Live Nation Entertainment Inc (LYV) 2014 Q1 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 first-quarter 2014 earnings conference call. Today's conference is being recorded.

(Operator Instructions)

Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ including statements relating to the Company's anticipated financial performance, business prospects, new 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 actual 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, reconciliations and other financial or statistical information to be discussed on this call can be found under the investor relations tab on investors.livenationentertainment.com.

It is now my pleasure to turn the call over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment.

Thank you. Good afternoon and welcome to our conference call.

Coming off a record year in 2013, we are continuing this momentum with first-quarter revenue growth of 22%, AOI growth of 56%, and free cash flow up 138%. And all four divisions delivered revenue and AOI growth for the quarter. And as we look forward, all signs point to us delivering on our growth targets for 2014.

In Concerts, our deferred revenue at the end of the quarter was up 14%, and ticket sales through May 2 are up 5% year on year. In Sponsorship and Advertising, our contracted revenues for April was up 10% over last year. And in Ticketing, our net renewal rate continues at over 100%. And at Artist Nation we are on track to grow market share and promote 30% more shows in 2014.

I'll now provide you with update on our core growth strategies. We expect to continue growing our global market share this year. Following our success of adding 10 million fans in 2013 concerts, our research shows continued strong fan demand for all live events on a global basis, with a continued strong pipeline of great artists. We expect the live events business to continue being a robust growth industry and having the two leading brands of Live Nation and Ticketmaster position us strongly in the center of this growth. And as we head into this summer, the business looks strong again as evidenced by selling 500,000 tickets in three days last week for the Jay Z and Beyonce tour alone.

And we will continue to grow market share three ways. First, we will continue growing our share in touring from clubs to stadiums. We expect to promote over 80% of the top 25 tours globally this year. Secondly, we will continue to grow our Festival portfolio, with 5 million fans across 63 festivals. Live Nation is the largest festival producer in the world, and we expect to grow this fan base by 10% this year. Our portfolio of 18 electronic festivals continues to be quite strong led by Electric Daisy Carnival in Las Vegas, which is the largest electronic festival in the world, with over 400,000 tickets sold for a three-day festival.

And third, we'll continue our market expansion and enter new markets. Collectively, our global concert platform has never been stronger, as we will promote over 23,000 shows in 40 countries with 3,000 artists in 2014, and we -will continue to add more markets, festivals and shows to this platform.

Our Artist Management business is becoming increasingly strategic to our pipeline of the Concert business. This division now in 2014 will promote over 30% more shows than they did last year. So, we're continuing to see this division as a feeding to our main Concert division, which ultimately drives our on-site sponsorship and ticketing business. Our Artist Management division is a global leader managing over 250 artists, and we expect to continue adding to this portfolio, as it supports our core business.

The third driver of our business is the rapid growth of our Sponsorship Advertising and Digital business. Our Advertising business continues to grow rapidly with a 13% increase in ad units sold during the first quarter as we increased total traffic to our platform by 14%. This growth was driven by large commitments from major brands like Citi, Ford and O2 and from our digital platform growth. We continue to offer a unique proposition for advertisers who want to engage with fans at scale on digital and on site.

And last week we took a major step forward in transforming our Advertising business towards a true media and content Company with the announcement of our Live Nation channel on Yahoo. While others have streamed shows in the past, only Live Nation with its scale of 23,000 shows globally can consistently deliver programming and establish a network with an ongoing advertising base.

With this channel, we co-sell the advertising, so our advertising team has new ad units to sell and we are attracting large commitments that will drive advertising revenue from day one from this channel. I expect as our venture with Yahoo proves successful, you will see us further leverage our content and Live Nation brand accelerating the growth of our Advertising business.

