020                 2019           2020                  2019
                                             (in thousands except estimated events)
    Concerts (1)
    Events:
    North America                226                 7,249          5,009                20,137
    International                141                 1,879          2,571                 7,450
    Total estimated events       367                 9,128          7,580                27,587
    Fans:
    North America                208                22,777          5,945                47,587
    International                 61                 8,843          4,779                25,979
    Total estimated fans         269                31,620         10,724                73,566
    Ticketing (2)
    Fee-bearing tickets        1,323                55,348         28,801               158,558
    Non-fee-bearing tickets    8,392                61,664         70,031               182,529
    Total estimated tickets    9,715               117,012         98,832               341,087


 _________

(1)Events generally represent a single performance by an artist. Fans generally
represent the number of people who attend an event. Festivals are counted as one
event in the quarter in which the festival begins, but the number of fans is
based on the days the fans were present at the festival and thus can be reported
across multiple quarters. Events and fan attendance metrics are estimated each
quarter.
(2)The fee-bearing tickets estimated above include primary and secondary tickets
that are sold using our Ticketmaster systems or that we issue through
affiliates. This metric includes primary tickets sold during the period
regardless of event timing, except for our own events where our concert
promoters control ticketing which are reported when the events occur. The
non-fee-bearing tickets estimated above include primary tickets sold using our
Ticketmaster systems, through season seat packages and our venue clients' box
offices, along with tickets sold on our "do it yourself" platform. These
ticketing metrics are net of any refunds requested and any cancellations that
occurred during the period and up to the time of reporting of these financial
statements. Fee-bearing tickets include refunds of 5.2 million and 23.3 million
for the three and nine months ended September 30, 2020, respectively.



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Non-GAAP Measures
The following table sets forth the reconciliation of AOI to operating income
(loss):

                                                                  Stock-               Loss (gain)                                   Amortization of
                                          Operating               based               on disposal of           Depreciation           non-recoupable
                                           income              compensation             operating                  and              ticketing contract         Acquisition
                                           (loss)                expense                  assets               amortization              advances               expenses                AOI
                                                                                                            (in thousands)
Three Months Ended September 30, 2020
Concerts                               $   (281,625)$      39,635          $           208          $      65,794          $             -          $      2,603$ (173,385)
Ticketing                                  (197,407)                 5,422                       (1)                42,565                    9,178                (1,693)           (141,936)
Sponsorship & Advertising                    13,755                  2,533                        -                  6,634                        -                     -              22,922
Other and Eliminations                       (4,781)                     -                        1                  2,192                   (2,471)                    -              (5,059)
Corporate                                   (34,383)                 9,105                        -                  2,753                        -                   746             (21,779)
Total                                  $   (504,441)$      56,695          $           208          $     119,938          $         6,707          $      1,656$ (319,237)
Three Months Ended September 30, 2019
Concerts                               $    111,374$       3,195          $          (320)         $      71,247          $             -          $      9,028$  194,524
Ticketing                                    64,168                  1,570                       15                 39,562                   21,783                   228             127,326
Sponsorship & Advertising                   133,243                    718                        -                 11,332                        -                     -             145,293
Other and Eliminations                          (58)                     -                        -                    145                   (1,930)                    -              (1,843)
Corporate                                   (48,686)                 6,515                        -                  4,020                        -                    (1)            (38,152)
Total                                  $    260,041$      11,998          $          (305)         $     126,306$        19,853$      9,255$  427,148
Nine Months Ended September 30, 2020
Concerts                               $   (722,607)$      66,376          $           896          $     202,352          $             -          $    (19,269)$ (472,252)
Ticketing                                  (480,460)                11,219                        -                125,054                   44,122                  (750)           (300,815)
Sponsorship & Advertising                    40,764                  5,207                        -                 21,766                        -                     -              67,737
Other and Eliminations                      (13,034)                     -                        1                  6,630                   (5,289)                    -             (11,692)
Corporate                                   (89,841)                24,163                        -                  8,983                        -                 2,094             (54,601)
Total                                  $ (1,265,178)$     106,965          $           897          $     364,785$        38,833$    (17,925)$ (771,623)
Nine Months Ended September 30, 2019
Concerts                               $    112,942$       9,826          $          (675)         $     176,827          $             -          $     33,774$  332,694
Ticketing                                   170,914                  4,675                      122                116,465                   58,680                   678             351,534
Sponsorship & Advertising                   256,787                  2,027                        -                 24,780                        -                     -             283,594
Other and Eliminations                         (402)                     -                        -                    404                   (4,560)                    -              (4,558)
Corporate                                  (132,477)                20,396                        -                 10,568                        -                     -            (101,513)
Total                                  $    407,764$      36,924          $          (553)         $     329,044$        54,120$     34,452$  861,751


