Live Nation Entertainment Inc (LYV) 2013 Q1 法說會逐字稿

Good afternoon. My name is Kerry and I'll be your conference facilitator today. At this time, I would like to welcome everyone to the Live Nation Entertainment first quarter 2013 earnings conference call. Today's conference is being recorded. (Operator Instructions)

Before we begin, Live Nation has asked me to remind thank you this 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, news development, 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 results. Live Nation will also refer to some non-GAAP measures on this call, and 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, 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 Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment.

Good afternoon and welcome to our first quarter 2013 conference call. I'm joined today by Joe Berchtold our COO, and Kathy Willard, our CFO. Let me start with a review of the first quarter and I'm pleased that we delivered overall growth with revenue up 6% and AOI up 10%, led by concert and sponsorship double-digit growth year-on-year in both revenue and AOI.

We continue to see strong global demand for live events driving this growth, and giving us confidence that we'll have another strong year in 2013. Through April, global ticket sales at Ticketmaster for events in 2013 are up 8%, with the concert segment up 18%. Our Live Nation concert ticket sales are up 26%, outpacing the market, indicating we are continuing to build market share in concerts.

On our last call I outlined our five strategic drivers that will lead us to our 2015 AOI and cash targets. First we will grow market shares in concert and ticketing by 5 million tickets through new events, global expansion, and higher per event conversion. With concert tickets year to date up double digits I expect that we will deliver over half this growth in 2013 alone, making me highly confident that we can deliver this target by 2015. Second, we'll drive event awareness and ticketing conversion by shifting advertising spend to more direct and efficient social and digital channels.

This year, all of Live Nation's national tours are utilizing digital and social media and through April, we almost doubled the share of spend in these channels to 20% of our total marketing spend. And we see this as a contributing factor to our double digit growth in attendance per show in the first quarter. Third, we'll continue to deliver rapid growth in our sponsorship and advertising business through 2015. With 15% growth in sponsorship AOI during first quarter we continue to distinguish our platform as the most effective way to connect brands with music fans.

Fourth, we'll grow our market share in the secondary business. We're off to a strong start this year with our NFL, NBA, and NHL secondary partnerships with our gross transaction value through April up over 20% from last year. I expect this to accelerate further once we launch our Ticketmaster Plus this summer. And fifth we will reduce ticketing costs through our replatforming project. We expect the project to be more than 75% complete by the end of 2013, with cost savings starting to be realizing in 2014 and continue on plan to save $0.35 a ticket in North America from the project.

Our first quarter results and ticket sales for 2013 events give me confidence in our ability to deliver 2013 AOI revenue and cash flow as expected with our 3-year plan. I'll now turn the call over to Joe Berchtold, our COO, who will take you through a divisional update.

Thanks, Michael. First, on concerts. Live Nation's concerts revenue for the first quarter was up 14%, an AOI improved by almost 50% versus 2012. The first quarter performance was driven by a 12% increase in global attendance and in North America, attendance was up 16%, with a 33% increase in Arena shows, led by sellout tours with Lady Gaga, Rhianna, and Maroon 5.

Internationally, attendance was up 7% with particular strength coming out of Australia with Red Hot Chili Peppers and Cirque de Soliel and Girls Allowed in Europe. Looking at our concert ticket sales for all of 2013 shows, we were up 22% year on year as of the end of the first quarter with consistent growth in both North America and our international markets. We had seven artists sell over 500,000 tickets each for our tours so far this year, Ink, Rhianna, Maroon 5, Jason Aldean, Luke Bryan, Bruce Springsteen, and One Direction. And given this strong early start, we expect attendance at our concerts to be up mid- to high single digits for the full year.

Looking at this by market, first in North America, our amphitheaters are a big driver of this growth, with show count expected to increase by over 50 shows while we also continue to increase our attendance per show and profitability per show. At the same time, arenas and stadiums have also shown substantial increases in both shows and ticket counts, which we expect to continue through the year.