And at Ticketmaster, our focus continues to be global growth and developing new features and products to gain share and conversion. Top of our list for 2014 continues to be our integrated inventory product, Ticketmaster resale. In a recent survey over 90% of fans indicated they would find it valuable to see all of their ticket options in one location, a service we are uniquely positioned to provide and now do. With 60 teams from the NFL, NBA and NHL and over 2000 concert now officially offering fans all verified options at Ticketmaster, we continue to see rapid adoption of both content and fans.

Looking at our most recent results for the month of April, we grew our global resale volume by 40% relative to April 2013, and we are tracking toward what we expect to be $1 billion in resale GTV from launch last September through this year. Growing market share while we invest and evolve the Ticketmaster platform and product remains on plan. We are building this new platform in a modular fashion and expect several key products to be deployed this year.

For consumers, the new platform is powering the Ticketmaster resale product, as well as other features on mobile that will enhance search, purchase and checkout. And we'll also deploy new products for our venue clients with additional analytics and marketing products in 2014. I remain confident that the investment to date has been key to delivering Ticketmaster's renewals, as well as providing a foundation for new products and features that continue growing Ticketmaster's global business, with Ticketmaster resale being the first proof of concept.

We will continue to see operating reductions that we need to deliver our strategic plan. These cost reductions will start to have a meaningful impact in 2014, and will be important contributors to Ticketmaster's profitability this year.

Given our momentum coming out of 2013, our strong early success with Q1 and solid leading indicators, I am confident in 2014 we will deliver our fourth consecutive year of revenue, AOI and free cash flow growth, grow the profitability of each of our businesses, stay on track to deliver on 2015 financial targets, operationally continue to invest and build all of our businesses to set them up for continued growth.

I will now turn the call over to Joe Berchtold, COO, to take you through an update on the divisions.

Thanks, Michael.

First, Concerts: Live Nation Concerts' revenue for the first quarter was up 29%, and AOI improved by 80% versus 2013, driven by an 11% increase in global attendance at our shows. In North America, attendance was up 13% with a 34% increase in arena attendance led by tours with Justin Timberlake, Imagine Dragons, and Luke Bryan.

Internationally, attendance was up 8%, driven by an 18% increase in arena attendance. Europe, particularly France and the UK, lead this growth with tours with Depeche Mode, Michael Buble, Beyonce and Drake. Through May 2, global ticket sales for all shows were up 5% through the same time in 2013. And the global growth has been across all venue types with nine artists already selling over 500,000 tickets for the year led by One Direction, Justin Timberlake, Luke Bryan, and Miley Cyrus.

Through April, we've sold approximately half our tickets for the year, and based on sales today in our pipeline, we expect to deliver continued attendance growth for the full year. We expect that this growth, along with improved performance in our Festival business, will deliver strong growth in our 2014 Concerts profitability.

One other point to note on Concerts is the seasonality of the businesses this year, with a significant shift from Q2 into both Q1 and Q3. As I mentioned, arena attendance was the primary driver of our growth in Q1, thanks to a 10% increase in arena show count. In Q3, we expect to see strong growth in both festivals and stadium attendance with all growth in Festival attendance projected for the third quarter and stadium attendance projected to increase by over 50% for the quarter. As a result, Q2 will be impacted by the shift out of arena activity into Q1 and festival and stadium activity into Q3.

On Artist Nation, for the quarter, revenue was up 44% and our AOI was $5 million, compared to a loss of $1 million last year, driven by the Artist Management business. And in 2014, we expect improved AOI from the Artist Management -- Artist Nation division from a growing roster of artists under management.

Turning to our Sponsorship and Advertising business, for the first quarter, revenue for the division was up 13% with Sponsorship sales up 13%, and online revenue up 12%. AOI was up 8% and AOI growth was slightly lower than revenue for the quarter because of headcount increases particularly for online advertising, where we've added staff in anticipation of building our online content. We expect this additional headcount to deliver strong growth in online advertising in the second half of the year as we expand our programming with Yahoo, launch additional content verticals and build on our current Live Nation and Ticketmaster sites.