Adjusted Operating Income (Loss)
AOI is a non-GAAP financial measure that we define as operating income (loss)
before certain stock-based compensation expense, loss (gain) on disposal of
operating assets, depreciation and amortization (including goodwill impairment),
amortization of non-recoupable ticketing contract advances and acquisition
expenses (including transaction costs, changes in the fair value of accrued
acquisition-related contingent consideration obligations, and
acquisition-related severance and compensation). We use AOI to evaluate the
performance of our operating segments. We believe that information about AOI
assists investors by allowing them to evaluate changes in the operating results
of our portfolio of businesses separate from non-operational factors that affect
net income (loss), thus providing insights into both operations and the other
factors that affect reported results. AOI is not calculated or presented in
accordance with GAAP. A limitation of the use of AOI as a performance measure is
that it does not reflect the periodic costs of certain amortizing assets used in
generating revenue in our business. Accordingly, AOI should be considered in
addition to, and not as a substitute for, operating income (loss), net income
(loss), and other measures of financial performance reported in accordance with
GAAP. Furthermore, this measure may vary among other companies; thus, AOI as
presented herein may not be comparable to similarly titled measures of other
companies.
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AOI Margin
AOI margin is a non-GAAP financial measure that we calculate by dividing AOI by
revenue. We use AOI margin to evaluate the performance of our operating
segments. We believe that information about AOI margin assists investors by
allowing them to evaluate changes in the operating results of our portfolio of
businesses separate from non-operational factors that affect net income (loss),
thus providing insights into both operations and the other factors that affect
reported results. AOI margin is not calculated or presented in accordance with
GAAP. A limitation of the use of AOI margin as a performance measure is that it
does not reflect the periodic costs of certain amortizing assets used in
generating revenue in our business. Accordingly, AOI margin should be considered
in addition to, and not as a substitute for, operating income (loss) margin, and
other measures of financial performance reported in accordance with GAAP.
Furthermore, this measure may vary among other companies; thus, AOI margin as
presented herein may not be comparable to similarly titled measures of other
companies.
Constant Currency
Constant currency is a non-GAAP financial measure. We calculate currency impacts
as the difference between current period activity translated using the current
period's currency exchange rates and the comparable prior period's currency
exchange rates. We present constant currency information to provide a framework
for assessing how our underlying businesses performed excluding the effect of
foreign currency rate fluctuations.
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Segment Operating Results
Concerts
Our Concerts segment operating results were, and discussions of significant
variances are, as follows:
                                                 Three Months Ended                   %                    Nine Months Ended                     %
                                                   September 30,                   Change                    September 30,                    Change
                                             2020                 2019                                 2020                  2019
                                                   (in thousands)                                            (in thousands)
Revenue                                  $  154,791$ 3,173,843            (95)%         $ 1,290,007$ 7,131,491            (82)%
Direct operating expenses                   113,283            2,636,344            (96)%           1,046,405             5,853,380            (82)%
Selling, general and administrative
expenses                                    257,131              355,198            (28)%             762,961               989,017            (23)%
Depreciation and amortization                65,794               71,247            (8)%              202,352               176,827             14%
Loss (gain) on disposal of operating
assets                                          208                 (320)             *                   896                  (675)             *

Operating income (loss)                  $ (281,625)$   111,374              *           $  (722,607)$   112,942              *
Operating margin                                     *               3.5  %                             (56.0  %)               1.6  %
AOI **                                   $ (173,385)$   194,524              *           $  (472,252)$   332,694              *
AOI margin **                                        *               6.1  %                             (36.6  %)               4.7  %


_______

* Percentages are not meaningful. ** See "-Non-GAAP Measures" above for the definition and reconciliation of AOI and AOI

       margin.


Three Months
Revenue
Concerts revenue decreased $3.0 billion during the three months ended
September 30, 2020 as compared to the same period of the prior year primarily
due to the continued unprecedented stoppage of our concert events globally
throughout the third quarter of 2020. Due to the global COVID-19 pandemic,
beginning in mid-March 2020 we ceased all of our tours, closed our venues and
cancelled or postponed our festivals to support global efforts at social
distancing and mitigating the virus, and to comply with restrictions put in
place by various governmental entities. Concerts had incremental revenue of
$26.8 million from acquisitions, primarily that of a merchandise business.
Operating results
The decrease in Concerts operating results for the three months ended
September 30, 2020 was primarily driven by the reduction in revenue related to
the global COVID-19 pandemic discussed above partially offset by cost reduction
measures implemented during 2020, which have included salary reductions, hiring
freezes, furloughs, and reduction or elimination of other discretionary spending
along with participating in government support programs globally.
Nine Months
Revenue
Concerts revenue decreased $5.8 billion during the nine months ended
September 30, 2020 as compared to the same period of the prior year primarily
due to the reduction in revenue caused by the global COVID-19 pandemic discussed
above. Concerts had incremental revenue of $123.3 million from the acquisitions
of concert promotion, venue management and merchandise businesses.
Operating results
The decrease in Concerts operating results for the nine months ended
September 30, 2020 was primarily driven by the impact of the global COVID-19
pandemic discussed above. Concerts operating results for the nine months ended
September 30, 2020 include net operating losses of $44.6 million related to
acquisitions and new venues.
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Ticketing
Our Ticketing segment operating results were, and discussions of significant
variances are, as follows:
                                           Three Months Ended                  %                   Nine Months Ended                    %
                                             September 30,                  Change                   September 30,                   Change
                                        2020                2019                               2020                 2019

