Live Nation Entertainment Inc (LYV) 2009 Q1 法說會逐字稿

At this time, I would like to welcome everyone to the Live Nation first quarter 2009 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 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 filings for a description of risks and uncertainties that could impact the actual results. Live Nation would also refer to some non-GAAP measures this call and in accordance with SEC Regulation G, Live Nation has provided a full reconciliation for the most comparable GAAP measure in the earnings release on their website. The release reconciliations and other financial or statistical information to be discussed on this call can be found on www.LiveNation.com/investors. It is now my pleasure to turn the call over to Mr. Michael Rapino, Chief Executive Officer. Sir, you may begin your conference.

Thank you. Good afternoon, everyone, and welcome to our 2009 first quarter conference call. I am joined today by my CFO, Kathy Willard. Our first quarter results were in line with our expectations on our key metrics that indicate we are on track to deliver our 2009 plan. Our first quarter is historically the slowest period of the year, but an important time as it provides a window how the full year will end up.

While the quarter results themselves are not a significant factor in the final year results, we believe that the key metrics of deferred revenue from tickets sold in the quarter for the summer events, in venue ending and sponsorship, are three trends that are very positive for this quarter, that indicate a strong summer. Overall, we're very optimistic about the full year given the strength of these three core metrics in Q1. Despite the challenges other media and entertainment companies are having in 2009, we have built our 2009 plan to deliver growth in adjusted operating income.

We plan to realize this growth through three levers. The first is new operating income from our 2008 investments in The Point in Ireland and two New House of Blues in Boston and Houston. Second, we will increase international ticket sales and, three, we will increase per head spend onsite in our North America amphitheaters. Fourth, we had planned on offsetting these increases by a slight reduction in sponsorship and a reduction in North American music ticket sales, netting to low double-digit adjusted operating income growth overall. To achieve growth in this economy is a testament to the resilience of the concert industry and our disciplined execution strategy. In 2009 we have two strategic priorities, deliver growth in our core business and increase free cash flow.

Let me take you through an update on the four main drivers of our core business, ticket sales, onsite revenue, sponsorship, and ticket fees. First is ticket sales. During the quarter, we delivered what we had planned, international music attendance was up 17% and North America was down 22% for a net concert decline of 10%. We had planned and assumed North America concerts would be down slightly since we had increased concert attendance last year dramatically. Our total number of events was essentially flat with international music up and North America music down.

Looking ahead our concert pipeline is robust and pacing ahead of last year as indicated by the nearly $700 million on our balance sheet in deferred revenue as of March 31st, a 24% increase from last year. Due to our strong April sales, current ticket sales as of today are pacing in line with last year, so we have made up any of the gap from our Q1 decline. There was no doubt the fans are continuing to come out to shows as we anticipated. We have a very strong lineup this year, U2's 360 tour has generated incredible demand, selling 2.5 million tickets. Madonna's extended leg in Europe has been another solid smash, and artists as a Nickelback, AC/DC, Coldplay, Aerosmith, Jimmy Buffet and the Jonas Brothers are well on track to sell out strong shows.

To stimulate incremental sales in North America amphitheaters, we're executing multiple promotions to drive value and provide low cost tickets for fans in this tough economy. This summer, we have over 3 million lawn tickets priced under $30, and have expanded our four pack to 70% of our shows. We're also running extensive price promotions with corporate partners such as Citi and 7-11 and working to expand the number of onsite offering tickets to affiliate programs to drive ticket sales to our site.

The second lever that drivers our business is onsite per head. Total revenue per attendee in the quarter was $66.48 versus $62.91 in the prior year, which indicates the fans are spending when they show up at the venue. In North America our in-venue ancillary revenue increased $3.06 per head compared to last year. One of our core strategies in 2009 is to drive in-venue spending in North America. With the reduced attendance expected throughout the year in North America, we knew driving more dollars from each fan was a key strategy.

We believe we'll achieve this in two-ways, first through higher margins food and beverage that will be an outcome of our new concession deal with SMG Aramark, which will increase profits by 10%. The second way we expect to drive per-head spend is through a host of new onsite initiatives including reducing the items sold and focusing on the most popular and profitable, increasing points of sale and portable hawking to sell food and beverages directly to patrons in their seats, and increasing products and adding new products like souvenirs photos, early access passes and bundling to create incremental revenue.

