Is Live Nation's day of reckoning approaching?
ON THE RECORD: JIM CARROLLon musicThe bigger they are, the harder they fall. As the music-business story of the summer continues to be about cancelled shows and underperforming gigs, industry big cheese Live Nation has found itself in a huge stock-market slump.
Last week the company lost $432 million (€333 million) of its market capitalisation as shares collapsed by more than 20 per cent after a warning about weak ticket sales.
The dive was accelerated by a botched investor presentation. As the company attempted to blame the media and dismiss Pollstar data (while simultaneously citing stats from that company in another part of the presentation), investors got nervous. Live Nation boss Irving Azoff’s strop about “short-sighted” investors didn’t help the mood either. Cue a massive sell-off.
Live Nation’s day of reckoning has been on the cards for some time. The problem for the company is that its business model is flaky and the numbers have never added up.
The company has operated as a music-biz Pac-Man in recent years, gobbling up everything in sight, including venues, promoters and Ticketmaster, as well as moving into non-core areas such as labels and artist management.
But the current slump in the music market means Live Nation’s revenue projections are off, and its core concert-management business has consistently been in the red since 2005.
It’s worth noting that Live Nation’s exposure is not just confined to the US market. It is a significant European player, controlling a large chunk of the UK market via its partnership with MCD boss Denis Desmond’s Gaiety Investments.
In a recent interview with IQ magazine, Desmond revealed his business plan: “In England, we’ve got Live Nation/Gaiety, which works great, and the plan is to recreate that in Ireland. We are talking; we are nearly there.”
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