Live Nation Entertainment Inc (LYV) 2010 Q4 法說會逐字稿

Good afternoon, my name is Tameka, and I will be your conference facilitator today. At this time I would like to welcome to the Live Nation Entertainment fourth-quarter and full-year 2010 earning's conference call.

(Operator Instructions).

Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements relating to the Company's anticipated financial performance, business prospects, new developments, and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on forms 10-K , 10-Q and 8-K for a description of risks and uncertainties that could impact the actual results.

Live Nation will also refer to some non-GAAP measures on the call. In accordance with SEC regulation G, Live Nation has provided a full reconciliation for the most comparable GAAP measure in the earning's release. The release, reconciliation 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. Irving Azoff, Live Nation Entertainment's Chairman of the

Welcome everyone to our year-end conference call. As you all know, international expansion is a major part of the Live Nation strategy going forward. I'm presently in Japan in meetings on behalf of Live Nation and attending shows by our clients, The Eagles and Avril Lavigne. So, my comments you are now hearing have been pre-recorded. Joining you live today are Michael Rapino, our CEO, and Kathy Willard, our CFO. I will begin the call with some brief comments and then turn it over to Michael who will review our results and plans for the year ahead.

I'm delighted to present to you for the first time as Chairman of the Board. With the completion of the front-line transaction earlier this month, we have completed the merger of three world leaders in live events, ticketing and artist management. We believe we have a terrific team in place to leverage these assets to deliver a stronger product to all of our audiences with the goal of improving our operating performance and generating return for you, our shareholders.

Our interests are aligned with our investors in seeking to grow the company, improve process and create value. With Michael at the helm, along with our Senior Management team as well as Greg Maffei, Chairman of our Executive Committee, and all the members of our board, I'm confident we can fully demonstrate our determined potential of our integrated businesses. In addition to my broader role at Live Nation, I will continue to lead front-line and ensure that we continue to build in our leadership and our management by signing new artists, strengthening our management team through the addition of proven industry managers, and expanding our artist management and artist services business globally.

The live entertainment industry certainly faced headwinds in 2010 as the adverse economic environment and strains on consumer spending impacted industry-wide concert attendance. Our artist nation's results for the fourth quarter and full year were below 2009, due in part to these headwinds, as well as the timing of major artists touring schedules. Despite the challenges of 2010, we've made good progress with our strategic plans, continue to grow our roster of artists and added a number of experienced and respected industry managers to our team. We finished 2010 with over 250 artists on our rosters and over 90 executive managers. This helps to set the stage for what we believe will be an improved environment in 2011.

We're very excited about the number of top artists currently planning to tour this year. At this point, we expect over 75% of our key artists to be actively touring during 2011, compared to under 50% of these artists actively touring last year. Major tours are expected from The Eagles, Jimmy Buffett, Kenny Chesney, Neil Diamond, Glee, Journey, Kid Rock, Kings of Leon, Britney Spears and Sugarland, just to name a few. So, I'm very much looking to a more active year in 2011. And, while it's early in the year, I'm hopeful we can see some benefit from an improving economy. I'm also very encouraged by the various strategic initiatives that Live Nation's management team is executing to improve the ticketing and live entertainment experience as well as their efforts to develop more robust resources for our advertising and venue clients to help them maximize results.

Michael will provide details and share his views on the industry in a moment. Thank you again for your support. I look forward to updating you on our progress in the year ahead. Let me close by saying that Michael Rapino and I have forged, what I believe to be, the most prolific partnership I've ever had in my 40-year career. We look forward to many years of success together here at Live Nation. Without further ado, you will now hear from Mr. Michael Rapino.

Thank you, Irving. During the past year, we completed the merger and integration of our operations and achieved our target synergies. We expect to realize an additional $20 million in additional synergies in 2011. In the past year, the industry failed economic headwinds, with all event categories feeling the impact. Theater tickets were down 12%, concerts down 10%, sports 1% down and family flat, resulted in an overall global decline in the 8% range. Our research indicates the fans still view concerts as a top entertainment spend, and their pull-back was price-driven and not a systemic overall issue with the core concert product. We believe long-term, concert attendance will improve. Concerts are a unique place and experience for fans, and it's not duplicatable. But, the category does have resistance for certain segments and certain prices.

As the economy recovers, we expect the industry to rebound. Although ticket volume was down in 2010, affecting revenue and AOI, we still preserve the base metrics of our core businesses. We maintained our market position at our three core businesses. Ticketmaster renewal stayed strong and sponsorship grew. So, as we head into 2011, the core business metrics are healthy and as industry volume grows, we believe our core business AOI will grow as well. The major benefit of the merger in 2010 was the ability to refinance our balance sheet, which provides us with the financial flexibility to move forward and execute in our plan and investing in the product lines that can drive long-term value.

