Live Nation Entertainment Inc (LYV) 2006 Q4 法說會逐字稿

Good afternoon. My name is Mary, and I'll be your conference facilitator today. At this time, I would like to welcome everyone to the Live Nation fourth quarter 2006 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. [OPERATOR INSTRUCTIONS]

Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to Live Nation's SEC filing for a description of risks and uncertainties that could impact the actual results. It is now my pleasure to turn the floor over to Alan Ridgeway, Chief Financial Officer. Sir, you may begin your conference.

Thank you and good afternoon, everyone. Welcome to our fourth quarter 2006 conference call. We are going to change the order a bit for this call. I'll start by reviewing the year and the quarter and then I'll turn it over to Michael to provide his comments.

To start with, let me point out that we will refer to some non-GAAP measures in this presentation and in accordance with SEC regulation G, we have provided a full reconciliation as to the most comparable GAAP measures in the earnings release. This release can also be found on Live Nation.com, under the About Us section.

For the full year 2006 our revenues were $3.7 billion, up $755 million or 26% as compared to 2005. And adjusted EBITDA increased by [$15.inaudible] million to $153.1 million. The key drivers of our revenue growth in 2006 were our acquisition of Concert Production International, or CPI, which promoted The Rolling Stones, Barbra Streisand and The Who, our overall increased show counts and attendance, and to a lesser extent, the contribution from our acquisition of House of Blues in November and Musictoday in September. As for adjusted EBITDA, a large driver of this growth was the acquisition of CP I. Increased EBITDA in our venues and sponsorship and digital distribution segments as a result of additional show counts and new food and beverage initiatives, offset by increased losses in our events segments due to 150 additional amphitheater shows, which of course, helped drive the increase in venues and digital.

In addition,we incurred increased costs due to our reinvestment initiatives, such as the development of a centralized venue management group, our online division, an increased cost associated with being an independent public company. On a pro forma basis, excluding the impact of our 2006 acquisitions of CPI, TRUNK, Musictoday and House of Blues, but including the full year impact of our 2005 acquisition of Mean Fiddler, and excluding the results for our exhibition and sports representation businesses, the majority of which were sold in 2005 and 2006, we estimate our revenue for the full year would have increased by $493 million or 17% to $3.4 billion.

As previously discussed, this increase was primarily due to the increase in the number of events in attendance in our Global Music business. On the same basis, adjusted EBITDA would have decreased by $4.2 million to $126 million. Its decline, as was previously discussed, primarily due to increased corporate costs associated with being a public company, an investment in our venue management and our online business.

Moving on for the fourth quarter, our fourth quarter revenues were $1.1 billion, an increase of $300 million or 39% as compared to the fourth quarter of 2005. And adjust EBITDA increased by $14.8 million to $18 million. Similar to the full year, the fourth quarter 2006 was positively impacted by our acquisitions of CPI, House of Blues and Musictoday. On a pro forma basis for the fourth quarter of 2006, we would have reported revenues of $1.1 billion, an increase of $300 million or 40% as compared to 2005 and adjusted EBITDA would have remained virtually flat, with 2006 adjusted EBITDA at break even compared to $800,000 profit in 2005.

Turning to the segments, first events. As a reminder, our event segment includes only cash flows related to the concert or event. The revenue in our event segment is primarily derived from ticket sales and expenses include talent fees, rent if the show is in a third party venue, and show production and appetizing costs, as well as SG&A. During the course of the number of events we held, excluding our exhibitions and sports business and any third party rentals, increased by 1400 and attendance increased by $1.5 million. Events revenue increased by $243 million to $857 million or a 40% increase over the prior year. This growth was due primarily to the acquisition of CP I which had the Rolling Stones and Barbra Streisand tours and House of Blues, which were not included in our results during 2005 and which generated a at the time al of $190 million of events revenue during the quarter.

