Live Nation Entertainment Inc (LYV) 2012 Q3 法說會逐字稿

Good afternoon. My name is Carrie and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Live Nation Entertainment third quarter 2012 earnings conference call. Today's conference is being recorded.

(Operator Instructions)

Before we begin, Live Nation has asked me to remind you that this afternoons call will contain certain 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 this call. In accordance with SEC regulation G, Live Nation has provided a full reconciliation for the most comparable GAAP measures in their earnings release. 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. Irving Azoff, Live Nation Entertainment's Chairman of the Board.

Thank you operator, and welcome everyone to our third quarter, 2012 earnings call. Joining me 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 for the quarter in more detail. We continue to deliver improved results without much help from the macro economy and are making significant progress towards achieving the goals set following the merger. Adjusted operating income for the quarter was essentially flat led by strong results from our ticketing and sponsorship divisions. In addition to my broader role at Live Nation, I continue to run Artist Nation, including front line management.

Touring activity by our key artists during the third quarter was slower than last year but included Kenny Chesney, Jimmy Buffet, Jason Aldean, Big Time Rush and the Fray. Christina Aguilera and Adam Levine continue their success as judges on the Voice. Mariah Carey has signed on as a judge on American Idol, and Britney Spears has taken a position as judge on X Factor. We continue our program of aggressive new artist signings and securing merchandise and VIP ticketing rights of established stars. Fall 2013 touring schedules for key acts are firming up, and are currently expected to include both the Eagles and Fleetwood Mac. So, thank you again for your support, I look forward to updating you on all of our progress on our next earnings call. Now I will turn it over to my partner Michael, for his remarks.

Thank you Irving, good afternoon and welcome to our third quarter conference call. We are pleased with our performance this quarter and continue on plan to deliver revenue, profitability and free cash flow growth, across all key segments for 2012 full year. For the third quarter the Company has grown revenue 7% on a constant currency basis. AOI is up 2% and free cash flow increased 23%. Ticket sales through September are up 5% at Ticketmaster, and 4% for Live Nation concerts. I expect the Company will complete 2012 with continued growth in ticket sales and market share at both Ticketmaster and Live Nation concerts and in 2012 with the two year growth in revenue close to 15%, AOI 25% to 30% and free cash flow 70% to 75% increase.

While growing profitability this year, we also continue to focus on four strategic leaders. First we continue to grow concert and ticketing core business, increasing global market share, expanding our portfolio and driving ticket sales. Second, we are making strong progress on our core ticketing platform to have established the most effective low cost platform in the industry, while at the same time, deploying new products from B to B and B to C, to drive incremental revenue. And third, on top of both our concert and ticketing platforms, we continue to grow our sponsorship in online advertising business.

As we look at the divisions, let me start with Live Nation concerts, Live Nation concert attendance is up 4% through the third quarter. Over the first nine months, the US has had a strong growth with AOI up over 40%, where Europe has underperformed. We now have good visibility into Q4 and North America is again looking very strong with over 1 million more tickets sold for the quarter than we had last year, led by Madonna and Lady Gaga tours. As a result, I continue to expect solid overall concert revenue and AOI growth in Q4 and for the full year. [While the] concert business remains strong with new artists coming on the scene every year, driving the next generation of concert fans. This year six of the top 10 Live Nation tours in 2012, are artists whose first hit occurred in the 2000s, like Lady Gaga and Jason Aldean. And early on sales for 2013 shows are encouraging, with 3 million tickets already sold, versus 900,000 the same time last year. Our strategy going forward for continued growth in our concert platform, is by concentrating on four growth priorities. The first priority is Europe.

We will tighten down on our portfolio, canceling festivals that don't have an attractive return over the next few years, along with reducing costs, and therefore we expect to bounce back in profitability next year. Our second priority is to continue to evolve and expand our portfolio into high margin opportunities, including festivals, electric dance music and emerging markets, and look to exit low growth areas. Our third priority is shifting our marketing spend to social/online, to drive sales and lower marketing costs. Almost 60% of fans today are sharing their concert experience. While Live Nation has been recognized as a leader in social marketing, I believe we can do much better. In 2012 we only spent 20% of our $125 million in marketing on social online media, and I want to double that in 2013, with the aim to harness the found passion of concerts and leveraging the millions of connected fans to drive awareness.