Similarly, we expect Festival sponsorship to continue growing rapidly and for the full year to increase by over 15%. At this point, we've sold approximately 75% of our expected sponsorship for the revenue, revenue for the year and a half our planned online advertising sales. This puts us on plan to deliver our expected growth for the year.

Finally, Ticketmaster, for the quarter, ticketing revenue increased 9%, AOI was up 17%, with primary ticket sales up 3% for the quarter and gross transaction value of the primary tickets up 9%. The Concert segment was the primary driver of our Ticket growth, both in tickets sold and for the increased gross transaction value, given the pricing on concert tickets is generally higher than average ticket pricing.

Geographically, our markets were fairly consistent with North America volume up 2%, and gross transaction value up 8%, while international volume was up 3% and gross transaction value up 10%.

On mobile, we continue to see a rapid shift of consumer behavior now accounting for 16% of all tickets sold in the first quarter, up 33% from the same period last year. In North America, mobile ticket sales grew by 26%, and accounted for 18% of overall ticket sales, while in Europe, it grew by 69% and accounted for 13% of overall ticket sales.

Based on the ticket sales in the first quarter and projections for the full year, we're currently expecting low single-digit growth in tickets is for the year with AOI growth slightly higher than ticket growth. Overall, given the strength of our first-quarter performance and more importantly our visibility into the rest of the year, we believe we will again grow our businesses in 2014 and continue on track to deliver our three-year plan in 2015.

And with that, I will turn the call over to our CFO, Kathy Willard, to take you through more details on our financials.

Thanks, Joe, good afternoon, everyone.

We had a strong start in FY14, with growth across all of our operating segments. I will provide further details on the first-quarter results and then summarize our current expectations for the full year.

For the first quarter, revenue was $1.1 billion, up 22% over the same period last year. This increase was led by Concerts, which improved by 29% compared to the prior year from an increase in arena shows globally and higher overall attendance. Adjusted operating income for the first quarter grew 56% to $83 million, as compared to $53 million in 2013. And this growth was led by our Concerts and Ticketing segments.

Concerts AOI improved 80% to a loss of $2.6 million due to higher overall attendance along with increased average attendance per show, specifically to arenas in North America and Europe. Ticketing AOI was up 17% to $70 million due to increased ticket volume and higher average pricing. Sponsorship and Advertising AOI was up 8% to $26 million, with growth in both North America and Europe. And Artist Nation AOI was up $6 million from the Management business.

The improved performance in our AOI drove a 63% improvement in our operating income for this first quarter as we reported an operating loss of $12 million compared to a loss of $33 million last year. And the growth in our AOI translated to the bottom line as our net loss for the quarter improved by $31 million over 2013 to a loss of $32 million. The improvement in the net loss was driven by our higher operating income in the first quarter, lower interest expense, due to the refinancing of our debt in Q3 of last year, and a discrete one-time tax benefit of $7 million, related to the deferred tax liabilities recorded from an acquisition completed during the first quarter of 2014.

Cash flow also expanded with our AOI growth. Free cash flow was $34 million in the first quarter, compared to $14 million last year with the improvement driven by our higher AOI with some timing impact an interest payments in the first quarter of this year. And cash flow from operations was $366 million for the year to date, up $95 million over 2013. This improvement is due to the increase in AOI, higher deferred revenue from ticket sales for future events and timing of artist deposits, which were lower in the first quarter of 2014, compared to last year.

As of March 31, we had total cash of $1.6 billion, which includes $569 million in ticketing client cash and $697 million in net concert event related cash. Our free cash was $363 million. Total event related deferred revenue was $885 million as of March 2014, as compared to $774 million in March of last year, due to an overall increase in ticket sales for 2014 events, which are up 10%, as compared to march 2013. This deferred revenue and concert ticket sales to date give us confidence that this will be a strong concert season.

Our total capital expenditures for the first quarter were $21 million. We spent approximately $11 million on maintenance capital expenditures and $10 million on revenue-generating additions. We currently continue to expect that our total capital expenditures for 2014 will be approximately $130 million for the full year, with a bit under half of that spend on revenue-generating projects.