                                             (in thousands)                                          (in thousands)
Revenue                             $  (19,822)$ 388,458              *           $  177,436$ 1,096,865            (84)%
Direct operating expenses                8,503            127,123            (93)%            120,967              359,502            (66)%
Selling, general and administrative
expenses                               126,518            157,590            (20)%            411,875              449,862            (8)%
Depreciation and amortization           42,565             39,562             8%              125,054              116,465             7%
Loss (gain) on disposal of
operating assets                            (1)                15              *                    -                  122              *

Operating income (loss)             $ (197,407)$  64,168              *           $ (480,460)$   170,914              *
Operating margin                                *            16.5  %                                   *              15.6  %
AOI **                              $ (141,936)$ 127,326              *           $ (300,815)$   351,534              *
AOI margin **                                   *            32.8  %                                   *              32.0  %


_______

* Percentages are not meaningful. ** See "-Non-GAAP Measures" above for the definition and reconciliation of AOI and AOI

       margin.


Three Months
Revenue
Ticketing revenue decreased $408.3 million during the three months ended
September 30, 2020 as compared to the same period of the prior year primarily
due to refunds for cancelled events for third-party clients and the lack of
tickets available for sale to the public driven by the unprecedented stoppage of
concerts, sports and other events globally during the third quarter of 2020 due
to the global COVID-19 pandemic.
Operating results
The decrease in Ticketing operating results for the three months ended
September 30, 2020 was primarily due to the reduction in revenue caused by the
global COVID-19 pandemic discussed above. This decrease was partially offset by
cost reduction measures implemented during 2020, including salary reductions,
hiring freezes, furloughs, and reduction or elimination of other discretionary
spending along with participating in government support programs globally.
Nine Months
Revenue
Ticketing revenue decreased $919.4 million during the nine months ended
September 30, 2020 as compared to the same period of the prior year primarily
due to the reduction in revenue caused by the global COVID-19 pandemic discussed
above.
Operating results
The decrease in Ticketing operating results for the nine months ended
September 30, 2020 was primarily driven by the impact of the global COVID-19
pandemic discussed above, without a proportionate reduction in direct operating
expenses as credit card fees and other costs associated with processing refunds
and responding to fan and ticketing client inquiries continued.
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Sponsorship & Advertising
Our Sponsorship & Advertising segment operating results were, and discussions of
significant variances are, as follows:
                                           Three Months Ended                 %                  Nine Months Ended                  %
                                             September 30,                 Change                  September 30,                 Change
                                        2020               2019                               2020               2019
                                             (in thousands)                                       (in thousands)
Revenue                              $ 47,927$ 215,247            (78)%         $ 156,560$ 441,862            (65)%
Direct operating expenses               8,647             41,617            (79)%            34,369             80,634            (57)%
Selling, general and administrative
expenses                               18,891             29,055            (35)%            59,661             79,661            (25)%
Depreciation and amortization           6,634             11,332            (41)%            21,766             24,780            (12)%

Operating income (loss)              $ 13,755$ 133,243            (90)%         $  40,764$ 256,787            (84)%
Operating margin                         28.7  %            61.9  %                            26.0  %            58.1  %
AOI **                               $ 22,922$ 145,293            (84)%         $  67,737$ 283,594            (76)%
AOI margin **                            47.8  %            67.5  %                            43.3  %            64.2  %


_______

** See "-Non-GAAP Measures" above for the definition and reconciliation of AOI and AOI

      margin.


Three Months
Revenue
Sponsorship & Advertising revenue decreased $167.3 million during the three
months ended September 30, 2020 as compared to the same period of the prior year
primarily due to a reduction in sponsorship revenue associated with our venues,
festivals and lack of online activity as ticket sales declined driven by the
unprecedented stoppage of events beginning in mid-March of 2020 due to the
global COVID-19 pandemic.
Operating results
The decrease in Sponsorship & Advertising operating results for the three months
ended September 30, 2020 was primarily driven by the reduction in revenue
discussed above. In addition, cost reduction measures were implemented during
2020, including salary reductions, hiring freezes, furloughs, and reduction or
elimination of other discretionary spending along with participating in
government support programs globally.
Nine Months
Revenue
Sponsorship & Advertising revenue decreased $285.3 million during the nine
months ended September 30, 2020 as compared to the same period of the prior year
primarily due to the reduction in revenue caused by the global COVID-19 pandemic
discussed above.
Operating results
The decrease in Sponsorship & Advertising operating income for the nine months
ended September 30, 2020 was primarily driven by the impact of the global
COVID-19 pandemic discussed above along with higher fulfillment costs on certain
sponsorship programs.

                                       39

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