Turning to our 2011 outlook, we believe ticket sales bottomed in 2010 and will have a modest recovery in 2011. As we wait for the industry to rebound, we will continue to invest in upgrading our technology for long-term growth. While we are seeing some evidence that concert sales, in particular, are rebounding as of February, these sales may be the results of acts going on sale earlier than in previous years. We expect concert attendance to be up in 2011, offset in part by weakness in the sports, arts and theater businesses. Looking at the current Ticketmaster sales, as of February 27, global tickets are up 4%, North America is up 1%, International is up 11%. And, for the North American segments, Concerts are up 7%, Arts and Theater down 18%, Sports up 1%, and Family down 4%. It's still early in the year, but we are encouraged by these on-sales trends in the concert business.

Turning to our operating plan, we believe we have an unparalleled set of assets with three global leaders in ticketing, concerts and artist management. These businesses are the engine to our overall business model. They feed our higher-margin distribution businesses of on-site spend, e-commerce and sponsorship, which represent 47% of our total AOI. We have three levers to grow our AOI and free cash flow. Number one, continued market expansion of our content, ticketing and artist management businesses. More markets, venues and concerts gives us more tickets to sell. Number two, grow online and event sponsorship as we get -- as we gain more tickets, we gain more fans, which drives our CPM and overall sponsorship revenue. And number three, grows ticket sales conversion, as we are strategically focused on investing and upgrading www.TM.com, and building our data services division with the goal of driving higher ticket purchase conversion on a lower cost basis.

These incremental ticket sales will drive revenue and AOI growth in all three businesses. So, our primary mission in 2011 is simple -- continue to grow the core businesses of concerts, ticketing and artist management while we drive higher margin sponsorship and incremental ticket purchases at www.TM.com. At the end of the day, the overall core metric that we focus on is ticket sales. The more tickets we have in our inventory and the more we sell, the more profitable we are.

Now, I'll take you through an update in each of the divisions, turning to concerts. The beginning of the talent line for 2011looks strong to date, for arenas and international festivals, while it's still too early to tell for our amphitheaters. Artists who are touring this year and already announced, U2, Lady Gaga, Glee, Rihanna, Shakira. We expect the industry to stabilize and Live Nation concert ticket sales to be slightly up year-over-year. However, it's still too early, and we are not in a position to forecast how the summer will end up. In addition, ticket sales at this point are artificially inflated with earlier on-sales at some stadium shows. By May, we'll have a more normalized year-over-year data.

Looking at some Live Nation metrics-to-date. Our total concert tickets sold to date is 11 million versus 8.8 million in 2010, up 25%, driven by U2, Lady Gaga and international festivals. North America year-to-date tickets sold are 6.1 million versus 4.3 million, up 42%. North American Amps have sold 274,000 tickets versus 329,000, down 17%. Average ticket price is the Amps is $37.41 versus last year's $42.67, a decline of 12%. an indication of our strategy of lowering the ticket price and entry cost. International tickets are 4.9 million versus 4.4 million, up by about 9%. And our international festivals have sold 843,000 tickets versus 631,000, up 34%.

As we continue to secure content for the summer season, we are finding that the top-tier artists are still able to demand high guarantees and the bidding remains competitive. However, the mid-tier artists are taking into account what happened in 2010. And are working with us to drive ticket sales by packaging with other artists, launching on-sales earlier, playing in less overall risky markets and scaling the house to reduce the back end for lower entry cost.

Our primary goal in concerts in 2011 is to grow AOI in our North American business. We'll achieve this by leveraging our fixed cost savings from 2010 [reorg], increasing contribution, margin and our amps, driving long volume at lower prices from day one. To date, the average lawn price for 2011 is $22.26, versus 2010's $28.00, a 21% decrease, which should drive attendance and let us avoid late discounting. We will still run value-add promotions when we see the opportunity. And, finally, increase in our market share in our top arena markets while reducing lower margin shows. On our venue side, we expect to maintain a strong renewal rate in 2011. We are currently planning on global tickets to be flat for the year, while we believe we can manage the risk of the NFL and NBA lock-outs, which could impact volume in Q4.

We have started to invest in our ticketing platform upgrade, a multi-year initiative. This upgrade will allow us to maintain our industry leading position and reduce overall fixed and variable operating costs. We expect to begin bringing new features and functionality to our clients by the middle of this year. We have also increased our global ticket inventory through the acquisitions in France and Spain, which are expected to close within 60 days. These two leading ticketing companies in two major European markets bring a combined 16 million new tickets to our inventory. In the US, we grew our ticket inventory by assuming the operations of Ticketmaster D.C. franchise. Turing to online, while www.TM.com is already one of the top five e-commerce sites in the world, we are striving to make improvements to drive more traffic, increase conversion and increase the average order on our site. Our interactive seat-maps is driving substantial improvements in the buying experience, improving conversion by as much as 25%, while almost 30% of the fans say they bought more tickets or more expensive tickets as a result of the seat maps.