Our third business driver is sponsorship. During the quarter, our sponsorship revenue recognized increased with our average revenue per sponsor increasing by 103%. This follows a 14% increase in our sponsorship revenues in 2008. Our integrated live music platform continues to attract larger more profitable advertising and marketing campaigns as evidenced by the Starwood partnership we announced in February as well as the new sponsorship agreements with JTI, Anheuser-Busch and Comcast. During the first quarter, total sponsorship revenue dollars paced ahead of 2008 by 17%. No doubt we are very pleased with the progress we are making in growing this portion of the business. However, despite these healthy trends, we continue to believe sponsorship is the one big challenge we have in 2009, given the broader advertising downturn.

The fourth lever of the profit is ticket fees executed through now LiveNation.com. Consumer traffic to our website continues to increase, and to date, we have sold over 6 million tickets to over 2,300 shows since our launch in December, including 5.8 million tickets sold in the first four months of 2009. Our e-commerce division is focusing on ways to increase sales, upsell and form direct relationships with our concert fans.

Our second priority this year is to maximize cash flow with the goal of deleveraging our balance sheet overtime. We spent the last three years building our integrated platform. With all the pieces now in place, we have essentially transitioned to running the core more effectively and reducing our capital expenditures. During the quarter, our consolidated direct operating expenses declined 6.5%, and consolidated fixed costs of 4.6%. Our direct operating expenses for North American music alone declined 4% and our average profit per show rose 10%. We believe that these operational benefits, when added to our new revenue streams, will result not only in higher adjusted operating income for 2009, but also substantial improvement in our free cash flow from operations.

Turning to capital expenditures, we remain on track to decrease our total CapEx in 2009 by 70% to approximately $55 million, a significant decline from the $187 million we spent in 2008. Our debt reduction efforts will be supported by proceeds from the sale of our remaining non-core assets. We recently entered into an agreement to sell our interest in the Boston Opera House in Boston for a total consideration of $22.5 million plus an earn out. We are also exploring the sale of our UK theaters as well as well as some of our other non-core real estate holdings. With or without the additional sales, we believe that we'll be well-positioned in 2009 and beyond to meaningfully reduce our debt and strengthen our financial profile.

To conclude, our first quarter results were in line with our expectations and reflect the seasonally slowest period of the year for us. We have now entered the busiest season for concerts and top line trends remain healthy as demonstrated by the deferred revenue, concert ticket sale pacing, per head spend and sponsorship. We are driving further efficiencies across our platform and we are operating with a very sharp discipline this year. As a result, we currently expect to drive strong free cash flow in 2009 and believe this will allow us to reduce our debt and strengthen our financial profile.

Finally as you're aware in February we announced and entered into a merger agreement with Ticketmaster Entertainment. Upon closing we believe that the combined company will accelerate the execution of our vision and strategy to build an artist direct company that provides a full service connection between the artists and fans. We believe the combination will provide us with significant strategic and financial benefits, and we continue to work hard to close this merger. We still expect that we'll close in the third or fourth quarter of the year.

Now I will turn it over to Kathy for the financial update.

Thank you, Michael. Good afternoon and thank you, everyone, for joining us. Before reviewing our results for the first quarter, I want to highlight that beginning in 2009, we have changed our reportable segments. Our reportable segments are now North America Music, International Music and Ticketing. Prior to 2009 we also reported an Artist Nation, which historically included the promotion and production of global tours and providing other services to artists with events occurring domestically and internationally. We're now allocating these activities to our North American Music and International Music segments based on where the profits are being generated. This change has been made to reflect how we're now managing our business.

Now to our results. During the first quarter, consolidated revenue was $499.3 million, which was down $33.4 million, driven by foreign currency movements, as compared to revenues of $532.7 million in the same period last year. This revenue decline was due to the impact of $48.6 million in negative foreign exchange movements, primarily in International music. On a constant currency basis, revenues would have been $547.9 million during the first quarter, a 3% increase over last year. Positive revenue impacts include an increase of $11.1 million related to acquisitions, primarily in International music, and $17.2 million in International music due to increased promotion activity.