In addition, revenue growth came from our production of Fountain, the Las Vegas Spectacular, which opened in June 2006, improved revenues from our global touring business, mainly attributed to U2, and stronger promotion activity in mainland Europe, arising from tours such as George Michael, Iron Maiden, Bruce Springsteen and the Red Hot Chili Peppers. These improvements in revenue were offset by a decline in our North American and UK music business due to lower than average ticket prices for arena shows in North America, 2005 prices being driven by Paul McCartney and The Eagles tours, and reduced touring credits in the UK, 2005 again being driven by the Red Hot Chili Peppers and Iron Maiden tours. Our events EBITDA also improved by $8 million, to a loss of $13.6 million, primarily due to the acquisition of CPI and House of Blues, which generated a total of $15 million, offset by decline from a weaker UK music business as just described.

Next venues and sponsorship. As a reminder, our venues and sponsorship segment captures all of the revenue and expenses associated with the venues. Revenue includes food and beverage, parking and sponsorship. Expenses include rent, other than your phrasing costs in SG&A. During the quarter, venues and sponsorship revenues increased by $60 million to $167 million or a 56% increase over the same period for the prior year. This growth was primarily due to the acquisition of House of Blues, which generated $29 million of venues and sponsorship revenue during the quarter.

In addition, revenue growth came from the increased attendance generated by the activities in our events segment, a 16.7% increase in food and beverage revenue per fan in our North American venues, primarily associated with the mix of shows which played our amphitheaters during the quarter in 2006, and improvement in our UK theatrical venues, due to long-running productions of Wicked and The Lion King, and also the inclusion of Wembley Arena under a management contract that became effective in April 2006. Venues and sponsorship EBITDA increased by $8.6 million to $19.9 million, a 76.9% increase over the same period for the prior year, primarily for the same reasons as the revenue growth.

Next digital distribution. As a reminder, our distribution segment captures service charge rebates we receive from Ticketmaster or other ticketing service providers, as well as service charges from our in-house ticketing system and revenues from Musictoday. During the quarter, digital distribution revenues increased by $12 million to $28 million, a 77% increase over the same period for the prior year. This increase was primarily due to the acquisitions of Musictoday and House of Blues, which together generated $10 million of digital distribution revenue in the quarter.

In addition, [inaudible] was the result of increased attendance generated by the activities in our events segment, as the additional ticket sales resulted in additional service charge rebates. Digital distribution adjusted EBITDA increased by $2.6 million to $16.7 million, an 18.3% increase over the same period for the prior year. The increase in adjusted EBITDA was lower than the increase in revenue due to a $9.6 million increase in operating expenses, which is primarily driven by a full quarter of operating expenses for Musictoday, as well as the cost of our website and internet management group, which did not exist in the fourth quarter of 2005.

Turning to some other financial metrics, capital expenditures were $14.7 million for the quarter. Of this amount, $7.3 million was associated with maintenance expenditure, $4.3 million related primarily to the construction of the Dallas is House of Blues venue scheduled to open in May and the remaining $3 million was from other revenue-generating projects at Live Nation.

Free cash flow, which we define as adjusted EBITDA as maintenance capital expenditure, less net interest expense and cash taxes, as the cash flow to minority interest partners and the cash flows from [inaudible] non-consolidated affiliates, was $54 million for the year and $8 million for the quarter. As of December 31, our reported cash balance was $314 million. We estimate our free cash balance, the cash that we estimate not attributable to future shows, at $36 million and our total debts and preferred stock total $679 million.

Finally, I would like to make some comments which I hope will help you better understand your real estate situation. You'll find in the 10-K that we have provided of you with a table of all our venues, listing out which are owned, operated or exclusively booked. You'll see in the 10-K that we own 35 venues. As you know, last year we hired CB Richard Ellis to complete a review of our real estate on an alternative-use basis. We used that analysis in connection with our own extensive analysis to determine the venues we have listed for sale.

In addition, there are a number of venues which we expect to be sold in the connection of the sale of North American Theatrical. While we continue to evaluate the potential for benefits to the company and shareholders from real estate and may put up additional venues for sale from time-to-time, the venues we have designated for sale represent the bulk of opportunity we currently see.

I will now turn the call over to Michael for his comments.

Thank you, Alan. And thank you for joining us everyone.