Internationally, we're seeing the same thing with double digit growth in our arena and stadium attendance so far and we expect it to continue through the year. This is led by tours from Rhianna, Pink, Robby Williams, and Bruce Springsteen. On the festival side for Europe, we're seeing continued strength and demand for our shows across Northern Europe, and the UK, and have reduced our activity in southern Europe, notably Spain and Italy to de-risk promoting in those markets. As a result in total we expect to be fairly flat year on year about 3 million festival fans in Europe, keeping Live Nation far and away the largest festival operator in the world.

As we have previously indicated, our other global priority is in festivals and concerts is electronic music. In the first quarter this year we almost tripled the attendance at our EDM shows to 350,000 fans and for the full year, by leveraging our Creamfields and HARD brands and new partnerships being established, we expect to more than double EDM attendance to over 1.5 million fans. As part of, this we also expect to be actively managing our portfolio of assets, disposing of non-strategic aspects and reinvesting these proceeds in the EDM and festival spaces and international markets more broadly. Taking all of this together, we expect substantial concerts AOI growth in 2013.

Now turning to our sponsorship and advertising business. For the first quarter, revenue was up 11% and AOI was up 15%. This AOI growth was delivered consistently by both sponsorship and online advertising, and across both North America and Europe. On the sponsorship side we continue to add strategic partners that we believe resonate well with our fans. Last quarter we signed Bose to be a global partner for our festivals, bringing their highly regarded brands to our events and creating unique music experiences for their customers.

Last week we announced our Bud Light 50/50/1 sponsorship deal, wherein we're working with Bud Light to hold 50 concerts in 50 states on August 1st, leveraging the unique scale of Live Nation to deliver innovative sponsorship opportunities. Our online advertising is similarly off to a great start with double digit AOI growth in the first quarter as we created more content at Livenation.com for brands to associate with. So based on first quarter performance in what we've already booked for the year, we expect sponsorship to continue to be one of our primary growth drivers with full year 2013 AOI growth expected to be in the high single digits to low double digits, consistent with the past few years.

Next, Ticketmaster. For the quarter, ticketing revenue was down slightly, while AOI has declined by 18%. This AOI decline was driven by two factors; lower recognized ticket sales during the quarter and increased stops. We believe the lower recognized ticket sales figures is a function of timing largely driven by a shift of over 1 million tickets from Q1 of this year into Q4 of last year. We expect total ticket sales for the year to be flat to slightly up, as we continue to deliver a net renewal rate of over 100% and benefit from a strong year at Live Nation concerts.

Specific to that timing, while recognized ticket sales are down 3% for the first quarter, ticket sales for all 2013 events are up 5% when you include tickets sold in 2012 for 2013 shows and tickets deferred on Live Nation Concerts. Our increased costs for the quarter are tied to our two key strategic initiatives, replatforming our ticketing technology and product development for our secondary business.

Looking at 2013 versus 2012, these costs increases are substantially front loaded given the ramp up timing of our platforming and secondary product development in 2012. As a result, we expect ticketing margins for the remainder of the year to be in line with last year's margins. Operationally, our ticketing replatforming project is now at its peak level with over 200 engineers rebuilding our core ticketing engine and developing applications for our venue clients. We continue to plan on deploying many of our key apps by the end of this year, which will enable to us reduce operating costs as we complete building the core infrastructure in 2014.

On the secondary business, as Michael noted, our overall gross transaction value is up over 20% through April, driven by our deals in place with the NFL, NBA, and NHL teams and leagues. As we deploy our integrated secondary product in the third quarter we will be leveraging this traffic along with a number of high profile artists' tours to deliver fans a simpler and safer buying experience. Underlying our secondary product strategy will be our mobile platforms which continue their rapid growth. Through April, 10% of total Ticketmaster sales in North America were purchased on mobile platforms, double the same period in 2012.

In March for the first time we sold over a million tickets worldwide on our mobile platforms and we expect this trend to continue and accelerate. For the full-year then, we are expecting our ticketing AOI to be flat, slightly down with our technology investments and not having Olympics ticketing this year, offsetting our increases in ticket volume and operating efficiency gain.

