Live Nation likely to prevail in DOJ fight, Roth says

Don’t count out Live Nation (Live Nation Stock Quote, Chart, News, Analysts, Financials NYSE:LYV) says Roth MKM analyst Eric Handler.

On May 23, the U.S. Justice Department announced it would sue Live-Nation-Ticketmaster for monopolizing the live concert market.

“We allege that Live Nation relies on unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the United States at the cost of fans, artists, smaller promoters, and venue operators,” said Attorney General Merrick B. Garland. “The result is that fans pay more in fees, artists have fewer opportunities to play concerts, smaller promoters get squeezed out, and venues have fewer real choices for ticketing services. It is time to break up Live Nation-Ticketmaster.”

While shares of LYV were slammed on the announcement they have battled back in the days since. Handler says he thinks LYV has the upper hand.

“The DOJ appears to be fighting an uphill battle,” the analyst wrote. “In our view, the DOJ’s lawsuit which aims to breakup Live Nation will have difficulty in succeeding. The company intends to vigorously fight this lawsuit and believes it has acted in accordance with its consent decree. It is willing to discuss certain remedies, which we do not expect to be transformative for the business.”

In a research update to clients May 24, Handler maintained his “Buy” rating and price target of $120.00 on LYV.

The analyst thinks the company will post EBITDA of $2.14-billion on revenue of $24.8-billion in fiscal 2024. He expects those numbers will improve to EBITDA of $2.34-billion on a topline of $27.8-billion in fiscal 2025.

“Claims of monopolistic and anti-competitive behaviors seem tough to prove,” the analyst concluded. “First, the company is largely a price taker in its Concerts business as artists are the ones who determine ticket prices. The segment’s AOI margin was just 1.7% in 2023 and since 2016 has never been higher than 2.6%. Second, claims about excessive fees paid to Ticketmaster by fans appear challenged as the average fee per ticket in 2023 was ~$9.00 and has declined 20% since 2016. Live Nation has stated its digital distribution take rate is 5%, which is well below fees charged by companies such as Sony Playstation (SONY-NC; 30% take rate), Apple iStore (AAPL, NC; 30%), Uber (UBER, Buy; 25%), airbnb (ABNB, NC; 17%). The majority of the fees paid by consumers for concert tickets come from venues.”