Standing here today with one year of operations behind us, I feel energized. I look back over the three years before Live Nation was spun off as a stand-alone company and see a business that was going in a lot of different direction, had lost focus and was in decline. In 2006, we stemmed the decline with our aggressive show count and acquisition strategy. We have gained focus and have built critical momentum. As those of you who have been on the calls before know, I have from the beginning laid our three-year vision from the date of our spin of transforming Live Nation from a middle-man service provider to a vertically-integrated, global live music company, connecting artists and fans through live music and capturing all the incremental revenue streams along the way.

The music industry is changing quickly and historic business models are being challenged. For Live Nation this is a great opportunity. We have a unique and powerful set of virtually unreplicatable assets that we believe gives us the foundation to transform ourselves into the next generation music power player. We believe there are two groups that are gaining strength in the music business: the artist and the fans. And Live Nation sits directly inbetween them.

In 2006 we spent $1.6 billion on artist talent fees and studies show that those dollars are becoming more and more important to the artist and Live Nation along the way, as artists are increasingly making more money from touring than other revenue streams. In addition, we had almost 36 million music fans, which made a real commitment to the artist by purchasing a ticket which could cost upward of $75 to [inaudible] which attended our events in 2006. That is more than the NBA, NFL or NHL. We estimate the global music business is a $75 billion business, of which live music is approximately $16 billion. And of that Live Nation is more than $3 billion and the leader. From where we're sitting, there's a lot of new revenue to capture.

We believe that the music company of the future will be the one that delivers the artist a platform to earn revenue and fans a platform to acquire artist products and we can become that company. Our job is to put the artists and fans together. Not just for the night of live entertainment, but are far beyond that. In three years we expect you will see a Live Nation that has built a global live music platform that provides the artist an opportunity to tour and fans to purchase live products directly. We plan to get there by executing our three-prong strategy of one, fixing our core business, two, building on our global network and three, expanding our business offerings.

I will now take you through strategic highlights in 2006 and how we executed against this three-prong strategy. First, focusing on our core business and divesting of non-core businesses we sold a majority of our sports representation business. We sold a 49.9% stake in our Phantom of the Opera production in Las Vegas and certain other Las Vegas productions, we sold Donington Park, a non-core racetrack located in the UK, which together generated almost $60 million of proceeds to be reinvested in the business. We completed the review of our real estate and listed a number of venues where we believe the real estate value is higher than the value to us as a venue and today we announced that we intend to pursue the sale of our North American Theatrical division.

Our second strategy has been to aggressively build our global live platform. To that our biggest acquisition of the year was House of Blues and added 29 music venues to our portfolio. The acquisition also extended our reach into Canada, the sixth largest music market in the world and through this joint venture with House of Blues, we are the number one promoter in Canada. We completed our reorganization in December of House of Blues and reduced our head count by 80 people. The management of the seven House of Blues amphitheaters and six management offices have been folded seamlessly into our regional infrastructure and the ten House of Blues branded clubs remain a stand-alone business with great growth potential. We reaffirm our current expectation of achieving approximately $15 million of cost savings in connection with this acquisition, exclusive of the reduced approximately $5 to $6 million of related one-time costs.

Now that we have owned House of Blues for four months we feel even stronger for the potential to roll-out this brand nationally and internationally, and the integration of House of Blues has gone amazingly well. Our other acquisition, CPI, solidified our global touring platform by bringing on veteran promoter Michael Cohl, who delivered The Rolling Stones, Barbra Streisand and The Who. At the end of 2006 and beginning of 2007, we were able to acquire Gamerco, the number one promoter in Spain, the ninth largest music market, and Jackie Lombard Productions, the leading promoter in France, the fifth largest music market. These two European markets were critical for us to create a pan-European platform for sponsorship and tours.

Our third strategy has been about expanding our offerings to artists and fans to capture more live revenue. Acquisitions of Musictoday, UltraStar and TRUNK added artist merchandise, artist fan clubs, artist websites to the services that we offer. We believe that we should be able to leverage our concert relationships with artists to capture these live related product line revenues. Strategies beginning to work, for example Musictoday recently won the Gwen Stefani Tour by taking care of her fan club rights and Live Nation is producing the tour.