Adjusted operating loss was $34.4 million during the first quarter of 2009 compared to a loss of $31.4 million during the first quarter of 2008. This slight increased loss was due to a $1.2 million decline related to negative foreign exchange movements and a $2.3 million decline in our ticketing segment driven by increased costs as we were beginning development of our ticketing platform in the first quarter of last year and therefore were not operating at a full cost base as compared to being at full operations during the first quarter of 2009. And also due to the impact of the timing of revenue recognition, as ticket service charge revenue is not recognized until the event takes place, regardless of when the ticket is sold. We had offsetting positive movements in adjusted operating income through a $4.7 million improvement in International music, driven by the results of strong arena theater and stadium events.

Our operating loss in the first quarter was $84.4 million compared to a loss of $70.3 million in the first quarter of 2008. This year-over-year decline was driven by increased depreciation and amortization expenses, primarily due to a $7.7 million impairment charge related to the sale of the three Boston venues, along with a slight increase in adjusted operating loss previously discussed. Also negatively impacting our operating loss was $3.8 million of acquisition transaction costs, primarily related to the merger. Due to a change in accounting rules related to business combinations, costs related to completing an acquisition must now be expensed as incurred, rather than capitalized as part of the purchase as had been done in the past.

These new rules are effective beginning in 2009. In calculating adjusted operating income, the Company is now adding these costs back so the results are comparable. Our net loss was $102.7 million as compared to a net loss of $37.2 million in the first quarter of 2008. The net results for 2008 include a benefit of $31.4 million of income from discontinued operations, plus $20.6 million from other tax benefits related to the gain on these discontinued operations. The other significant impacts to our net loss are the impairment charge and acquisition costs previously discussed.

Turning now to other key financial information, as of March 31st, our cash and cash equivalents balance was $357.1 million. Our free cash, which is essentially cash less event related items, was a negative $103.5 million. This negative free cash flow is due to payments made during the quarter for longer term artist advances, including the make whole to Madonna to settle her stock guarantee, our negative free cash flow during the quarter which is our seasonally lowest quarter and total net debt payments primarily on the revolver and term loans of $22.7 million.

As many of you know, we generally receive cash related to ticket revenues at our owned or operated venues in advance of the event, which is recorded in deferred revenue until the event occurs. At March 31st, 2009, our deferred revenue was $696.2 million as compared to a balance of $560.4 million at March 31st 2008. Reflecting an increase in the amount of ticket sales for future shows as of the end of the quarter. We had negative free cash flow at $51.9 million during the first quarter of 2009, which is slightly improved compared to negative free cash flow of $52.2 million in the first quarter of 2008. Total capital expenditures during the first quarter were only $12.6 million, just over half of our total capital expenditures of $23.1 million during the first quarter of 2008. CapEx in the first quarter consisted of $2.9 million in maintenance expenditures, and $9.7 million related to revenue generating projects. Overall, we currently expect total capital expenditures to decrease significantly in 2009, to approximately $55 million compared to total CapEx of $187 million during 2008.

As of March 31, 2009, our total long-term debt including our outstanding redeemable preferred stock was $840.3 million compared to total long-term debt of $864.1 million as of December 31, 2008, a decrease of $23.8 million. For 2009, the Company implemented new accounting rules that changed the accounting for certain convertible debt instruments, including our 2.875% convertible senior notes. Under the new rules, the Company must now separately account for the liability and equity components of the debt in a manner that reflects our nonconvertible borrowing rate. The effect of these new rules for our notes is that the equity component, which is the debt discount, is included in additional paid in capital and the debt is now recorded net of this discount, which is $59.5 million as of March 2009. Also, interest expense now includes additional noncash interest as this discount is amortized. This new standard was applied retro retrospectively, so the December balances have been restated for you as well.

As we have previously stated, we have no significant debt maturities under our primary debt instruments until June 2012. We continue to remain comfortably in compliance with all of our debt covenants and also remain focused on all of our cash flow parameters. These key parameters can be broken into three components, working capital, free cash flow and debt reduction. For working capital, one benefit we have been able to capitalize on these tough economic time sincerely around the timing of artist advances. Historically, when an artist would sign for a tour, a significant amount of the guarantee, in some instances up to 50%, might have been paid at signing, although the tour may not be occurring for many months into the future. We have drastically reduced this practice and are now timing advances much closer to the start of the tour and staging the payments of advances as the tour progresses. This has had a positive effect on working capital and reduced reliance on our credit facility.