Our fourth priority is to continue our channel shift to mobile where economics remain constant, but fan engagement is much higher than online. In October we had 9% of concert ticket purchases made by a mobile, up 50% from the first quarter of this year. And in a few cases, such as Paul McCartney presale in Canada, we have had higher mobile ticket sales than online. Next, Ticketmaster. Through September, global ticket sales were up 5%. October continued this trend with ticket volume up 8% for the month. The first nine months of 2012 versus '11, revenue was up 4% and AOI up 6%.

Our global net retention rate is over 100% so far this year, and expect this to continue through the full year. Our growth strategy in ticketing includes three growth priorities. Number one is to continue on track to complete our Ticketmaster platform upgrade. The project is now 40% complete, with about $50 million spent to date, and running on time and on budget. Starting last month we rolled out our first set of new products to Ticketmaster venue clients. These products will help the venue simplify work flows, reduce costs and gain further insights into the concert customer. And from Ticketmaster perspective, these products will enable us to start reducing costs in 2013, and deliver a return on these investments.

Our second priority is growing our secondary market share. This year we built on our NFL partnership by adding NBA, UFC, Barclay's, and Madison Square Garden as content partners for the secondary market. This has resulted in an 11% increase in secondary ticket sales so far this year. We expect to see continued strong growth as we roll out additional products and improve the experience for fans, looking to buy and sell tickets. Our third priority like Live Nation is mobile. Fans are moving to mobile ticketing effortlessly, and with high satisfaction levels. In North America, mobile ticket purchases accounted for 5% of all ticket purchases, and global mobile ticket sales are up 150% this year to 4.7 million tickets through October.

So while we have a great early position with almost 5 million downloads of our apps, and inclusion in iPhone' s passbook, over the coming year you will see a number of new products deployed to improve the consumer experience in purchasing and managing tickets on their smartphone. Now turning to our sponsorship and advertising business. For the nine months year-to-date, revenue was up 6%, and AOI was up 7%, and 10% on a constant currency basis. For the full year, I continue to expect us to hit double digit AOI growth on constant currency basis. Our global sales team continues to deliver high renewal rates, across our near 800 global brand partners. Overall our growth in sponsorships this year, has been driven by new onsite ad units at festivals and amphitheaters and expanded online ad units.

Going forward, we expect ongoing growth in our advertising platform through higher sell through, increased CPMs, and adding new mobile advertising units in 2013. Overall, 2012 has been a strong year for our core business, with market share expansion and free cash flow growth. This will be the second year of growth and overall delivery of approximately $100 million AOI improvement from 2010. We believe this demonstrates that through improved execution, we can continue to drive profitability from our world -- leading world platform. Our investments in technology will then add further incremental revenue and profitability on top of this core. Between these results and progress on investments, I believe we can continue to grow profitability over the next three years, and add another $150 million in AOI by 2015. Now I'll turn it over to Kathy.

Thanks, Michael. Good afternoon everyone. For the nine months ended September 30, we have delivered growth in revenue, AOI, operating income and free cash flow. These results are consistent with our plan and we are confident in our ability to deliver our full year forecast for growth, with solid operating metrics, while continuing to invest in our business. For the third quarter, revenue was $1.96 billion, up 10% compared to 2011. After adjusting for the impact of changes in foreign exchange rates in the quarter, revenue increased 12% over the prior year.

On a reported basis, concert revenue was up 12%, driven by more events with higher attendance in our North American amphitheaters, the timing of global touring activity, and acquisitions. Ticketing revenue was up 4% due to higher ticket sales, increased resale activity, and higher fees from the London Olympics. Sponsorship and advertising revenue was up 11%, driven by festival sponsorships. Artist Nation revenue was up 5% due to increased VIP ticket package sales, and acquisition activity. Adjusted operating income was down slightly for the third quarter at $202 million, compared to $204 million last year. Concert's AOI was down 41% compared to last year, or $35 million. The majority of this decline was due to timing with some festivals moving to the second quarter, as we previously discussed, and also a shift of event activity into the fourth quarter.

The remainder was driven by some under performance of a few festivals in Europe. Ticketing AOI increased 51% or $28 million, driven by ticket fees from the ParaOlympics in London, higher primary and secondary ticket sales, along with lower legal expenses this year, since we accrued $15 million, for a legal settlement in the third quarter of 2011. And sponsorship and advertising AOI was up 12%, or $8 million, as a result of increased sales from festivals and strategic sponsors. Our operating income for the quarter was $105 million, flat compared to last year. And our net income was $58 million in the third quarter, compared to $52 million in 2011. We show a $0.03 increase in earnings per share, to $0.31.