Finally and importantly in our quest to expand our model, we invested very aggressively in our online strategy. In 2006 we developed a significant online presence. In the course of six months we replaced 93 separate web presences with LiveNation.com and quickly became the number two entertainment event site in the U.S. We believe that this presence is the key to future revenue potential from e-commerce.

Operationally, we had a solid year. As you know by now, 2006 was a record year if the concert industry and Live Nation was a big part of driving that revenue growth. Pollstar estimates the North American concert industry was up 16% in total revenue and attendance for the top 100 tours was up 6%, a positive change from prior years, when attendance was down. This year we promoted or produced 7,850 music shows in North America and almost 10,500 globally, hosting 36.5 million music fans. Of the top ten tours for the year, Live Nation was involved in promoting or producing nine of the top ten tours, including blockbuster from The Rolling Stones, Barbra Streisand, U2, Madonna, whose tour was the highest-grossing tour for a female artist in history. Our strength in attracting the top talent to work with us continues to be seen in 2007, as we have announced a global tour for The Police, which is unbelievably already sold out all 16 of its current shows on sale.

Our 2007 objectives will continue on the fixed build and expand theme and include the following strategies: To drive profitability in our North American business by improving booking margins, increasing venue ancillary revenues per fan and growing local and national sponsorships and alliances. To continue to sell non-core assets, we've already announced our plans to sell select venues in North American Theatrical assets. To augment our international promoter network in major music markets around the world, we hope the acquisition of AMG in the UK will be completed early this year. To expand our festival House of Blues and mid-size music platform in North America. To extend our relationships with artists and maximize all live revenue opportunities. And to accelerate LiveNation.com online business through expanded offerings online and expansion to international markets.

With that, I will open up to questions. Operator?

Certainly, sir. [OPERATOR INSTRUCTIONS] We'll pause for just a moment to compile the Q & A roster. Our first question comes from Mark Weinkes from Goldman Sachs. Please go ahead.

Thanks for the question. Just wondering could you -- do you think the sale of the theater business would be sold to one buyer or multiple buyers? Or any thoughts on how that sale process might go? And then if you could prioritize the use of cash from that? And secondly any implications from the number [inaudible] presents sort of moving into receivership? And finally if you could just touch on the benefits that you saw of the internal reorganization and consolidating your North American music business. That's it.

Okay. I'll start. I missed you in the middle because your phone broke up on the question about some receivership.

Sorry. [Inaudible] in the competitive landscape and are there any implications for you from a market share perspective?

On the theater, we've started the process. We have had quite a bit of response. I would assume it will be a single buyer. There seems to be a lot of opportunities out there with people that are focused on that business line. So we would assume it will be a single purchase that would happen fairly quickly in 2007.

Yes, Jack, kind of old news. I know they've looked at certain assets. I don't think his was so much a business operational issue as maybe financing. But really has had no effect on the industry in whole. There is generally whether it's us, AEG, independents, there are a lot of healthy and strong promoters that are doing very well in 2006 and 2007. And the last was that about the organization restructure?

Yes, just consolidating North American Music.

Right. A year ago we didn't have that luxury because we still were balancing a lot of business lines. So over the year, by getting rid of our exhibition division and our sports division and now officially announcing our theater division, it now gives us an opportunity to put everyone in North America under one leadership, because everyone in North America is basically in the music business now. We think the three drivers, meaning sponsorship, events and venues, now driven by one leader and one strategy really finally help to bring all of those synergies together on each one of them reliant and interlaced. So we think we have now the strongest management team that we have had in history.

That's great. Thank you.

Our next question comes from John Klim from Credit Suisse. Please go ahead.

Hey, good afternoon guys. Can you touch on margins quickly? And if and when do you think that overall margins for the company could get back to SFX levels? And then any interest in selling your Motor Sports Division?

Alan will take the margin question.

Yes, John. Obviously we have had a few times about our margins and getting back to some of the SFX levels of the past. I think I probably mentioned it on the last call that obviously our margins are largely extended by revenue that comes from ticket sales. Which is fairly a lower margin part of our business.