Our social experience, we released a Facebook connect integration. It's begun to tackle the awareness issue in the live-event business. This enables fans to see the profiles of others attending shows and to like, recommend, publish and RSVP to a live event in their news feed. Early fan RSVPs on www.TM.com currently generates an additional $5 in ticket sales from -- for our new clients. We also launched my shopping cart feature, including more seamless up-sale opportunities and an easier way to resume check-out for those fans who abandoned their cart. Initial results are showing that 10% of cart users are purchasing tickets at later periods while they would have previously abandoned their purchases. We will continue to add functionality throughout 2011 to drive our eCommerce metrics and enhance the fan experience.

We're also working on improving our traffic monetization by increasing the amount in quality of online inventory we offer to sponsors and advertisers. Today, we include advertising on less than 20% of our pages served in North America with limited use of rich media. As we increase this content on our site-pages to enhance conversion, we have created several new attractive assets for sponsors. We will continue to create and monetize the assets in 2011. Finally, one of our priorities in 2011 is to begin to capitalize on our on-tapped data. At the end of 2010, we had nearly 200 million unique fans recorded in our database. We are in the process of creating a comprehensive suite of tools to help our venue clients better understand their fans through segmentation, prospect scoring and benchmarking.

Turning to sponsorship, the outlook for that division remains strong as our marketing platform continues to demonstrate proven results to our partners while attracting new global brands. We recently signed Starwood hotels to a four-year extension, and expanded our relationship to Latin America, Europe, Middle East and Asia. We also signed a first-time national sponsorship with HP. And, during Q4, our international team secured a three-year agreement with American Express.

We are continuing to staff up our online business in New York, Chicago, Los Angeles, UK, France and Australia, in response to a continued strong interest from media agencies and the on going growth of our advertising platform. Our sponsorship business generates solid double-digit growth year-over-year in 2010, and we expect that trend to continue in 2011. As of February 15, contracted revenue for our sponsorship division is up 28% versus a year ago.

In summary, we entered 2011 with our merger integration complete and started focusing on executing our growth priorities across our businesses. Our concert pipeline is strong, and we are hard at work elevating www.TicketMaster.com to drive increased conversion and fan tickets. The enhancements being made to our online platform will provide consumers with a better experience and our clients with stronger service, that will help them sell more tickets and grow their business. And, we'll continue to grow our artist management and sponsorship business. With that, I'll turn it over to Kathy to discuss the financial results.

Thanks, Mike. Our fourth-quarter revenue was $1.24 billion, a slight decrease from the prior year on a combined basis, including Ticketmaster. This decrease over last year was primarily driven by declines in ticketing, due to lower ticket sales. And Artist Nation, due to the reduced volume of the their artists touring this year. Adjusted operating income for the quarter was $57 million, as compared to $87 million for the combined 2009 results. This decline over the prior year was driven by a decrease in concerts, primarily due to reduced North American ticket sales and the $4.9 million of severance recorded during the period for the North American restructuring. We also saw a decrease in Artist Nation due to reduced touring volume.

Ticketing AOI was down 3%, but their fourth-quarter results include $23 million of legal settlement accruals previously disclosed. Without this, ticketing would have shown an increase in AOI for the quarter. Our operating loss was $86 million in the fourth quarter compared to a loss of $30 million on a combined basis last year. This decrease resulted from the lower AOI along with higher depreciation and amortization expense, due primarily to $40 million in impairments recorded in the fourth quarter related to a lease hold asset in trade name and artist related intangibles.

For the full year, consolidated revenue was $5.1 billion, as compared to $5.6 billion on a combined basis in 2009. This increase was driven by a $266 million decline in the concert segment caused by reduced ticket sales and lower average revenue per ticket. Additionally, there was a $149 decrease in ticketing, due to lower ticket sales and a $91 million decline in Artist Nation due to the reduced volume of their artists on tour this year and lower ticket sales.

Adjusted operating income for the 2010 full year was $363 million, down from $428 million in AOI on a combined basis in 2009. This decrease was driven by a decline in concerts, primarily due to the reduced ticket sales and including the $13 million non-cash artist advanced write-down we recorded in the first quarter. AOI was also down in Artist Nation from the lower touring activity and related ticket sales. And due to the $23 million legal settlement accruals in ticketing in the fourth quarter. We saw an increase in sponsorship from strong sales, including higher festival sponsorships and also a reduction in corporate costs. AOI for the full year on a constant currency basis to last year, and adjusted for the legal settlements discussed, would have been $391 million for 2010, a decline of only 9%.