We currently expect that free cash flee will be positive in 2009 after adjustment for transaction costs related to merger, exceeding last year's free cash flow adjusted for discontinued operations on a double-digit basis. Free cash flow has been an important focus for us over the last two years, as we have realigned our business away from non-core activities and have grown our core businesses. As we have previously stated, we're at the end of our major capital investment initiatives, which will reduce the use of our cash. Our free cash flow this year will be used to fund the last non-recoupable payments under our all right deal the make whole payment under Madonna's stock guarantee, and revenue generating capital expenditures of approximately $35 million. After adjusting for these incremental payments and investments, our adjusted free cash flow for 2009 is still expected to be slightly positive.

Moving into 2010, we currently expect to substantially outperform our free cash flow results from 2009, based on our current asset mix as we see further gains from our investment activity. In addition, we will see further benefits from the acceleration of recoupment of payments under our all right deal in 2010. We recently completed a review of our debt with the rating agencies as part of the merger process. As a result of that detailed review of our projections, both S&P and Moody's have left our ratings unchanged with S&P moving to positive watch. As we have indicated, we have entered into an agreement to sell certain assets in Boston and 50% of those net proceeds will go against our term loans in the third quarter.

From a covenant perspective, we have very solid head room. Based on the visibility of our current projections for adjusted operating income, show counts and cash on hand, we easily expect to meet all covenant tests for 2009. Based on the timing of share related items, the second quarter is a tighter quarter, but it would still take a significant drop in adjusted operating income in Q2 before we would even get close to a covenant threshold issue. Moving into the third and fourth quarters, and looking forward from there, we expect covenant headroom to have over a 20% EBITDA cushion.

Finally, based on the investments we have made over the last three years, we currently believe we'll deliver adjusted operating income growth in the low double-digits for the full year in 2009, as we continue to grow our core operations and realize the impact of these investments in venues, artists, and our ticketing operations. With that, I will open up the call for questions. Operator? Operator, are you there?

Yes, ma'am. You're ready for questions?

Yes, ma'am.

(Operator Instructions) Your first question is from the line of David Joyce with Miller Tabak.

Thanks. Can you talk about any dynamic pricing initiatives drive the ticketing for this summer and secondly if you can talk about any cannibalization that took place as you moved to larger sponsors, or have you maintained some smaller relationships?

Thanks, David. I will talk to the first one, the second one first on sponsorship. No cannibalization at all. We have got a lot of sponsors, over 800, but we still think that number should be dramatically higher in the big picture, so we haven't bumped into any cannibalization. We find there are basically three different type of sponsors. There is a local sponsor that just wants a lower deal in his local market. There is a regional company that has a geography platform that maybe wants a West Coast deal, and there is a national company who is looking for a more national campaign, and those are three very distinct categories. We're keeping all of our local and regional on track, and what we have just really done in the last two years is built up our national division and started to take advantage of the bigger brands that have a bigger budget for national campaign.

In terms of dynamic pricing, I wouldn't say we made a ton of head room yet. I think that is still the low hanging fruit that we have to get to. First as you know our priority in 2009 was become the e-commerce platform that can sell the tickets and get that job done and after a couple hiccups, at the beginning, as you can see how over 6 million tickets, it is a non-news event we're selling tickets every day fast, strong and confidently. First priority is to get the sales pipe working, establish the relationship with the customers, doing some tests, No Doubt Jim Guerinot's a progressive manager and we price the house very smartly versus a traditional three-scale model, and that's providing some great learning and increased revenue, Coldplay is giving out CDs at the concert. I would say the appetite for the artist to sit down with us now and explore all ideas on how do I sell my concert ticket differently, how do I participate in the higher end? How do I bundle is coming to life full steam as we have now just entered into the ability of being able to do it, so we'll test some this summer by by next year this will be an ongoing change in how we sell with all the different options.

Thank you.

Your next question comes from the line of Ben Mogil with Thomas Weisel Partners.

Hi, guys, good afternoon. A couple questions. First of all in sponsorship, obviously tracking up in the quarter, can you give us a sense, Kathy, maybe where year-to-date you are in terms of sponsorship? Or Michael obviously.