I think what I would say is that I love the areas that we are moving into and increasing our venue management, and online and merchandise are much higher margins overall. So that will start to bring our margin up. But the overall company margin is so heavily driven by your ticket sales and the talent fees that these initiatives could end up just having a small impact on the bottom line margin.

Michael did you want to take the Motor Sports?

The Motor Sports -- at this point we obviously declared our core business is live music on a global basis. Motor Sports at this point -- we do not have plans to sell. We'll get through the current plan of theater divesture, continuing on our music platform and we'll re-evaluate the Motor Sports decision at another time if it's the right thing to do.

Great. Thanks. And then if I could just follow-up real quickly. Any way you'd want to quantify the after-tax expected proceeds from the sale of real estate?

No. Not at this stage.

Okay. Thanks.

You expected the answer there.

Our next question from David Kestenbaum from Morgan Joseph. Please go ahead.

Okay. Thank you. Michael, you talked about changing the business model and obviously this OzFest where you're giving away free tickets does change the business model. Can you talk about - is that going to be a trend going forward or is that just a one-off and how does that work economically for Live Nation?

Perfect. I think we may change the business model for us. The first step, just so we're clear, is historically our business model as a promoter was invest capital against the artist and count our money at the door and some peanuts and popcorn. And then, obviously, the end ticket was sold through a retailer called Ticketmaster or whoever. So we were very, very contained as a middleman. Our business transformation means we have to be vertically-integrated and we have to seize a lot of those revenue opportunities centered around the live event, whether that's the t-shirt, whether it's the fan club, whether it's streaming the show, whether it's more sponsorship. But using those two hours of rental content and participating in all of the revenue streams that are now fragmented and plentiful.

As far as OzFest then, really what that comes down to is anyway we can reduce our up front risk and share with the artist our back end, that's where we want to move the model to, any day of the week. So when an artist is committed, as Sharon and Ozzie were, to participating on the back end of the show, and reducing the up front risk significantly, that is a great model for us. Not enough artists will jump on that board quickly. But as we become more and more multi-streamed in our revenue streams that we can share with them, we can provide a great opportunity to the artist. When we start talking about three, four, six, seven ways we can share revenue on the back end of the event and prove to them that if 20,000 people show up, we have a lot of ways we can all make a lot of money together, versus just the up front guarantee, which has kind of been the model to date.

So are there other artists interested in this type of arrangement?

I think like anything in this industry, you'll see a lot of people will evaluate the model and if we put 20,000 people in 25 amphitheaters and generate a lot of money for the artist, it's a great case study.

Two financial questions. Can you talk about how big, revenue-wise and EBITDA-wise, the theater business is. And then why did the accounts receivable jump up year-over-year by a lot?

The basic revenue and EBITDA we are not giving out any detailed information on that at the moment because we are in the sale process. And the increase in our receivables year-on-year is largely the result of the acquisitions that have taken place and a bit of timing in terms of collections on some sponsorship revenues where there is some sponsorship coming in at the end of the year. So those collections will be in the first quarter.

Finally how does the 2007 summer touring season look?

I knew that was coming, David. We would like to tell you we had the crystal ball and could give you perfect guidance on this one. It's still early in the year. The good news was 2007 was a robust, record-breaking year. In terms after attendance with some of the biggest superstars out on the road. This year it doesn't look like the superstar lineup is on the road. The Police is out. There's some big tours in Europe.

But we are still a few months away from really knowing exactly who is going to get on the road this summer and the back end of the year. So at this point we are still fairly early in the year to give a real firm prediction on will we repeat or grow or not versus the 2006 base. The good news is The Police has gone on tour and has done -- not only did we know it was going to be big, but it has been bigger than anyone could have imagined. It's probably going to be one of the largest tours in history, if they continue on. So that's the good news and hopefully there is a few more of those looking to get on the road this summer.

Okay. Thanks.

Our next question comes from Tuna Amobi from Standard & Poor's. Please go ahead.