For the nine months of 2012, revenue was $4.4 billion, up $184 million or 4% over 2011. On a constant currency basis, revenue increased 7%. Concert revenue increased 5% compared to the prior year on a reported basis, driven by an increase in events, primarily amphitheater shows with higher attendance, as well as festivals, along with acquisitions. Ticketing revenue for the nine months increased 4%, driven by higher primary and resale ticket sales. Sponsorship and advertising revenue grew by 6%, with higher sponsorship activation for key sponsors, and activity around festivals. Artist Nation revenue was up 2% due to increased VIP ticket package sales, and acquisition activity. Adjusted operating income for the nine months grew 2% to $397 million, compared to $387 million in 2011.

Concerts AOI decreased slightly, 3%, or $2 million, driven by a few festivals in Europe, which offset the improved profitability in amphitheaters. Ticketing AOI increased 6%, or $12 million, due to higher ticket sales and the 2011 legal charge, while also making continued investments in the technology platform. And sponsorship and advertising AOI was up 7% or $9 million, from increased sales related to festivals and amphitheaters, along with higher online advertising. For the nine months, we had operating income of $105 million, compared to $85 million last year. This improvement comes from our higher ticket sales and increased sponsorship and advertising results, along with a reduction in stock-based compensation expense from the Front Line buyout in 2011, while investing in our ticketing platform. Our net loss for the nine months was $4 million, compared to a gain of $17 million in 2011, with a decrease driven by the 2011 net benefit related to the Front Line buyout of $27 million.

As of September 30, we had total cash of $784 million, which included $394 million in ticket and client cash, and $89 million in net concert future event-related cash. Our free cash was $300 million. For the quarter, free cash flow was $152 million for both 2011 and '12, and for the nine months was $274 million, versus $224 million last year. This increase for the nine months is primarily due to higher AOI, and a cash tax benefit in 2012, driven by the realization of tax benefits from the Front Line buyout. The free cash flow generated in the first nine months of $274 million, was used to fund revenue generating capital expenditures of $46 million, including the ticketing re-platforming. $86 million in acquisitions of businesses and other rights, and to fund working capital in the nine months, our seasonally high point of the year.

Based on our current view of the acquired businesses for next year, we believe that they will generate a cash-on-cash return of 20% plus. We continue to expect that our total capital expenditures for 2012 will be approximately $125 million. We have spent $88 million of this in the first nine months of the year. The increase over last year's $69 million was driven by the cost for the re-platforming of our ticketing system, along with other purchases of technology and venue equipment. Total deferred revenue was $327 million as of September 30, 2012, compared to $274 million as of September 30, 2011. This increase was driven by higher Live Nation concert ticket sales in 2012, regardless of the event date, which is up over last year by 15% through October.

As of September 30, our total current and long term debt, including capital leases, was $1.75 billion, with no outstanding draws in our revolver. For the first nine months of 2012, we made $26 million in debt repayments. Our weighted average cost of debt, excluding debt discounts is 5.3%. During the third quarter we issued $225 million of 7% senior notes, and increased our term loan by $100 million. These borrowings were used to repay the $287 million of 10.75% senior notes, and to pay the associated premiums, accrued interest and related fees, leaving cash of $12 million for operations. As a result of this refinancing, we expect to save $11 million in cash interest annually.

We continue to remain comfortably in compliance with our debt covenant requirements under our credit facility. As of September 30, our total debt to EBITDA ratio was under 4 times, versus the maximum 4.5 times, and our interest coverage ratio was over 4.4 times versus the minimum ratio of 3 times. Our business continues to deliver solid results, and we remain confident in our ability to execute on your growth expectations for the full year, which currently include continuing to build and grow our concert portfolio. We expect this business to deliver a mid single digit increase in attendance, and solid growth in AOI for the year. Continuing to invest in our Ticketmaster business, we expect overall ticket sales for 2012 to be up in the low to mid single digits, with this increased revenue to be partially reinvested in our Ticketmaster technology, and mobile and social products, and continued growth in sponsorship and advertising. We expect this segment to again deliver double digit AOI growth in 2012, on a constant currency basis. We thank you for joining us today for our third quarter 2012 update, and we will now open up the call for questions. Operator?