Lastly, Artist Nation. For the quarter, Artist Nations revenue was down 18%, while our AOI losses were reduced by 63%. The sales decline is due to timing in our merchandise business, but at the same time we were able to reduce costs by a greater amount to deliver improved AOI for the quarter. More broadly, over the past four months we've streamlined and simplified the Artists Nation division to better position it for long term sustainability and growth.

The main change has been on the artist management side where we've worked with the managers to consolidate the management teams and define specific products and processes to enable them to more effectively tap into the Live Nation concert, sponsorship, and ticketing platforms. We believe this strategy of greater access will provide tangible to the artists, enabling the managers to further differentiate how they can serve their clients and in turn, creating greater alignment between these managers and each of the Live Nation platforms.

So, in summary, based on our first quarter results, strong 2013 ticket sales across both concerts and Ticketmaster in a growing committed book of business and sponsorship, we expect 2013 to be our third consecutive year of strong growth in both revenue and AOI. With that, I'll turn the call over to Kathy Willard to take you through more details on our financials.

Thanks, Joe, and good afternoon everyone. Today I'll provide more details about our first quarter results, then I will discuss what we see ahead for the rest of 2013. Let me start with the first quarter results. As you heard from Michael, we delivered strong results with growth in revenue and adjusted operating income, and also improved our operating income by 22%. For the first quarter, revenue was $924 million, up 6% over the same period in 2012.

This increase was driven by concerts which improved by 14% compared to last year through higher overall attendance, increased global touring activity with Lady Gaga and Rihanna on tour, and more North America arena shows, and growth in Australia sales. Adjusted operating income for the first quarter grew 10% to $53 million as compared to $48 million in 2012. Concerts drove this AOI growth with a 48% increase from higher show count and attendance in North America, and growth in emerging markets including Australia. Sponsorship and advertising in AOI was up 15%, driven by growth in online advertising and sponsorship related to venue.

For the first three months of 2013, our overall AOI margin was 6%, which is flat compared to first quarter of 2012. In the first quarter, we had an operating loss of $33 million compared to a $43 million loss last year, a 22% improvement. This was driven by the improved results in our concert segment and also led to an improvement to our net loss which was $63 million compared to $69 million last year. Free cash flow was $14 million in the first quarter compared to $24 million last year. This decrease year-over-year was due to a cash tax refund of $26 million that we received in 2012. Cash flow from operations was $270 million for the quarter, up 2% over last year.

As of March 31st, we had total cash of $1.2 billion, which includes $441 million in ticketing client cash and $503 million in net concert event related cash. Our free cash was $302 million. Our total capital expenditures for the first quarter were $22 million, approximately $12 million was maintenance expenditures, and $10 million on revenue generating additions. This spend is slightly lower than last year's $23 million at this time, and we continue to expect that our total capital expenditures for 2013 will be approximately $120 million.

Total event related deferred revenue was $774 million as of March, 2013, as compared to $613 million in 2012 due to higher ticket sales for 2013 concerts, which are up 22% as compared to this time last year. This increase in deferred revenue and concert ticket sales to-date to year provides strong momentum for the summer concert season. As of March 31st, our total current and long-term debt including capital leases was $1.73 billion. Our weighted average cost of debt, excluding debt discounts is 5.2%. We continue to remain comfortably in compliance with our credit facility debt covenant requirements.

As of March 31 our total debt to EBITDA ratio was under four times vs. the maximum of 4.5 times, and our interest coverage ratio of EBITDA to net expense was over 4.5 times versus the minimum ratio of three times. While our weighed average cost of debt is at a historic low of 5.2%, we consider alternatives to take advantage of the very favorable interest rate environment, in both the senior debt and high yield markets. We delivered great results for the first quarter of 2013.

Looking for the remainder of the year, we continue to focus on generating improved profitability, while investing in the future growth of our business through our ticketing platform, as well as expansion in mobile, social, and resell technology. Overall, our early results are solid and we remain confident in our growth expectations for the year.