We've kind of been pretty good this year, trying to give guidance on sponsorship to help everybody because it is the one area. To simplify our sponsorship, we built the plan this year that we end up doing about $150 million a year in sponsorship EBITDA. That's our base from last year. We built a plan -- I am sorry, I'm counting premium seats. It is 120 EBITDA on sponsorship without premium seats. We built a plan this year that said given all of the news we were hearing back in November, we didn't think it would be a realistic that we would match 120 so we built a plan that could say we can grow operating income if we're down $20 million in sponsorship and hit 100, and I would say to you as of right now we are in striking distance of hitting the 100. Our only debate will be do we do better or are we $4 million off the budget of 100, but we're tracking close to the 85, $90 million range of that 100 right now, so within striking distance.

Okay. That 100 you're referring to is an EBITDA number, correct?

Yes.

And then I want to sort of understand a little bit better on the deferred revenue line and the growth that we saw there, so I am sorry if this is step by step, make sure I understand it. You sold 4.2 million tickets so far year-to-date through your ticketing system, of which 2.7 were at your owned and operated venues, is that correct?

That was as of March 31st, that's correct, Michael gave more current numbers which are the 6 million numbers through basically today.

Okay. So if I were to look at it a different way, what I want to get a sense of it if you had been ticketing yourself at your owned and operated venues last year, assuming say a $50 average ticket price, what would last year's deferred revenue account be in March 31st or sub out what you have in the deferred revenue line at your owned and operated venue this is year, want to get a sense of what the changes how you have been doing tickets in both years.

I think the only difference in the way you're thinking about it is that we would have the service charge on the piece of the tickets that we're selling which we wouldn't have had last year that would have been in Ticketmasters, but remember our deferred revenue also includes tickets sold in third party buildings, too, if we receive the cash, so it is not just the tickets sold through our own ticketing operations.

Okay. So the difference would be the ticketing surcharge, right.

That's really the only difference between the two. The rest is timing of on sales and amount of tickets sold on the event that is are on sale.

So if that were the case, should we be looking at like say call it the adjustment I think your delta was I think about $130 million from year-over-year, and maybe of that, call it like 15 to 20 is because of the change in Ticketmaster and the rest is all growth in the business, is that correct math?

Let's just say it is -- the last thing I want to do is let your inaccurate math take any of the shine off the deferred revenue story, which is the for most of the people following the stock know that if you have that level of deferred revenue today, we've sold the tickets, that means the pipe is full for the summer versus last year, so I will back you up. The deferred revenue for everybody's clarity, last year we grew ticket sales double-digits year-over-year. We had a fabulous year in North America. So to be standing today with deferred revenue ahead of last year, would mean that we have sold more tickets today than we did a year ago this day, so that's a good indication. You are right, there are service fees in there, and you're right, there is the very small minority piece of that upside, so in the 10 to 15 range is a good kind of approximate number to use to figure out what the rest is in terms of growth.

Okay. That's great. I got a sense of which was that you were still booking as deferred revenue even money obviously being held by third parties, that's why the balance even last year was so high in the absence of your ticketing.

That's Europe, stadiums, anywhere in the world we're selling tickets.

Sure. Great. That's helpful. And I think sort of lastly, I mean obviously some bands are selling well and others that's always the case and know you that got long history of knowing how bands sell in different venues to get a sense how to price them on the guarantee side as well. Are you seeing in any cases or do you have any flexibility in any cases with some tours that is are simply not performing as you hoped? Did you have any kind of out or flexible clauses with artists the minimum guarantee to sort of bang it down a little bit if certain thresholds aren't met?

Generally you have a contract with the band. You have a contract. We both have the same motive. A band does not want to get on stage and have empty seats.

Sure.

I would say to you that 99% of the time if a tour goes on sale and it is not pacing well, you are sitting with the manager and agent coming up with creative ways to sell more tickets, reduce the prices, do more promotion, excite sales, and that end. The good news is this. The reason we planned, and that's why I don't want any of the Q1 decline in North America to come across as consumer purchase behavior versus self implied, we knew that we had a really strong year in North America last year. We know that there is a certain amount of shows we need to fill the pipe.

Some of the shows above and beyond that are the gravy that help deliver higher profit or sometimes bring down your profit. We went into 2009 with a very purposeful disciplined plan that said let's not try to grow market share in North America this year, let's go after the for sure bands, the for-sure business, we'll leave a few bands on the table, let AEGs and others book a few that we might have historically chased harder, so we purposely went out this year to say we'll fill the pipe to the level we know that we can drive our operating income, we will not go after all and every band, we'll reduce our risk, and we'll go after kind of the more for sure bands, so we're sitting here right now, Ben, and the good news is I can tell you we're not sitting here right now with any tours or any shows of magnitude that are dogs that are going to take us, you know, take a hit on our P&L in any big sense. We have a pretty solid lineup of super stars and downward, and we're happy with the level we have right now, and we don't see any big losers this year that will impact our operating income.