As of March 31, our total current and long-term debt, including capital leases, was $1.8 billion. Our weighted average cost of debt, excluding debt discounts and including debt premiums, is 4.3%. Our debt covenant currently requires a maximum leverage ratio of 5.25 times and we are comfortably in compliance at less than 3.5 times.

We delivered strong results for the first quarter of 2014. Looking forward, we expect to drive growth across each of our businesses and increase overall profitability while continuing to invest in our long-term growth strategies. We expect the positive trends this quarter to continue throughout 2014. And we currently expect to deliver solid growth in Concerts AOI.

As Joe mentioned, we had an increase in early arena shows shifting event activity on a comparable basis from the second quarter to the first. Additionally, we currently expect to have higher stadium activity in the third quarter, which will shift more activity out of Q2. The growth trend in Sponsorship and Advertising AOI is expected to continue in 2014 at historical rates.

We expect Ticketing's AOI to be slightly up compared to 2013, as we grow our secondary ticket sales and deliver cost savings. And we expect Artist Nation to grow its profitability this year, as well.

Thank you for joining us today. And we will now open up the call for questions. Operator?

(Operator Instructions)

Amy Yong, Macquarie Capital.

This is Andrew for Amy. I had two questions. The first one if maybe you can quantify the synergies that you expect from the replatforming of Ticketmaster this year? And also can you comment on StubHub's recent initiatives including the all-in pricing and concert series with Pandora? Thanks.

On the first with regard to not so much synergies but the cost savings as we continue our replatforming. As we've talked several times now, the replatforming project is really an ongoing one that we've broken into a modular basis so we can start both getting the consumer and venue benefits through new products as well as taking some costs out. So I would say that our expectation at this point for this year is about a 10% -- sorry a $0.10 per ticket reduction in our cost for our fee bearing tickets in North America.

Great and second?

On the -- I don't have a ton of input on what they're up to in their strategy, but all-in pricing we've had all-in pricing available to our clients for the last couple of years, depending on the artist. The team -- if they want to put all-in pricing at the front of the proposition, we do that. We leave it in the hands of the client. A lot of times its -- position is all-in but we break up the pieces to make it transparent. So we don't think all-in pricing either way is much -- changes much on the purchase intent, but we have it as a option for the clients, if they want position it that way, but we don't think it does much either way. I don't know what they're up to on their Pandora concert series, assume they're just looking for some brand extension. But we're very thrilled with the progress we're making on our secondary market share.

Great, thanks.

Vasily Karasyov, Sterne, Agee.

I was wondering if you could clarify the metric that you provided that you have a 40% increase in secondary market total value, I believe. What -- when you disclosed at the Analyst Day I think last year that you estimate that you have 10% of secondary tickets, was that true for April last year or was your share less than 10% at that point?

Yes, I think when we talked about the 10% share, that we were looking at the year in its entirety. As you can tell from the numbers that Michael gave, we've been substantially growing our activity each month since we have been launching our Ticketmaster resale last fall. Because of the seasonality, different sports leagues on at different times, we wanted to give that April-to-April comparison so that you have an understanding of versus April of last year before we launched Ticketmaster resale to April of this year, the most recent full month that it's been going that we increased our global secondary gross transaction value 40% year over year.

And do you expect to provide this update every quarter or do think it's going to be a one off illustration?

We will try to provide the information we think is most relevant so that you all and our investors can take a read on the progress that we're making.

Thank you.

Doug Arthur, Evercore.

Joe, want to go back to -- you were giving guidance low single-digit Concert ticket sales for the year based on your read right now and then you made a comment about AOI for the year of somewhat better. Were you referring -- but then you were talking about a dramatic -- significant increase in Concert profitability. So is the somewhat better AOI description for the entire Company, I just want to get clarity on that?