Specifically, in 2013, we expect to deliver substantial growth in concerts AOI as Joe noted. Based on tour and festival timing this year, we expect to see some shift in activity from Q2 to Q3. We expect sponsorship and advertising to continue its steady high single to low double digit AOI growth, and we expect ticketing's AOI to remain flat to slightly down due to the investments in our ticketing platform and the loss of the 2012 Olympic earnings from last year. As a result, we currently expect margin improvement for the year in concerts, while our ticketing and sponsorship and advertising segments margins will remain essentially flat to 2012.

On our cash flow, we expect an increase of cash taxes to be paid in 2013 of roughly $40 million over last year, because of our tax refunds received in 2012, along with improved AOI this year in tax paying jurisdictions. Despite this cash tax increase, we currently expect free cash flow to still be at or above last year's level, based on our expected improvements in operations. Thank you for joining us today, and we will now open up the call for questions, operator.

(Operator Instructions) We'll take our first question from Doug Arthur.

Kathy, Artist Nation AOI for the year, I think you had said on the fourth quarter conference call you were looking, given all of the transition in management and changes, they're flat for the year is that still the outlook or is it based on Q1, could you do a little bit better there?

I think-- this is Joe, Doug. I think flat is still probably our best guess with the visibility we have at this point. We don't see a lot of movement from there.

Okay. Then a follow-up, Joe, for you. You're adding a lot of amphitheater shows this summer. Are you confident you can -- obviously you are given your guidance, manage that growth profitably with higher margins?

Well, I think probably in our viewpoint more important than the number of additional shows is how the shows themselves perform. As I said, our expectations-- you can do the math off of what we give you in ticket sales as we think our attendance per show will be up and our profitability will be up. That's really what matters most to us.

All right, thank you.

We'll take our next question from John Healy with Northcoast Research.

Thank you. I wanted to ask just a little bit about the outlook for the Ticketmaster business. I think in your prepared remarks you mention flattish for the year in terms of -- flat to maybe I think you said slightly up in terms of volumes. Just the strength you're see in the concert market let alone what you're seeing specifically at Live Nation. What do you see in the give back in terms of the volumes or is there something in the numbers that might impact the reported volumes statistics on a year-over-year basis?

Yes, 100%, remember, Ticketmaster counts the ticket sales when the sale is made and Live Nation counts the ticket sales when the show occurs. So, when Ticketmaster has a big Q4, which are all of the Pink and Rihanna pre sales for 2013, they're counting that ticket sale and that revenue in Q4. We're not counting the sold-out Rihanna Pink tour until it happens now, so when we say tickets-- Live Nation's ticket sales for 2013 events are up 26%, to look at Ticketmaster and to put it on apples to apples, we'd also have to count Ticketmaster November-December ticket sales for anything that was for a 2013 show to give you apples to apples. So, overall, you're going to see if you just do a 2013 where more tickets flow through Ticketmaster regardless of whether the sale was in December or the year 2013, the answer will be yes, the business will be up, tickets will be up, as will the concerts.

That's helpful, I appreciate that I guess to gauge your temperature in terms of the overall health of the business and what you see out there from the consumer. I thought your comments regarding Europe at the margin were probably a bit optimistic than what I would have expected. You seem like you're very comfortable with the summer lineup. Do you feel you're incrementally more positive about the business and what you're seeing out there relative to where you were maybe two months ago when we last spoke? Are we right in picking up that maybe the business is operating a little bit ahead of where you maybe expected two months ago?

I think that's a fair assessment I think we're fielding on a global basis. When you're sitting with 26% ticket sales up year-over-year and you're as big as we are, to start with as you know, those are big gains on a big base, so we're very confident, but it's a strong season. The consumer seems to be coming back very strongly, both in America and in Europe. Remember, most of our business in Europe is in the North, so I'm not betting on a Spain or Italy recovery, but in Northern Europe where the bulk of our volume is, Ireland, and England, London, Paris, Sweden, the Nordics, Holland, those markets seem to be doing very well year-over-year. A lot has to do with our teams executing better than last year. We bought smarter. We reduced some risky events. We shut down some festivals that weren't working, so I think we'll grow our business both through execution and a slight increase in the consumer spend over there. And in North America, the consumer seems to be coming back very strong to the show.