That sounds great, guys, thank you very much for the clarification.

(Operator Instructions) . Your next question comes from the line of Alan Gould with Natixis.

Thank you. Good afternoon, Michael and Kathy. My question is regarding the operating income guidance of low double-digits. Can we get more granular? Are we talking 10 to 15%? Is that what we're looking for?

No, Alan, I would love to, but we historically don't even give guidance, but we thought that given a lot of the uncertainties in the marketplace around the sponsorship business, I spent the first three months of the year getting the question what if no one comes this year, and then now we have proven not only coming they're probably coming at the same rate as next year, and I spent the last two months saying what if they come and don't buy a beer. I now convinced you that the per heads are holding strong, and the only piece I want to be clear on is sponsorship we built in a reduction, and we'll deliver plan, and we built in at the end of the year international music will be way ahead of last year, North America could be flat to 5% down if we plan right, could end up net overall flat to 3 to 5% down. That's the attendance numbers we built in our plan to deliver a growth over our 167 last year, so we typically we don't even say that we're going to grow. We don't typically give that, I think today we just wanted to give very strong signals that even in this economy with all of the other issues that entertainment companies are having, we will grow operating income.

I think we said just for clarity in the single-digit growth, and that we are attacking the second and most important priority in this economy is generate free cash flow and delever. So I think the message today is for all of the analysts building their models, we will grow the business from the 167 and all the metrics from Q1 in isolation mean nothing combined between deferred sponsorship and per heads and the new data I am giving you today that says we are now caught up on ticket sales versus last year through a super strong April on sale, we will deliver a fairly strong year in an economy where most people aren't delivering growth at all.

Okay. Can you just refresh my memory, the ticketing cost you -- was it $15 million expense on tickets last year and that was --

It was a little bit less than that. We ended the year about $13 million in costs.

And was supposed to generate a similar amount of profit this year.

That was based on that presentation we did when we were first rolling out tickets, and it is still in that ranges, somewhere in the 10 to $15 million range.

I would say just on so we're clear it will be a spectacular feat because we will grow into the positive so we'll grow a $15 million swing from negative to positive. The only two pieces that will slightly affect our dream of getting to 15 in the first year is you have heard a lot of noise about the secondary business. We had planned in there to have a bit more of an aggressive tech secondary strategy this year that we're now kind of put on the back burner as we understand that market better, so that took a few million off our plan, and we also had a few million for sponsorship that we said could come to risk, and we think we'll deliver the core driver of that division, the service fees times ticket equals profit we might will be off plan on secondary revenue and sponsorship revenue within that 15 which will be the only two pressure points against delivering that exact number.

Okay. My last question with regard to the TicketMaster deal and the timing of it. Isn't closing by the end of this year a little bit aggressive and what are the milestones we should look for from this point forward?

We're into second review as we announced. It is an extensive data collection period. So we're all indications we're getting from our advisors that fall is a very reasonable close and time period. In terms of our business right now, we're pretty much focusing on executing the core, the milestones, we're into Ticketmaster is into some bank refinancing bank debt. That's going well. We assume that will get done soon. I guess we'll have a shareholder vote late Julyish, maybe early August would be the next milestone, and then after that you would just look for the close.

We should expect a proxy early June?

By the late May, early June is where we're timing right now.

Thank you very much.

Your next question is from the line of David Kestenbaum with Morgan Joseph.

I want to go back to deferred revenue. I am a little confused. You had said I believe that ticket sales were kind of in line with last year but with a deferred revenue up so much, I am a little confused by that. Are you just selling the tickets a little earlier this year or are you just under stating the fact that you're going to have a strong summer?

A bit of both, David. I think I have kind of given you guidance which I don't typically do where we think we'll end up on attendance by the end of the year, and I can see you can look at our historic 52 million tickets last year or all in and take out motorsports and figure out where we'll be. We built the plan this year that said the economic crisis has to affect you somewhere. We knew though that we had a super strong slate because of the stadiums and Madonna and U2 and our festival business is on fire in Europe, which is a really early on sale, so we knew international was going to have a strong year, so we knew we could look for growth from international.