Our operating loss for the full year was $64 million compared to operating income of $40 million on a combined basis in 2009. This decrease was driven by the lower AOI in the year, increased stock-based compensation expense primarily for $18 million in expense due to modifications primarily related to the merger, higher depreciation and amortization due to the intangibles related to the merger and including $44 million in impairments as discussed in the fourth quarter. These declines were partially offset by lower acquisition expenses this year. At December 31, we had total cash of $893 million. Excluding the $385 million in client cash and the concert-event related items, our free cash was $369 million. Free cash flow for the fourth quarter was a loss of $13 million, as compared to a positive $23 million on a combined basis in 2009, due to the lower AOI. For the full year, our free cash flow was $165 million, as compared to $186 million on a combined basis last year. This decrease in free cash flow was primarily driven by the reduced AOI, including the fourth-quarter legal settlement accrual, partially offset by lower cash taxes and cash interest.

During 2010, we successfully achieved our target goal of $40 million of merger-related synergies through our cost reductions and integration efforts. In 2011, we expect to realize an additional $20 million in merger related synergies. As of December 31, our total current and long-term debt, including capital leases, was $1.73 billion with no draws under our revolving credit facility. Our weighted average cost of debt excluding discounts and premiums was 6% as of December 31. With respect to our senior secured credit facility we continue to remain comfortably in compliance with our debt covenant requirements. Our total debt to EBITDA ratio is slightly over 4 times versus a maximum of 4.9 times and our interest cover is over 4.5 versus a minimum ratio of 2.5 times. Capital expenditures in 2010 totaled $74 million, compared to $98 million on a combined basis last year, and below the $85 million we previously estimated for 2010. We reduced annual expenditures in 2010 based on the overall decline in AOI. Thank you again for joining us today, and we will now open up the call for questions.

At this time, I would like to welcome everyone.

(Operator Instructions).

Your first question comes from the line of Ingrid Chung from Goldman Sachs.

Thanks, good afternoon. So, it sounds like, from at least a content perspective, 2011's going to be a stronger year than 2010. Why do you think artists have decided to tour this year versus not touring last year? And, then, secondly, you talked about how some middle-tier artists are now working with you in terms of sharing the risk, and taking less up front. Are we going to see a significant impact from that in the financials this year? I was wondering if you can give us some idea of how many artists are working with you? And, how easy it has been to get the artists to work with you on that? Thanks.

I'll talk about the first part and then the second part. As far as artists touring in 2011 versus 2010, I think it was, in the middle of the summer, pretty obvious to most managers and artists that 2010 was going to be a tough year. So, if you have flexibility on when you're going to tour, you probably waited and went on sale this year. So, we kind of predicted that six months ago. But, unless you had an album going out and had to tour, you probably were going to wait for this year. As far as the talent question, we get this a lot. I wanted to simplify it. As I said, the top artists can still demand great competitive bidding, the middle artist still can be very competitive. There's lots of venues in America still looking for content.

What we've referred to as -- there are -- the simplest way to do well in a show is sell all the tickets. Last year, because of the industry and because the ticket was priced higher, we didn't sell all the tickets. Whether it was here or at the industry. So, as I alluded to in my presentation-- the most important thing to us in a deal is, did we price the ticket right from the beginning? Did we have the lawn at $20.00 at the beginning, not $40.00 at the beginning and then have to discount it halfway through? Did we go on sale early enough? Did we have the right support act? So, the variables you want to figure out, before the artist says, "I'll play for less," is can you execute better?

And, what we're finding is, from the proof in our amphitheater tickets on the on-sales, artists listened. Most managers are having lively conversations with us and other promoters about how do I make sure I sell all the tickets? How do I price the back end lower? How do I make sure I go on sale? How do I break the marketing clutter? So, much of what we predicted, that with the industry in the middle who can't sell out all the time and need to make sure they execute properly, would they listen and react? We feel very confident that a lot of the artists, and I think the on-sale numbers-to-date are kind of the proof in the pudding. Most of them are concerned about how do we execute better this year? So, we do not expect that artists overnight said, "I'll work for a lot less money," and thus our talent fees are going down.

Artists are still the ones on stage to be able to demand 90% of the door. What matters to us is, can we get more people in the door to drive all of our ancillary businesses? And, from early indications, I think we priced the house right. I think we got the right amount of dates on sale, and we seem to be seeing some early success. But, one of those three factors, whether it's New Kids on the Block and Backstreet Boys doing a package together, selling out every place that they go for sale. A year or so ago they might have went out on their own and charged maybe a bit too much individually and sold half the house out. So, when you put that tour on and package it, that's a good day for us in terms of sell-through. So, I think what I said in my script is what we believe has happened. There's a lot of interest, a lot of curiosity about how we can sell more tickets, and our job is to execute those initiatives. And, we think, right now, we're seeing great on-sales, lower ticket prices overall is the net win.