Okay, great. Just a last question. I think in your remarks you mentioned maybe reallocating some resources on non-core assets. I thought you were talking maybe about the focus in terms of where you were looking to promote shows. I wasn't sure if that was a specific genre or music or certain area of the country. I was hoping to understand a little bit more about that statement as well as your thoughts on more future growth. I think there were press reports out in the last week or so about some interest in electronic music opportunities. What does the acquisition pipeline look like and should we expect a bit more activity there in the not so distant future?

I think we've been consistent that we think there's two opportunities to continue to grow the business from a portfolio prospective. One is always an international expansion, where you continually see us, whether organically as we did in Russia, or whether we bolt on a strong promoter like we did in Australia, but we think there's still great opportunity in Latin America, and in the Pacific rim, and also Eastern Europe, so lots of markets to expand both Live Nation and our ticketing business, you'll see us do that. And then on the other end, think about-- we have a hundred offices in over 35, 40 countries. Those are the outlets, but what's real important is that you're putting the content through. The more shows we buy, the more content we have, the more fans that walk through the doors, ultimately our business model works and ultimately sponsorship lays on top of that. So we're always looking at our portfolio to make sure we have a diverse and renewed content platform, so country happens to be on fire in North America, so we're continuing to look and we launched a country festival in Michigan this year.

You look around the world, we've been saying it for the last couple of years, electronic music is a global phenomenon. Globally every country is looking from a club, to Vegas, to a festival to look to get into that space, so we're going to look to build upon our [cream] fields and hard acquisitions and if we can find the right deal to build that piece of our business, we will. And we've talked about continuing to grow our festival business in North America. It's probably the one piece of the overall portfolio that we're under serviced in, so we think we'll accomplish that through electronic music. You look at a company like Insomniac, they have the second largest festival in the world in Vegas, after Rockin' Rio. 300,000 tickets. So they are -- electronic music is truly a festival business in itself. We'll look to electronic music and we'll look to traditional festivals in North America, whether organically or some bolt on acquisitions to keep driving our portfolio.

Thank you.

(Operator Instructions). We'll take our next question from John Tinker with Maxim Group.

Hi, thank you. To follow up on Insomniac, what kind of multiples do you have to pay to buy into these festivals now, if the cost was $50 million?

Good question, John, just straight out there. we're not going to comment on anything until we get deals done. I would say good properties, festivals that are doing really well are probably going to get a decent multiple. Every deal is different, lots of content out there. I would say other--We're certainly, unlike maybe some others out there, we're not desperate nor do we need to buy a lot, so if we think we have the right festival to add to our portfolio, we like buying-- we don't like buying 100% of these businesses.

We like the entrepreneur to have some upside and risk in the game with us to build the businesses, so we tend to look for businesses where we think they've got a strong foundation, an exceptional entrepreneur at the helm, and more importantly that they can use our distribution to grow that asset, like we've done with festival republic in Europe, like we've done with rock nation here, so we'll continue to look for the right acquisition that we think works with our distribution, and that ultimately what we look for is regardless of what that asset makes today where can we take that business over the next two or three years, and can we grow that business with a strong return for our shareholders when you put their content with our distribution together.

You mentioned mobile, it's about 10% of ticket sales. Is there any difference in the kind of person who buys mobile rather than online? You think you're reaching a new audience in any way or is it getting rid of some of the inefficiency out there where people hadn't heard of the tickets, perhaps hearing of them now and it's easier buy? Or is this just business as usual but a different platform?

We think long-term it's absolutely an aid to conversion in selling more tickets to, let's call it the casual buyer. We think any time that you can make something this convenient versus having to run back to your computer and log in, that if at any time you're sitting with that phone in the car or whatever you may be, you can instantly buy two tickets to the Rhianna show. We think that's going to drive ticket sales. We know from early data that when we send out our e-mail blasts and our mobile blasts, that you look at a traditional e-mail converts online at 10% to 15%.