Thank you for taking the question. I guess the first on is, is there any update you can provide us on the -- I know it is still probably a year or more out, the contract renegotiations with Ticketmaster? And the ARAMARK? Anything that you would be targeting there? I know there has been speculation that those two contracts present significant potential offsets, so any color you could provide in general terms would be helpful.

We're not -- as business course, there -- we're in discussions. They're big suppliers and partners with us and we would respect their need and ours to continue through our negotiations. I will qualify that they're very different contracts.

ARAMARK is a food and beverage business that provides a great service to us. We're not a business where we believe that that is something we want to be in, in the future. It is a business that we think we can increase our margin on. On Ticketmaster, it's a business that we've been very clear this year that we want to be on the online business and have a much more direct relationship with the artist. And shake their hand on those 36 million people coming to our shows. So that one takes a little bit more time and will be a longer process to see if Ticketmaster and us continue to have a great future together and meet each other's needs.

Okay. Great. And my next question is on -- just trying to get a handle around the different segments. Better -- seems to me that the events segment, the way it's organized now, is it my understanding that you basically see that segment as a leader and hope that you can use venues and [inaudible] and digital distribution to make up for whatever losses that you sustained there? Or if that's not the case, what is it going to take to turn around in terms of profits and actually start making money in that events segment? Can you explain a little bit more about the dynamics over the long term?

Sure. Absolutely. We kind of mislead the numbers because of the size of our amphitheater number. As we said, we did over 10,000 concerts last year globally. We did about 900 on amphitheaters. 9,000 of those we would have made money at the door and not been a loss leader. 900 of those we would have lost money at the door because we own the amphitheater. So we get a little penalized by the artist because of the fact that when we own and count the parking money and the peanuts and the popcorn and the beer, the cost of talent tends to be higher to fill those venues.

So we don't want to -- and we realize this year in our segments the data looks like all of concerts are a loss leader to make inside ancillary revenue. That's actually not the case. In Europe we continue to make money at the door and in America on arenas and clubs and theaters, those 9,000 shows are not loss leaders. We make money at the door, we make money on our marketing and ticketing and any other revenue streams we have. The amphitheaters are the ones that have had an historic subsidy strategy of losing dollars at the door to drive 20,000 thousand people into the venue to drink, eat and park, and we are continually looking at means to reduce that loss leadership as in OzFest I just referred to. Anyway we can reduce our subsidy cost to get the bands to play and fill up the venues we are looking to do and we'll have a very aggressive booking strategy in 2007.

We are going to move to a different segment strategy in 2007 now that we are a pure-play based music company and now that we've consolidated North America, we will move our segments into a more, I think, useful basis for you, the Investor, to kind of add up the pieces to see truly what the business effect is. So right now, instead of having to add up amphitheaters, good or bad loss, digital ticket rebate, venue food and beverage to try to figure out how good that business is, going forward in 2007, we will shape our business into a North American segment, which will include our events, food, beverage and everything that drives that international segment and a global touring segment and an online segment.

And this starts by the end of 2007 you said?

We'll start that in Q-1 of 2007 and I think that will help all of you add up the pieces and have a better basis on how the business is truly measured.

Right. That's very helpful. Thanks a lot.

Our next question comes from Gordon Hodge from Thomas Weisel Partners . Please go ahead.

Yes. Good afternoon. Just a quick question on sponsorships. I'm just curious if you could give us a sense of what the tone for sponsorship revenue growth might be for 2007. What sort of advertiser interest you're seeing. And then if you could just give us a sense for what or how you're participating in the secondary ticket market opportunity and how that might change as we, I guess move toward the Ticketmaster negotiation.

Sure. Sponsorship continues to be one of our shining spots in our business. We have over 1300 sponsors of varying levels throughout the company on a global basis, whether that's a local, national or global. Over 250 sponsorship people every day waking up selling sponsorship. It continues to be we believe a double-digit growth business.