Okay. Great. Thank you.

Our next question comes from the line of Ben Mogil of Stifel Nicholas.

Hi, good afternoon. Thanks for taking my call. So, two for Michael and one for Kathy. Starting off with Michael. Talking about the earlier on sales, looking at the paper over the weekend seeing stuff already on sale for as late as June. Do you have any concern that-- I recognize the flexibility the early on sale gives you. But, any concern that advertising this far out from an event that you may be wasting some advertising dollars and have to reload a little bit closer to the dates?

That's always an issue, but you have two kinds of artists. The one that can sell out quickly; it doesn't matter when you put it on sale. It's an on-sale launch and sells out. The rest of the business is really about time. It's as simple as this, the longer you have on-sale, the more the consumer has a chance to -- maybe he couldn't afford it this week, but maybe when he gets paid in two weeks he can. Maybe in a month, if he saves up for it, he can. So, the longer you can give a consumer who's thinking about going to the show, but not pulling the trigger. If you can find time to advertise to him or just quite honestly give him enough time to finance and think through with his buddies, is that the show he wants to go to, we find that you can drive incremental sales in the long run.

So, a middle-of-the-road act, you want to be on sale for a long time and give them a long period to make the purchase. A hot act, we don't -- we might be on sale for three months, but you might have spent all the money on the weekend not a dollar beyond that. So, we only employ marketing dollars to the shows that are not working; and, if they're not working, we know that, over time, a little bit of time, marketing does push every day a few hundred tickets?

Are some of the proposed legislative changes on credit card fees helping you guys a little bit? I guess the Durban agreements, are those helping you a little bit?

We're still assessing that, but we're not seeing any significant impact from that right now, Ben.

And, then, Michael, going back to the thing about artists trying to help out -- not trying to help out, but being more realistic. Beyond just artist-guarantee costs, on the non-artist side, so advertising, some logistics around shows, are you seeing any kind of relief there? Or any kind of ability to scale down those costs, as well, to get to a lower breakeven?

Yes. Usually this early in the year, you're dealing with the super stars or the strong artists. So, they're probably already on sale, selling well, maybe sold out. You don't usually get into the next level until April, May and June, where you really now have that next level of artist or that next level of marketing execution spend, where you're trying to push it over the finish line. So, we're still very early in the year. Most things that go on sale right now are bigger artists, bigger cycles, longer planning. And, you're not yet into the middle-tier bands, which are going to start going up probably in March to April, where you start to see the next kind of middle of the business come to life.

Fair enough. And, then my last one is for Kathy. I'm assuming you guys have given directional guidance in terms of what you want to see. Can you give us more specifics on things like CapEx for 2011?

Our current estimate for CapEx for the year is somewhere between $110 million and $115 million. And, the increase is more in line with where we expect it to be on a full AOI year last year and then takes into account the cost for the rearchitecture.

And is that the only guidance that you're able to provide right now?

On CapEx?

No. In general.

Yes. I think what we want to do, and you and I have discussed this -- the year is still early and has lots of swings. We're widely encouraged that, for 365 days last year, my daily flashers had a red year-over-year down, negative. So, it was a depressing year. And since January, day-after-day, we're seeing, waking up to a year-over-year positive. So, we're -- I think the questions that were hitting us earlier in Q4 were, is this a long-term issue with the business, or is it a blip? I think we're feeling that it bottomed in 2010, and we'll at least be flat to slightly up in 2011. So, that answers the question is it a long downward spiral or was it a blip. So, I think we're feeling confident that it was a blip.

We're feeling confident that artists that need to push -- get sales from 8,000 to 10,000 are listening and working hard on pricing and promotion and packaging and all the ways we can execute. It was the topic of the first conversation with every artist this year, not the last. So, we're feeling the artists are listening. No one wants to lose this year, no one wants to be the poster child for the tour that didn't work in 2011. That doesn't -- so, that's working well. The artists are motivated. We're feeling good right now that the business had a strong February, and I think the guidance I gave you, since you know our business model.

If volume goes up, we grow AOI, and if it has another bad year, we can't grow AOI. And, I'd say, right now, we're looking at a business that we think, overall, is flat to slightly up on a ticket volume, which from there drives the AOI. That's more guidance than I thought I would give in the first part of the year. I thought I would be waiting more until May to sense anything. But, because things went on sale so early, we've got enough in the pot right now to say that the business looks like it at least is going to rebound. And, now, we'll wait for what Q1 May call to provide more color around how that really turned out when we put the second piece on sale.

That's great. Thank you very much for the color. I appreciate it.

Your next question comes from the line of John Healey with Northcoast Research.