When you start sending out mobile alerts, they're converting somewhere in the 20% to 30% range because you're delivering a content-rich message with immediacy. We're seeing some great conversion on mobile. Believe it or not, the fan is young and old. We sold-out a Paul McCartney show in Canada on a mobile pre sale. Let's assume that's a older demo, as well as electronic music and Rihanna. Young and old, I think the consumer looks at it as an efficient channel. We love it because we get to take all of the same economics to that channel and we get to start to directly communicating with use of mobile alerts and bringing e-mail to live to conversion on your mobile phone. We think it will be a big part of the future of how we increase our conversion rate.

Would you want to guess as to what the percentage of business might be desktop to mobile in two to three years?

I think it's only limited right now really by the adoption of the eco system versus the consumer, so I think as you see all tickets companies ourselves included, ramping up our apps, our transferability, and more importantly, all of the scanner equipments needed at the venues. But over the next--So we're equipping daily converting venues to make sure that they're able to scan that digital ticket. I think over the next few years, you'll see that 10% double and triple fairly fast as the system catches up to the consumer.

Thanks.

We'll take a question from Doug Arthur with Evercore.

Yes, Michael, this might be a little bit repetitive, but can you just remind us with the Ticketmaster replatforming, what are-- for the venue operator going from old to new system. What are the three key upsides for the venue operator when this thing is finally up and running 100%?

From a venue prospective?

Yes.

Well for a venue, Ticketmaster is truly a partner in the ticket selling operation. If you're a venue that has our box office installed, our software, you're trained on our platform, we're your support team, we're your complete, let's call it salesforce.com, we're the center hub for all of those tickets flowing through your venue, your biggest revenue stream, the heartbeat of your business. To-date, we've been a fairly transaction-based platform, as I've shown you at the presentations, green screen and fairly bulky. As we have started to launch already some new business apps, we poured in an inventory, we start to become a much deeper partner with you. On the first and most important, some of the venues that now have our new platform tools or part of the tools, we're providing incredible analytics and reporting on ticket sales.

So our old system you knew that you sold 5,000 tickets at10 o'clock for a show or sporting event. Today you're looking at a beautiful user interface that's showing you those 5,000 tickets. We're giving you demo breaks, we're giving you age, we're giving you analytics on where they came from, how they found out about the show. So we have a deep bench of analytics that we can provide to you and up sell to you so you can really understand your customer and how their buying patterns emerged. We, second, launched a deep marketing platform with this, so we're going to be able to really help you market those shows once you build the show, integrate into Facebook, buy ads for you online, show you where your customers are, give you target-specific CRM tools so you can really look deep into your database and your customer base to look for how to reach those fans.

And we're also really important from both of our ends, we're giving you full control of the inventory through our inventory app. So again, to-date, if you're a venue, you have to call Ticketmaster to get most things done. Think of our platform to-date where it's a completely managed system. You need to call [need] Ticketmaster to change ticket data, to do most of the basics. With our new inventory app, can you sit in the box office, change the ticket prices, build the show yourself, make all of the changes you need to; a complete self-managed platform with less of the user face behind it.

If you look at this simplistically, what does the platform do? Aside that it's got a great user interface and it's competitive with anyone else out there, no one has the data depth that we have, so now you truly have not just the ticket selling platform, but you have a platform that's providing you incredible data to help you sell, target, and hopefully ultimately the end goal is we're going to help you sell more tickets, drive revenue because we brought a full suite of services around the consumer base to your fingertips.

Great, thank you.

We'll take a question from Andrew Rittenberry with Jennison

Thanks for taking my question. I appreciate it. Question for Joe or Michael. Joe, I think you mentioned the secondary product integration that you're going to roll that out in the third quarter. Would you guys mind filling us in on your strategy there and I think you mentioned you were going market that with a couple of large tours et cetera, but could you fill us in on the product and how you're going to market that, et cetera? Thank you.

So we're going to launch TM plus this summer. We've all ready got a head start obviously with the sports business because we have relationships with the NHL, NBA, and NFL, so we are the official secondary partner with those three leagues so you'll start to see those teams and venues part of our integrated inventory this summer. Then you'll also start to see, as we're selling through the concert season, you'll start to see first most importantly, we'll start with our Live Nation shows since we can help sell those in for our partner, then we'll expand out from there.