We knew North America we had a super year last year in our amphitheaters, and we didn't want to kind of chase that exact market share and some of those shows and get ourselves into risky shows to try to match the exact number. In overall you're right. The number should suggest we beat last year. We're looking at it as we're down in Q1. If you add in our strong April sales and our deferred revenue and you kind of trend it out for the year, we will be very happy at the end of the year if we're up internationally, down slightly in North America, and overall pacing flat to a few points down since we know how to make more money from an attendee year-over-year, so we're just looking at that strong on sales as a little bit of head room. In this business it is all about no bad bands, just bad deals, so when you have a strong solid plan you don't have to then chase a lot of extra which sometimes can get you in trouble, so we're going to take all that on sale, all that win we have right now and execute against that and extract what we can from that piece of the pie versus going for 5% extra sales which is could work or could not work in this economy.

Okay. And then I guess, Kathy, on the international side you took a big hit on currency. Can you comment where that was because the euro didn't fall much against the dollar although the pound did, and obviously some of the South American currencies got hit hard, too.

The biggest currency impacts for us were the pound and then Swedish kroner. We had a little euro impact, but the bigger pieces came from that.

Do you see the international mix still remaining in those countries as you go into the summer?

Yes. Our biggest countries are those plus Belgium and Holland, so that's where you're going to see most of our activity.

Okay. And then as far as the disclosure on the Artist Nation, do you plan on giving some type of metric that is we can look at and judge how the Artist Nation is doing in the future now that you're not segregating it?

Absolutely we will. Probably towards the end of the year, whatever Q3 or Q4 probably I think once we have the Madonna entire tour cycle wrapped up, U2 won't be wrapped up by then, but it will in full motion. Jay Z will be in, Nickelback in, and hopefully Shakira starting to go out. I think by the end of the year, we'll be able to talk about how those bands did from touring and sponsorship and accessory sales and all of the pieces how they added up against our investment so we'll definitely, although not segment them out because we want them to be considered just part of our continued core touring strategy, we will definitely provide investors that update.

Okay. Finally, I am sure you heard Cablevision talked about closing the Garden for certain parts of the year over the next four years and certain sections. I know New York is an important market for North American business. Can you talk about what impact that could have?

Listen, MSG is the greatest venue in the world. Every band wants to play it. We love working with those guys, but like every other city, there is always a venue down the street, so we have the Jones Beach which we focus on in our summer and as you know, living in New York there is a whole bunch of excess arenas now looking for dates every day of the week, so at the end of the day, a band that loves to play MSG, but if it is not open and they have to play Jersey, they're fine with that.

Thanks.

Your next question comes from the line of Steven Pfeiffer with Wells Capital Management.

Hello, everyone. I have some questions about the status of Live Nation's ticketing efforts off of here, and this part of what new business you're soliciting as part of the upcoming merger? As I understand it, you're basically just doing ticketing for your own venues but not a soliciting other outside venues, is that correct?

Yes.

And is that under the planned business model going forward even after the merger?

No. We have been talking well before we announced this merger that the most important thing to do in 2009 was to execute against our inventory. The scale of our inventory is a big challenge, so we didn't have the capability and the resources to be chasing other people's businesses this year, so our plan always was in 2009 let's make sure we can do the best job of executing our inventory and by the end of the year as we can prove out to others that we know how to do it our model works, our website works, our platform works, then we would look at third party business at that point.

Is that still the plan after the merger to still have that happen?

Yes.

Okay. Is there any sort of official contracted agreement between you and Ticketmaster to not do that or is that just simply your own business strategy?

That was our business strategy well before the merger announcement.

Okay.

Merger or not we wouldn't be chasing new buildings this month. We have a big summer season, and selling our tickets in our amphitheater and maximizing every ticket sale we can is our number one execution strategy right now.

So you're going to show everyone look how we did it our own way in 2009 and in 2010 you will go out and go elsewhere to sell your opportunities? How is that going to work going forward when you're going to be competing basically one side of the house versus the other side of the house in 2010?

I will leave all that merger stuff for another call because it is premature at this point on how the two will work together on a public basis. We'll leave those for another call when we can get into that.

Okay.

There are no further questions at this time. I would now like to turn the conference back to management.

Thank you, everybody.

This concludes today's conference call. You may now disconnect.