Thank you. Michael, a question for you. Your comments, as a whole, seem more upbeat and incrementally more positive than a few months ago. I was curious to get your thoughts on why you expect a little bit of softness on the professional sports and the family-oriented shows in 2011? Is it related to do with any sort of shows you may have won or loss or anything along those lines?

No. Just think about, for our total business, the most important number, and not just because we're in the concert business, but for Ticketmaster, they make most of their money from concert tickets. Because it's the highest face value, which means it's the highest service fee. So, it's highest margin sale for them. The number-one indicator you should look at is, regardless of overall categories, the concert business needs to grow for Ticketmaster to grow.

As far as sports, there is a Q4, as you know, there could be lock-outs on the pro-leagues. That will obviously affect some volume. We don't get paid on season tickets, so it may not be an overall AOI hit as dramatic as the volume will be. But, we see sports going through a tougher year, because there's a lot of different leagues that come into that number called sports. So, major league baseball, et cetera, all of those have to work to grow, and, if we looked at the trend right now in the possible Q4 lock-outs, we would assume that category's probably not going to have an overall growth year.

In Families, we don't have a lot of data, we don't make a lot of incremental dollars on it both from the concert side, front line or www.TM.com. But, it has been a category that has been trending down the last few years. So, we would just be seeing that early this year being a trend down. We assume that will probably continue for the year. I don't know of any great family content coming out that would change that prediction.

So, your overall view on the ticketing business assumes some sort of impact from the potential lock-out in the NBA or NFL?

Yes.

And, then I wanted to ask, just kind of on the international ticketing front. The pipeline for more activity there. Do you feel like 2011 is going to be a story of digesting the French and business you bought in France and Spain? Or are you on the hunt for more deals as it relates to the international side of the business?

We would be always on the bolt-on the front of our concert management and ticketing. Obviously, we joked, Irving earlier mentioned he's in Japan, but we would say there are lots of promoters, ticketing companies and even management companies in the UK that we're talking to continually about expanding our platform into higher margin markets. So, we think the integration of Spain and France will be fairly seamless. We didn't have big businesses there to start with, so you don't have a big merger. Those businesses are already leaders, and that will just integrate them into our overall business. And, international higher margin growth is something we're always on the hunt for.

I imagine your outlook for ticketing does not include any sort of contribution that you may get from those two businesses in 2011?

No. That would be included in our outlook.

That would be included right now.

For France and Spain.

Okay. Thank you.

Your next question comes from David Joyce with Miller Tabak.

Thank you. A couple of questions. First, it looks like ticketing margins improved year-over-year. That's where you had most of the synergies. Could you just walk us through really how that was done?

Yes, that really is driven by the synergies as well as the other cost cuts they've been able to do this year. But, that's going to be the largest impact.

Okay. And, the volume wasn't down as much as the revenue. Is that because of the mix, I guess, a follow-on to the question, the mix of tickets, having your own concerts?

Correct. If you look at the overall decline. It was 8% down, but 10% of it came from concerts. That's going to drive the revenue down more.

And, can you provide some more color on France and Spain. I know it hasn't closed yet. But, what's the kind of business model we should be modeling. And, how do you compare and contrast that with what you're doing in North America?

International, as you know, we have a very large concert platform where we have a local promoter, sponsorship business and tours that come to that market. And, there are -- we also have a ticketing -- existing Ticketmaster business in some markets. In France and Spain, we acquired kind of the leaders of the number one or two in those businesses. And, that will just take our kind of core Spain business, and our core France business and now have two of the three legs of our business model, where we're probably the leading ticket company or a leader in ticketing and in concert promotion. And, when you have those two, you can drive now incremental sponsorship, online advertising, which we would be looking to execute this year on those two core businesses.

And, it seems, on the sponsorship topic that you were probably doing a little better than we expected. Is this starting to become a little better spread-out through the course of the year, as you've been adding some larger sponsors?

Yes. I think you can see anytime we do a full-year HPD deal or global European AMEX deal, it kind of moves that metric that we're looking at on average deal size going up. The more national or semi-national long-term deals we do. That's our focus, and we're happy we put a few more into the win column this year.

And, finally, I apologize if I missed it. But, could you provide some more color on the fourth-quarter concert attendance? Was there better attendance at the clubs or arenas? How did that play out?

Yes. The fourth quarter, in general, obviously the amphitheater shows. And, in the international customers there's not that much activity. So, it's primarily going to be club and theater activity in the fourth quarter.

And, how much were both of those down year-over-year?

In our Q4, 6%-ish.

Both about equal?

Yes. It's as Kathy said. With no APS and festivals, it's usually a quiet arena business period anyways. And, it's theaters and clubs, which is the low-margin business. And, Q4 didn't finish any different than every other quarter last year on trending down year-over-year.