The entire industry, if you look at any statistics, from the marketing world, you'll see that event marketing is continually growing and has been growing in double-digits year after year. It looks like the advertiser in this fragmented marketplace is continuing to look for event-based marketing as part of his marketing mix to reach his consumer. So we believe that we have a great opportunity to turn those 1300 sponsors into long-term and continue with some great national and global opportunities. So that's a continued shining spot we'll invest in.

The secondary market the hot topic of all. I guess we are very excited to see that eBay believes StubHub is worth that level of valuation. I think it helps validate our strategy from day one that says the ticket is very valuable on who controls and sells the tickets are very valuable. And I think anyone that's in this business is spending their days figuring out how are we going to capture that live music secondary business.

Ticketmaster has a new program called Exchange. We're looking and working with them on at times and we continue looking at that market. I think the industry in general wants to figure out how to put that secondary revenue in that pot that the artist, the promoter and the participants share in. So we will continue to be very aggressive on solving how we participate in that growing market.

Great. Thank you.

Our next question comes from Dan [Kilmurray] from UBS. Please go ahead

Hi guys. Thank you very much. Michael and group, are there any theater assets that are non-U.S.? Or rather non-North America based?

Yes. Alan will take you through what we are selling and what we can't sell to date.

Yes, Daniel. You'll see it in our press release that went out this afternoon. But the parts of the business that we put up for sale are our Broadway Across America Presenting business in the U.S. and 13 of our venues within the U S. The Theatrical assets that we haven't put up for sale for various tax reasons are our UK theaters and then there's the two theaters in the U.S. -- The Hilton in New York and the Boston Opera House in Boston. Otherwise, everything else is included in the package.

And is this something we should anticipate? Are the tax reasons here time-related tax reasons? Or is this something that we're going to intend on owning indefinitely?

They're time-related. There is a couple of issues there, but the main one is related to the spinoff from Clear Channel last year. We believe it's a 5-year sort of time delay from spin on selling those assets.

Could you also spend a minute and explain the cash position? Because it's obviously a rolling number based on guarantees to artists, etc. Is there a way to understand how you would want us to look at the steady state, nature of what the net cash position might be?

We've introduced a measure I think a couple of quarters ago called "free cash" or "available cash." Where we take a balance sheet cash figure and then adjust it for various balance sheet accounts related to the future shows. Backing out some third revenues with respect a few shows and any advance costs we paid on those. So that's the number that I gave earlier on, on the call. And you'll see -- you see the details of that calculation in our press release.

And so, what I'm trying to get to, is there a seasonality to that, so that there are high points and low points based on you tying up cash for artist guarantees for upcoming tours? Just so we can get some sense of what that real number may be.

Well, yes. That's the free cash calculation. The idea is that that strips out the seasonality of the tours, if you like. If you were to ignore that, then yes, you're right. I would say the end of the fourth quarter is probably our lowest cash position. And then over the course of the beginning of the year you're building up cash balances as you have shows on sale. Through the summer and quarter 3 that cash starts going down as the shows play out and you're paying the artists.

So fourth quarter -- this number you gave us today of a free cash balance of $36 million would seasonally be the lowest number? Or should seasonally be the lowest point?

That's right. Yes.

Okay. And then, I just wanted to ask the question about the thing you mentioned about the 36 million attendees or customers, however you want to talk about it. Michael, you mentioned that number. What does that actually represent? Is that the total number of customers attending your live events globally?

Yes, that is a music number. We have used 60 million at times, which is our total number, if you counted theater, motor sports and music. But to help all of you get closer to understanding the business, we wanted to give you the exact music number of 36 million people that have bought a ticket and walked through a gate somewhere in the world to one of our shows.

And of the 36 million, how many of those do you believe you have ticketing rights to?

Well, it is a number in the 10-K we have put more detail behind that because the North American model ticketing is controlled by the venue. In the international markets, depending on what market you're in, the ticket may be controlled by the promoter who has an allocation.

Okay. So there's more detail on the 36 million that we could find in the K?

Yes, in the digital section of the K.

Okay.

Help everyone get to it clearer.

Okay. Thank you.

Thank you, everyone for your questions. And for joining us this evening. This concludes this evening's conference call. You may now disconnect your lines at this time, and have a wonderful day.