I think I said on Concerts that we'd have a strong increase in Concerts division AOI off of the continued fan growth that we have this year. We obviously from our current profitability of our Concerts division, will tend an increase AOI at a higher percentage than our fan base. I think overall message that we were trying to give on the totality is we continue on plan with what we've been consistently laying out, and we think that we're off to a very strong start that gives us some good tailwind to deliver those results this year, and all the indicators support that.

And so the first quarter, which was obviously seasonally small, you're up 56% in AOI. Are you -- I guess the commentary strongly suggested you're going to give some of that, if not a fair amount of that back in Q2 and then recapture momentum in Q3. I'm just trying to get a read here of --

And that's roughly right. As you said, Q1 is seasonally low when you look at the overall level of activity for Concerts relative to the overall year. But I think in general, you got it right. We had a really strong Q1, we have a really strong Q3, and what we've seen from a show count perspective is, I gave the detail on, seasonally less. Nothing more, nothing less than that, just timing.

Okay. And then finally on Artist Nation, this -- you've been in a year long reshaping of that business. Revenues were up 2% in 2012, they were down in 12% in 2013, so now we're looking at a big pop in the first quarter. I know a lot of that can be timing associated with the Concert tours, but are we -- is this a completely new platform at this point and should we expect strong revenue growth for the year, or is that not the read?

No, I think what we're trying to be very clear about is Artist Nation on itself is a division of 15 or 16 management companies that manage over 250 artists. We spent the year taking out a lot of services and non core businesses that weren't core to the Artist Management business. VIP business, merchandise business, graphic artists, things that were in that division that we didn't believe could grow within there. So we took those out and we have a very strong single-minded Artist Nation division that it wakes up everyday managing great artists and furthering their careers.

What we did say is we don't believe that division has high growth in it organically. We believe that we're going to run it better, and we're going to add a few artists and continue to change up the portfolio and add some artists that we think have a long-term perspective. But the most important thing about that division is over the last year when the silos got broken down, we were able to embrace that division to a level we hadn't historically. And that division's main goal is with 250 artists, you can now capture and co-op into touring with you, supporting your ticketing proposition and supporting your sponsorship division, there is nothing better than 250 fabulous artists beating your main pipeline.

And that is the constructional change that has happened is that division now reporting directed to me is much more integrated in our Sponsorship, our Ticketing and our Concert division. So we believe having 250 strong artists that is a high-margin business, generates nice AOI, is a stable and strong business on itself. But more importantly, the numbers we keep telling you that over the last two years, since we've taken it over, we have doubled the amount of shows that those 250 artists do that are not touring with live nation versus our competitors. So we believe it's an incredible, strong division on its own, but when linked to our core business, can drive profitability in our core Concert business on its own, and then Ticketing and Sponsorship.

So if you took last year's number, and we were up 25%, we're going to be up 30%. If those 250 artists combined have a few thousand concerts and now we've gone from promoting 300 of them to 600 of them, that's a great supply chain. And we believe that if we add value to that division, we will continue to gather more Concert market share from that division if we have the best product out there. And that in itself feeding the core business, you don't see it reflected in the Artist Nation financials, but you do obviously see it reflected in our increase market share in our Concert division.

Got it, thank you.

David Joyce, International Strategy and Investment Group.

Your attendance per event was up again nicely both in North America and internationally. How much would you attribute that to the Ticketmaster replatforming and increased conversion) And how much would you be attributing that to macroeconomic trends or other factors?

Yes, I think a couple of factors, David. Clearly we believe that as we've continued to develop new products at Ticketmaster online, the Ticketmaster Plus, the mobile, we're continuing to give more -- a better experience for consumers and a better experience that makes the purchase easier is always going to help conversion some is one.

Two is as we've continued to be very focused on shifting more of our marketing spend to digital and social platforms using that database that we have on fan interest, fan behavior, historical purchase patterns, what they have on their iPhones to do a better job, making them aware, getting them interested in the show. And then third would be what's the mix of artists you have and some of the macro environment.

