Live Nation’s virtual monopoly makes it a winner, this fund manager says

Music fans may begrudge the name but investors are making out like bandits with Live Nation Entertainment (Live Nation Entertainment Stock Quote, Chart, News NYSE:LYV), whose share price has doubled over the past two years.

No wonder, says Scotia Wealth’s Stan Wong, who likes Live Nation for its stranglehold on the concert industry.

“It’s not in our portfolio at this point, but if you take a look at their profile, they’ve got Ticketmaster, they own Live Nation, which is the artists and how they market them, the concerts and so forth. They almost have a monopoly on the business,” says Wong, portfolio manager and director of wealth management at Scotia Wealth, in conversation with BNN Bloomberg on Wednesday.

“There are other players out there but I like this near-oligopoly or monopoly that they have,” he says.

Formed out of the merger of Live Nation and Ticketmaster in 2010 in deal which gave the company control over 140 concert venues worldwide, Live Nation Entertainment is the market leader in concert promotion, ticketing and sponsorship. And as anyone who has been to a few show over the years knows, ticket prices have jumped considerably, enough to boost Live Nation’s bottom line but also to raise the ire of lawmakers.

Billboard reported in late August that two US Senators have called upon the Justice Department to investigate ticketing practices that the Senators think raise anti-trust issues, stating that Live Nation raises “serious concerns that online ticket markets are not working for American consumers.”

Live Nation Entertainment Stock up sharply over the past few years…

Live Nation’s share price has been steadily increasing over the past three years, rising from the $20 level by mid-2016 to where it currently resides above $70 per share. Year-to-date, LYV is now up a sparkling 44 per cent.

“If you look at the chart it looks very, very strong,” says Wong. “81 per cent of their revenue comes from concerts, 13 per cent from ticketing and the rest is sponsorship and advertising and so forth. You know that when you’re buying or selling tickets on Ticketmaster that you’re paying a fee.”

“I like this stock and the technicals on it,” he says.

Live Nation last reported its quarterly numbers in late July where its second quarter 2019 featured revenue up ten per cent year-over-year to $3.2 billion and earnings of $0.41 per share, up from $0.24 per share a year earlier. The company saw its Concerts segment sales grow by 11 per cent to $2.64 billion, while Ticketing climbed six per cent to $370.8 million and Sponsorship and Advertising sales increased by eight per cent to $151.5 million. Overall during the quarter, the company says that about 27 million customers paid to see Live Nation shows at about 10,000 events.

“We have created the most scalable and unparalleled business model in the industry, building a platform that brings over 570 million fans in 45 countries to live events each year. With our key metrics in concerts, sponsorship and ticketing all pacing well ahead of last year, we are confident that in 2019 the company will again deliver double-digit operating income and AOI growth,” the company said in its quarterly press release.

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