(Operator Instructions)

Ben Mogil, Stifel Nicolaus.

Kathy, I think my question is more for you. If we look at your ticketing segments, even if we exclude the litigation charge from the third quarter of last year, the margins were flat year-over-year for 9 months but they were up a lot in the third quarter of '12 just on the quarter alone. Can you walk us through what the Olympics impact? Is it a license fee that comes at 100% margin? Or is the margin on the Olympics higher than the overall consolidated number? Trying to understand why the 9 month numbers were flattish but the third quarter numbers were up so much on a margin basis.

It is partially driven by the Olympics and the paraOlympics, which their recorded ticket fees and basically dropped the bottom line. We did have some costs of fulfillment. The majority of those costs were covered by the initial sales. Then overall just the increase in overall ticket sales from the primary and the secondary would have some impact on that as well.

Can you isolate the Olympics for us?

We don't give those kind of details.

Okay. I think the second question is more for Michael on a larger question. You know at the Liberty Investor Day you talked about a number of initiatives to give the guidance for the next couple of years or in '15. When you are thinking about the 5 million attendance growth by adding some more festivals and adding more electronic dance music, can you achieve that organically? Do you need to do acquisitions? Can you talk about the M&A environment particularly in EDM with Bob Sillerman back in the market, and [Lon Burkell] and a lot of other players sort of looking at that market, too?

You know, it's always a mixture. I think we've shown over the last seven, eight years when we've gone from, you know, prior historic event flow and ticket flow that we've been able to do a combination of both. So we have a great platform in place. So, as you have seen this year, every time we organically start a festival from scratch, it's incremental tickets to when you do MIA in Philadelphia from scratch it's 85,000 new tickets organically. So we've been able to use our platform to launch a lot of festivals around the world, and we continue to -- and we will continue to do that.

We're also able to, in Korea, we walked in organically in Korea, set up an office there, and have been able to build a nice business there, and add a few 100,000 in incremental tickets out of the blocks. So we're looking at a lot of other key markets where we think we can enter. Some organically, some with a bolt on. So we would look at the 5 million as a combination of organic and bolt on, by event creation and by small bolt ons.

Are you seeing acquisition multiples start to expand as you see more -- this is clearly a lot of focus on it in the space. Are you seeing stuff going a little bit further?

The market, you know, although Bob is out there and others, there has always been somebody out there. So, we haven't seen any difference in the marketplace as we have seen over the years. If you have a great festival, you have a strong position in the market, you probably can get a couple people bidding. But we haven't seen anything dramatically change in terms of multiple expansions when we're looking at options.

Okay. That's great. Thanks, guys.

John Healy, Northcoast Research.

Michael, I wanted to ask you a little bit about Europe and if I think back kind of where you guys have been and where you're at today. 2010 was obviously a tough year for North America. When you kind of sized what happened in Europe this year, obviously it was a lot more economic related than strategy, but how much was the impact on AOI for the concert division in Europe this year? And is it basically using the same play book as you did in 2011 to kind of -- to recalibrate the strategy for Europe? How confident do you feel that you can get that piece of the business on a break-even or profitable level next year?

Yes. You know, you said it best. I think we've seen the exact same play book play out over there as we did here, and as we've shown you two years in a row we can self adjust the model and return to what we have in North America. We don't think it's as prevalent across all of Europe as we've seen in the 2010 US pullback. But we definitely in southern Europe, Spain, Italy, some of the obvious markets, were tougher coming into August than any other year. So, we think we have room in the model. We think two things happened. The market tends to self adjust itself because, as I've said in prior years, the artists have the greatest motivation it make sure the house is full.

So, it usually starts with ticket pricing, and making sure that everyone is pricing the house for maximum sale through next year. So I think you are going to see a lot of those conversations going on for next year about what should the ticket price be, and that's what happened with the catalyst to change in '11. So I think we can self regulate by adjusting the ticket prices to make sure we can match the market economics. We've got, you know, the good news about our European business is we have over 54 festivals, and the vast majority of them are established and very profitable. We'll probably, you know, into '13, we usually try to start five or six organic festivals a year in that marketplace, which tend to be an investment strategy, and you hope that, you know, 50% of them end up being winners long run.