So, we're looking to beta launch it in July and we have adoption rates from July on to December on getting inventory up and available as we've missed the concert season on purpose because of the load, so we're ready for next summer in terms of the full season, but we'll still be able to catch the back end of the year in the concert business and we'll be able to get most of the on sales for the sports leagues for the fall. We're in selling in through all of the different constituents right now. I think our sales pitch is easy honestly. It's a sales pitch that starts with we work for you, the content. You're not participating to-date. There's $4 billion sitting somewhere else. You don't have the data. You don't participate in the revenue. We think that you should be, so we're working for you and we want you to share in some of that revenue and share in some of that data issue and it seems to be well-received to-date.

Got it, thanks. I guess one more follow-up question. I think this is the first call a couple of years, no one has asked about the. CTS arbitration, so I guess I'll ask about it. Any update to share with us?

It's almost an old question at this point. We continue to think it's going to be soon. We'll be hearing from the arbitrator and the counsel that the decision will be coming soon, so we would assume, again, as I've said for two years, we think it's coming soon.

All right, thanks, appreciate your answers.

And we'll take our final question from Ben Mogil with Stifel Nicolaus.

Great, good afternoon, thanks for taking my question. Kathy, on the free cash flow guidance that you gave, are you including all CapEx like revenue and maintenance or are you just including maintenance. And then how do you also see in that number the distribution to minority partners when viewed on a year-over-year basis?

So it is our definition of free cash flow so it does not include revenue generating when I'm talking about that guidance.

Okay.

And we don't see dramatic changes in our minority interest partners year-over-year. We will probably see a little bit of growth in Europe coming out of concerts and that will drive that some, but that number won't dramatically increase.

Can you remind us what was your maintenance CapEx number for 2012 in the breakdown, and what do you think it will be for 2013?

Yes, 2012's maintenance was $62 million and expecting a pretty similar number for 2013.

TM and Live Nation.

That's combined.

That's everything.

Sure, thanks. Then, Michael, a question for you on the TicketsNow platform. The sports leagues at least right now have minimum floors. Can you talk about the best that you can given confidentiality, et cetera, what conversations you've had with them about looking to remove some of them to make the site better for them effectively?

Repeat the last part.

Sure. What conversations have you had with the sports leagues about removing some of the price floors that they basically implemented on TicketsNow? That if you can get rid of those floors, that would obviously make that product for their customers more competitive with some of the other retail sites out there, and better for them because they participate in the revenue as well then being the leagues. Can you talk about where their minds are at for price floor, et cetera?

As I said all ready, we're in business with content so we're going to do what's right from their prospective and I think there's been lots of talk about what MLB has done and selling tickets in the most (inaudible) too cheaply. I think it's a fine line if you open up the doors to some secondary, to try to take advantage of some of the inefficiencies in the top end pricing, you also have to protect your core customers who's are buying everyday on bottom end. We don't look at the advantage of secondary to figure out how to sell discount tickets.

We look at secondary as an opportunity to figure out how to capture some of the inefficient low price top end. I don't think you'll see floors removed. I think that's a pretty smart basis for the product, but to your core idea, just so we're clear. Our goal in life isn't that TicketsNow grows dramatically on its own and competes against Stub Hub. Our strategy is that Ticket Plus-- Ticketmaster Plus that we'll launch this fall for the spring-summer will be the way that we are best are able to tackle the secondary business. We think our main front door having that big traffic that Ticketmaster gathers is the best way to sell you a primary and/or secondary ticket when you come shopping the first time.

Howling is the Stub Hub MLB deal? Do you know?

I don't know.

Have you gotten any feedback from MLB owners, just because you obviously used to sell tickets from MLB as well. Any feedback from them on how they're feeling about that deal so far?

We don't comment on the other guys. We just know what the leagues are doing with us at this point and we seem to be fulfilling most of their needs on the business right now and lots of opportunity on the upside.

That's great. Thanks, guys.

And this concludes our question and answer session. I will turn the call back over to Mr. Rapino for closing remarks.

Thank you, everybody, have a great summer and we'll talk to you next on Q2.

Ladies and gentlemen, this concludes the Live Nation Entertainment first quarter 2013 earnings conference call.