By Glenn Peoples, Nashville
Ticketmaster’s Q1 2009 earnings release on Tuesday saw the company being impacted by the loss of Live Nation ticketing volume, the Bruce Springsteen ticketing fiasco in New Jersey and the proposed merger with Live Nation. Like many other companies in the entertainment world, Ticketmaster praises its long-term strategy of acquisitions, synergies and cost-cutting. And like many other entertainment companies attempting to lure cash-conscious consumers, Ticketmaster can point to middling results rather than clear-cut successes.
This was Ticketmaster’s first quarter since Live Nation contracts began to expire and the concert promotion giant began selling its own tickets in January. With the loss of Live Nation, Ticketmaster’s ticket volume was down 6% and the value of those tickets was down 7%. Those losses from Live Nation took away $8 million from Ticketmaster’s profits, which fell 78% to $7.2 million on $373.8 million in revenues (a 7% increase). The company said ticket value was down only 1% excluding Live Nation.
TicketsNow, Ticketmaster’s secondary ticketing service, has proved to be a problem child. A settlement with the Attorney General of New Jersey cost the company $350,000. Even worse are the effects of changes at TicketsNow that pulled $15 million in profits from the bottom line in Q1. As a part of the settlement, tickets cannot be posted to TicketsNow until primary tickets go on sale. In addition, customers will be informed about and provided a link to primary tickets at Ticketmaster.com if the event is not yet sold out. Those changes are good for consumers but will lower short term profits. The best long-term strategy, however, may be to acquiesce to government demands and forego further punishment and financial pain. In the context of a longer time frame, changes at TicketsNow are prudent.
Merger costs were also a big part of Q1 results, amounting to $6.5 million during the period. Ticketmaster said yesterday over half its bank lenders have approved the proposed merger with Live Nation. Both Live Nation and Ticketmaster believe their merger will be approved later this year. Recent statements by antitrust officials at the Department of Justice, however, give hints the merger will face far greater scrutiny than had it been pushed through during the previous administration.
With a traditionally slow Q1, the Artist Services division (via the merger with Front Line) contributed only $34.8 million of revenue and $4.4 million of EBITDA. This division will continue to be in flux will take some time to reach its potential as Front Line is re-shaped and fit into the larger, merged company. It continues to acquire smaller competitors -- Mick Management (John Mayer) in November 2008, for example, and Dale Morris (Kenny Chesney, Big & Rich) just recently.
The company has decided to move Echo, the online e-commerce and artist services company Ticketmaster acquired in March 2007, to Los Angeles. Judging from conversations with involved parties, the transition could easily be a drag on artist relationships and the division’s Q3 performance. There is a good chance the transition will cause lower levels of e-commerce, and the loss of employees means an absence of knowledge and relationships that Front Line will need to service the handful of Echo clients Ticketmaster will keep.
One bright spot was a resilient average revenue per ticket, which increased 1% in the domestic market as ticketing volume dropped 9%. Global ticketing volume was down 8%. The concerts segment was down 9%.
Ticketmaster’s Q1 2009 earnings release on Tuesday saw the company being impacted by the loss of Live Nation ticketing volume, the Bruce Springsteen ticketing fiasco in New Jersey and the proposed merger with Live Nation. Like many other companies in the entertainment world, Ticketmaster praises its long-term strategy of acquisitions, synergies and cost-cutting. And like many other entertainment companies attempting to lure cash-conscious consumers, Ticketmaster can point to middling results rather than clear-cut successes.
This was Ticketmaster’s first quarter since Live Nation contracts began to expire and the concert promotion giant began selling its own tickets in January. With the loss of Live Nation, Ticketmaster’s ticket volume was down 6% and the value of those tickets was down 7%. Those losses from Live Nation took away $8 million from Ticketmaster’s profits, which fell 78% to $7.2 million on $373.8 million in revenues (a 7% increase). The company said ticket value was down only 1% excluding Live Nation.
TicketsNow, Ticketmaster’s secondary ticketing service, has proved to be a problem child. A settlement with the Attorney General of New Jersey cost the company $350,000. Even worse are the effects of changes at TicketsNow that pulled $15 million in profits from the bottom line in Q1. As a part of the settlement, tickets cannot be posted to TicketsNow until primary tickets go on sale. In addition, customers will be informed about and provided a link to primary tickets at Ticketmaster.com if the event is not yet sold out. Those changes are good for consumers but will lower short term profits. The best long-term strategy, however, may be to acquiesce to government demands and forego further punishment and financial pain. In the context of a longer time frame, changes at TicketsNow are prudent.
Merger costs were also a big part of Q1 results, amounting to $6.5 million during the period. Ticketmaster said yesterday over half its bank lenders have approved the proposed merger with Live Nation. Both Live Nation and Ticketmaster believe their merger will be approved later this year. Recent statements by antitrust officials at the Department of Justice, however, give hints the merger will face far greater scrutiny than had it been pushed through during the previous administration.
With a traditionally slow Q1, the Artist Services division (via the merger with Front Line) contributed only $34.8 million of revenue and $4.4 million of EBITDA. This division will continue to be in flux will take some time to reach its potential as Front Line is re-shaped and fit into the larger, merged company. It continues to acquire smaller competitors -- Mick Management (John Mayer) in November 2008, for example, and Dale Morris (Kenny Chesney, Big & Rich) just recently.
The company has decided to move Echo, the online e-commerce and artist services company Ticketmaster acquired in March 2007, to Los Angeles. Judging from conversations with involved parties, the transition could easily be a drag on artist relationships and the division’s Q3 performance. There is a good chance the transition will cause lower levels of e-commerce, and the loss of employees means an absence of knowledge and relationships that Front Line will need to service the handful of Echo clients Ticketmaster will keep.
One bright spot was a resilient average revenue per ticket, which increased 1% in the domestic market as ticketing volume dropped 9%. Global ticketing volume was down 8%. The concerts segment was down 9%.