So you'll see in '13 we just won't take any of those risks. We will let the market settle down. We'll cut back on our risky organic strategy. We'll cut some costs and we'll make sure that we get the pricing of the product right across the portfolio. We think we get that play book in place there, we'll start to see the market come back by next year.

And maybe for Kathy, are you able to isolate what the headwind has been in Europe maybe on a concert division profit this year?

Obviously we track that John, but we don't usually give those kinds of details out.

Fair enough. And then Michael I wanted to ask another bigger picture question. You have been awfully direct in putting out the 2015 goal of $150 million in incremental AOI. When I think about your four main divisions, is there a way you could roughly break down where you see that $150 million coming through at? I know you've talked a lot about sponsorship and the reworking of the ticketing business. But I was trying to think about, you know, where that $150 million might be slotted out hypothetically over the next couple of years.

Well, we're not going to go through the detail today. But we'll start to get more details as we head into '13. I think if you have seen the presentation, we kind of isolated those drivers at the end. I'll start backwards to front. Obviously, Ticketmaster where we're spending the investment on our platform, the higher margin business we think is obviously the largest contributor from two functions. One, we can run a very efficient business when that new platform is in place. So that per-ticket savings hits the bottom line directly.

So that's a big AOI pickup. And we're very bold on, as we roll out our new B to B products online and mobile, that we're going to take up that secondary business and take a good bite out of that business, and drop back to our bottom line. So, you know, the biggest spend in our business right now priority wise has been around ticketing and we would look at that as being -- those two initiatives as being the larger part of the $150 million. Then you add on two components. Sponsorship being next because the more tickets we have, the more robust our platform is, the easier it is for my sales guys to sell through online and customized programs. So that we expect to continue to grow at higher rates, as we improve our technology platform.

And then the fourth being the final is the smaller of the four, would be the increase ticket volume across our platform of concerts. Now, as you know, concerts end up being the engine to the train. The more tickets, the more concerts we do. The better Ticketmaster does in terms of renewals, and the higher sponsorship's we get because of the flow through. So we think the ticketing is the absolute priority to our business both from an investment and a return perspective.

Okay. And then just one final question. I think in the Q that you guys filed tonight, a brief negligence the CTS update. Sounds like you are expecting some sort of update by the end of the year. Is there a way you could provide us with maybe a little bit more clarity in terms of how you're feeling, maybe where you are positioned, and thoughts regarding that outcome?

Yes. We sure hope and believe this was the final extension. We're pretty confident now that the judge will deliver the verdict by the end of the year. We are still confident in our position. We've had many discussions and we think that we're still going to have a verdict that is in our favor or we would have, probably looked at other options by now. But we believe seeing through the process is the best option for shareholders.

Great. Thank you.

Doug Arthur, Evercore.

Kathy, two questions for you. On the concert costs, the Q says that adjusted for FX, if I have this right, costs were up 20% in the quarter year-over-year. You talk about the acquisitions Coppell, Cream, obviously, you have been buying into electronic dance music. You started some new festivals. I guess I'm trying to get a breakdown of how much was organic, and how much was due to those other factors.

And then correct me if I'm wrong, but it looks like the accounting treatment in ticketing completely changed this quarter. The number for last year is different. You have a much larger inter-segment revenue number all of a sudden, and the cost allocation between operating and SG&A look a lot different. So can you explain that? Thanks.

Sure. So on your first question, we actually do give the breakdown on the acquisition impact in concerts in the Q as well. So you're asking on DOE and the acquisition piece, that was about $57 million of the increase. The rest of it is really driven by festival investments. Some of the European festivals, and then also just timing of how the global tours are working out this year, that there will be some blending between Q3 and Q4 on that. That's really the biggest driver on that.

On your ticketing question, what you're seeing is that the eliminations between activity for concerts and ticketing, the elimination was changed where we moved it out of -- it was within ticketing before. We have now broken that out and we are dealing with the eliminations to better show inner segment revenue. That's just a fix to how it was presented in the past to make it consistent with this year's presentation, to get that concert and ticketing activity reported as cleanly as possible. No change in overall numbers and that would have just been revenue and direct operating expenses that were impacted.

Okay. So does that -- so it impacts how you allocate costs versus SG&A?