Thank you.

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

Okay. Just a few quick questions, first with Michael. Can you just talk about--I know you've been planning on introducing dynamic pricing this summer, but haven't heard much on it. So, just wondering where you stand with that? And, then, can you talk about Fred Rosen's company entering the ticketing business and what kind of impact you think that can have on the market?

Sure. Dynamic, we will be rolling out a product this summer. I've seen the version, again, a couple of weeks ago. I know it's a self-contained tool, software platform. We've partnered with one of the leaders in the world on this business, created a kind of unique product on our own that we will roll out to venues and teams over the year. We'll start beta testing it this year with teams and Live Nation itself. And, it's a very dynamic tool that lets you look at the holistic house, and how best to scale the house. As well as on a time basis to maximize the revenue from the event, combined with a massive database of consumer-purchased demand. So, we think we'll have something to show the market, in terms of testing, by the May period.

The May period.

As far as Fred. Other than he did a press release about it and a little chatter, it's still looks like another year or two away from seeing what that product is. I really don't know much about it. I know what Outbox is and Montreal that's been servicing Cirque De Soleil. I have no idea once they scale that up and invest in that, what the end product looks like to the venue. We think that there's two business, and we are, thankfully, in both of them. There is the I-supply-a-venue with software to sell tickets business. We are the leader in that. And, there are others that are doing that, and it looks like that's what they're doing. We're in the aggregation business and help-you-sell tickets, which having www.TM.com in the platform we have, but no one else really has.

So, it sound like they talk about a white label; we white label over 2,000 websites right now for venues, and so do others. So, providing a white label to a venue is not unique right now. We're in that business; we do it well. But, what we find out with every venue around the world or team, no matter how well they want to run their own website, they also like the added power, audience and eyeballs at www.TM.com, where they are probably driving most of their sales.

So, we think we -- we're going -- our strategy is simple. We have to reinvent our existing venue platform over the next 18 months to 24 months, a delayed program that should have been done. But, we're at it now; we have a full team in place, and we'll get that platform for venues running over the next 18 months, and they'll start to see some of the features and functionality this year. So, I think by the time Outbox gets to the business, we will have a better platform within the venues to solve some of those debates.

So, we think we can keep our market share and build a better interactive platform for our venues over the next 18 months. And, as you see from my speech today, and we're all about consumer interaction in the share of wallet. So, taking www.TM.com to new levels is the greatest insurance we could do for all of our businesses. Because whether it's Irving's artist, whether it's a concert you're trying to secure or a venue you're trying to close, if you're the company that has a top five global eCommerce site, and can help them with your data, help them sell more incremental tickets and help them power their new revenue through up selling. That's the combination that puts us in a different league, and we're going to make sure we excel at that now.

And, I have a few quick questions for Kathy. Can you give us the gross value of tickets sold, so we can calculate the average ticket price, if possible?

Yes, it's in the K, David. It was $7.2 billion for 2010.

Okay. Am I right in my calculation that your revenue per attendee increased in the fourth quarter, about $69. Does that sound right?

Are you looking at just concerts?

Yes.

That's about right.

And, finally, can you explain the difference; I know you touched on it. The difference between the depreciation. For three quarters was $91 million and $186 million for the year, and the amortization went from $90 to $135. I might have done it the wrong way. But, I know you said it was a $44 million impairment in there. But, what else -- it seems like a big move there?

But, it really-- that fourth-quarter impact is the $40 million almost solely related to those impairments. Because, if you look at the year-over-year, that really does explain most of the growth just in that quarter.

Okay.

The impairments is just an annual test you do based on future cash flows, and you have to take into account sales. So, nothing really abnormal there. Just part of the accounting process.

Okay. Thanks a lot.

Sure.

(Operator Instructions).

Your next question comes from the line of John Tinker of Maxim.

Hi. Could you just give us a quick update on the timing of closing of the capsule injection by Liberty?

Yes.

So, we have to get shareholder vote, which will be mid-June is when the shareholder meeting will be. Once we get that approval; then, they will buy those additional 5.5 million shares.

And, that buying price is locked in when the deal was announced?

That's correct. It was based on a trailing at that time.

And, then, forgive me for this question. But, if the average ticket price in amps, you said, is down 12% to $37.41. Is there any magic number you see out there where demand really would pump up?

Yes. We do know that we've done a bunch of consumer purchase and tent testing. We know that the ideal ticket price for the lawn. Remember, in the amphitheaters, we don't usually ever have a problem selling the 6,000-ish reserve seats. That's usually the easy part. It's the part where you'll have a great EBITDA show or not is going to be how many people came on that lawn and then spent at the venue. So, we know that the lawn price of either $20 to $25 all-in ticket price, that's the highest purchase intent. It's literally when you charge $26 onward, the line starts declining on purchase intent. Now, I'm being general. If it's a super star, they pay different. But, in generality, we like to keep our amphitheater in the $20 to $25 range, all-in, from the beginning. We know that's the best optimum driver of revenue and attendance.