No. It impacts how it's reported from a segment standpoint. It's just the sharing of the rebates between concerts and ticketing, and how that's booked between ticketing revenue and ticketing direct operating expenses versus the elimination Company.

Okay.

That's why the total doesn't change at all.

Okay. All right. Thank you.

(Operator Instructions)

John Tinker, Maxim.

Could you just talk a little bit more about the mobile side? I think you mentioned it's about 5% of all ticket sales. Does that -- is there any difference in the margin as that becomes bigger? How does sort of the cost of that compare with the existing structure? And secondly, just if you could touch on how many tickets do you think that Stubhub gets from you as people sort of go on your site on Ticketmaster and buy tickets and resells them via Stubhub?

I'll start with the first question on mobile. We've, you know, in general the nice part about our mobile strategy versus maybe other companies that are struggling in terms of how to transfer to that channel, our economics transfer 100%. So whether the face value or the service fee, it's the exact same price mobile or online. So that's the good news because, as you know, others are having difficulty figuring that one out. Our ticket is obviously, this is a product that's made for mobile phones. Meaning a consumer doesn't need a lot of descriptions or pictures to figure out if they want to buy that ticket.

So we're seeing huge interest and we'll continue to move to mobile. So the economics on the revenue stay the same. Economics on the cost generally stay the same for now, you know. I envision, yes, when we're talking three, four years from now, when a higher and a majority percent of the tickets are on mobile, we'll probably be able to realize some efficiencies as we move to a mobile platform versus an online or as we pick up any of those remaining retailer phone sales that people will start to gravitate to a mobile phone. I think long term it's a cost benefit to our business if you're all -- if the high majority of our tickets are sold on mobile.

As far as the second on Stubhub, we don't disclose or track that specifically. You know, generally you could say that probably most of our tickets, if they're a good ticket, end up in a secondary market. So probably, you know, a high, high majority of our sports and music shows that are first sold at Ticketmaster end up somewhere on a secondary site, which is why we think we have an incredible opportunity to add some value at that juncture.

Thanks.

Rich Tullo, Albert Fried and Company.

My first question is, I was just a little bit late to the call due to a connectivity issue. Was there a head -- do you expect a headwind in the fourth quarter owing to the storm Sandy?

No, we're lucky, you know, we've thankfully, as I said somewhere in a quote, thankfully it was the Fall on a Monday or Tuesday or a midweek. We had a big weekend the weekend before, which was successful obviously. But in general, if you look across Ticketmaster, Live Nation canceled shows. Obviously, a vast majority of those end up getting rescheduled. So you pick that back up at some point. But in general we've been lucky in the overall cost cancellation. Insurance, et cetera, is maybe a few $100,000 to our bottom line, but nothing significant.

Where do you stand with the NHL lockout? Is that going to be a drag or net benefit to Live Nation to increase the arena availability?

Yes, I mean, it's, you know, right now it's a Ticketmaster business issue, not so much the concert division. We have obviously -- we would like to be selling NHL tickets. But as of right now, let's just call it, if the business doesn't happen by the end of the year, Ticketmaster total impact is probably a couple $1 million. We don't see right now any dramatic pickup in events happening in those dates. I guess if the year was completely declared over, you would start to see it. But I think the NHL arena owners are still on a stand by basis. So there is not much opportunity to book new shows in right now.

Last question, on sponsorship. Was there any drag on -- in that business owing to Europe or any of the other factors? And what do you think needs to occur to get revenue going in the right direction with sponsorship?

Well, listen, sponsorship is by far one of our most profitable, highest margin and consistently growing bottom line businesses over the last few years. We have been growing AOI at double digit growth for years. So we think that business will continue to have great runway. We will continue to find better ad units within our platform. We have had a great new business by online and we think mobile is a whole new opportunity for us.

So continue to be very bullish with sponsorship, advertising. Will continue to be a growth business for us. We actually in Europe, did not see the effect of a slowdown. We saw it, obviously, in the concert ticket side, but we did not see it in the sponsorship side to date. So we will finish 2012 in Europe sponsorship fairly unscathed by the European slowdown.

Okay. Thank you very much.

(Operator Instructions)

Mr. Rapino, there are no further questions at this time. I will turn the call back over to you.

Thank you, everybody. And we look forward to our Q4 conference call.

Ladies and gentlemen, this concludes the Live Nation Entertainment, third quarter 2012 earnings conference call.