Thanks.

Your next question comes from the line of Richard Greenfield with BTIG.

Hi. A couple questions. When you look at the focus, from both you and it sounds like a broader industry focus, on bringing down ticket price. How do we think about the ultimate impact on your business? Because, obviously, Ticketmaster's business is built around charging fees that relate directly to a percentage of overall ticket price. So, as ticket prices fall and you get more people, which is great for your venue business. But, obviously, impacts -- and the number of tickets sold, but impacts the fees. How do we think about the trade-off there? And, how do you think about the increase, decrease to profit as we see ticket prices coming down substantial year-over-year, even as you sell more tickets. And, I guess just to relate that over to the point on guidance. You sound like you're unwilling to give EBITDA guidance for the year. But, is there a level of overall attendance that you need to see in order to show growth in EBITDA or adjusted operating income for the year? Any type of color we could be thinking about would be great. Thanks.

Your point on tickets is right in theory, but let's step back for a second. I think the industry has had 22 years of ticket price increases on revenue year-after-year. So, this has been an industry where the revenue has been going up, fueled by increasing ticket prices. So, first and foremost in 2011, our goal is to make sure there's a healthy industry and more tickets sold. So you're right. There is always a trade-off on, does Ticketmaster want a $52 ticket or a $44 ticket, because they make more on the $52. Well, first and foremost, we want a sold ticket. So, we believe that right now the number-one kind of rallying call is to drive more attendance to all of those venues, whether they're mine or one of the owners or other venues. So, first and foremost, more tickets sold means more money for us.

And, second, in terms of -- when we talk average ticket price. It gets a little inflated. Remember overall, in 2010 versus even 2011. I assume by the time the year is done and all the concerts are done, the average ticket price for a concert will probably be up a few dollars. Because there's segments within this business. So, when we talk about bringing the price down, what we're talking about is from a Live Nation perspective, amphitheater business. We're not trying to bring the ticket price down or have those same concerns around some of the super stars playing in arenas, whether it's a Lady Gaga or Rihanna that just sold 54 dates out in Europe. Or a Roger Waters tour.

So, there's a lot of the top-end business. Call it the iPod of the business. They're selling very well, and they will continue to. We want to just find that pocket in the middle where amphitheaters are a huge part of our EBITDA. And, we know that if we take a more proactive approach on pricing it slightly down on the full year, we will be able to get that sweet spot of increased attendance, increased revenue overall for both Ticketmaster and Live Nation. And, that's that sweet spot on our amphitheater business that we're focusing on, and that is why we gave you those numbers. On core arena international volume, we don't expect revenue to come down at all on the ticket price and/or the ticket fee. So, hopefully that explains the category-specific approach we're taking to the amphitheater versus the overall business.

A question about how to think about guidance in terms of what you need to seeing terms of attendance changes year-over-year.

Yes, and I kind of alluded to it. Our business is all about our volume. So, we would be -- I think you and I had this discussion before. If AOI was flat year-over-year, we believe that we could, because of our running our model a bit more efficiently this year, could be flat to a few dollars up in AOI. If we're down in volume, then we're -- then we can't grow. So, we would be looking at a year where we think flat to 2% or 3% growth provides us with a chance to grow some EBITDA at modest levels and point the ship in the right direction going forward.

Right. Some other parts of your business will still be growing, even apart from the amphitheater, certainly from your focus. So, that comment on guidance or how to think about it, is purely focused on the amphitheater side, away from the other parts of your business.

No. No, I just meant, if you look at my business, the number one thing you should take away today is, Irving and Front Line will grow if tickets grow, as he alluded to. The more artists that tour, the more artists that sell tickets, the more commissions it takes. So, his business grows if tickets grow. My Live Nation grows if tickets grow and Ticketmaster. So, all three of these businesses, in some effect, grow if ticket sales grow. And are hard to grow if they don't. Now, sponsorship, you're right, is the separate piece that as shown last year will grow with volume up or down. But, all three businesses, if global ticket sales are flat, it probably means all three businesses are somewhere in that world of AOI flat. If their AOI gows up 3% or 4%, then they all grow 3% to 4%. So, as I alluded to, I think we're looking at a year -- it's early -- where we believe ticket sales are responding. And, we think 2011 ticket sales are at least flat to up slightly, which was my -- is the most encryptic way of getting what AOI could be if those trends stayed.

Thanks a lot.

There are no further questions at this time. I would like to turn the conference back over to Michael for closing remarks.

Thank you, everybody.

Thank you for participating in today's conference call. You may now disconnect.