Thanks. And on the type of events that are going for you, the festivals this summer for example, is that an area where the growth in Sponsorship Advertising revenue might be more focused given that you've talked about that being an area where there's more attendance upside?

Yes, absolutely. We've always been very strong in Europe with our Festival platform. Our Festival but from has been our main driver to our Advertising business in Europe. And as we are adding more and more festivals in America, in Canada, and in Australia, we know that our Advertising proposition gets stronger. And we've seen that already come to life with our Insomniac acquisition or some of our new country festivals, Made in America with JZ festivals are a great platform for advertisers and we'll continue to build up that portfolio.

Thanks. And finally on the Artist Nation strength, with the increase in commissions there, was that related to the artist performing more at arenas or was it more clubs? How would you characterize where the growth opportunities have been coming there?

Part of it is timing for us with activity, but in general, it's just where our artists, the managers are -- where those artists are active in a particular quarter. There's nothing magical about it.

Okay, great. Thank you.

And on the economics of that, as we've said many times, the artist is making most of his money on the road. So if live business in general on a global basis is continuing to grow and Maroon 5s and Rihannas have more and more opportunities to tour and make more money, then the largest part of your commission is going to be in your touring business. So a manager going forward is going to have an increased business just off the basics if his artist is a good touring artist, the artist is going to have more revenue and more growth in the future.

Okay, thanks.

Rich Tullo, Albert Fried & Company.

Got the one question. In regards to the seasonality, it looks like you ran about 5% ahead of my model on first-quarter attendance. Is -- looking at seasonality as a percentage of total revenue for the year, I guess this is to Kathy, when you talk about the second quarter, are we talking at something like 100 to 200 basis points was transferred into the first quarter and something like 100 basis points will be transferred into the third quarter?

Rich, this is Joe, I don't think we're getting that specific. I think what we said is we had a strong first quarter that we're very happy with. All leading indicators that we've walked through going to continued strength through the rest of the year, and we're just trying to every year around this time we have a conversation that says what does the seasonality look like because we manage it for the total year, not for the given quarters. And this year it's particularly strong in the third quarter as I talked about festivals and stadiums, strong in the first quarter. And so by definition, some of that has to come out of the second quarter. But in totality, everything pointing to ongoing growth and strength. Show count (multiple speakers)

We get it, we know you're trying to fill out, we got it. We're trying to help you, but we're -- we don't want to get caught exactly on 100 shows versus this month versus next in an overall thesis right now.

All right, okay. And I'm not asking you to point the wrong finger here, but to point the finger on the EDM, are you thinking about Festivals in terms of more of the experiential marketing and advertising plan versus a sponsorship in pouring rights? Is that where we're headed with this, and if that's the case, is that going to be an announcement data point or are you just going to let the numbers surprise us if it transpires?

I'm not even quite sure what you're asking, but I'll -- I could try to answer what I think you're asking. But help me out here, what are you asking about EDM exactly?

Well it seems to me that the opportunity with Sponsorships is more than just banners and pouring rights, right? The opportunity is to develop a one-to-one communication between the concert goer and the advertiser in ways that are not necessarily available in a two hour venue.

Absolutely. I think if you look at our business, it's what we've been doing for many years. Our business model, whether it's an EDM festival or country festival, a stadium show, or a House of Blues, our main job is to create that 23,000 show flywheel that spits out 60 to 70 million consumers on site. And from that scale of consumer base, we've built 800 plus sponsors. And many of those sponsors are much deeper than a banner ad, as you know, they're very integrated programs like the Ford Rider Series, which is a whole content program, online series we created for Ford through the American Express front of the line to the Starwood upgrade while you purchase ticket to stay at a Starwood Hotel to upselling a Hertz rental car.

So we've got incredible sponsor base you want to participate in many of the different genres. The beautiful part about our model is the diversity. A 19-year-old or a 30-year-old or a 40-year-old doesn't live in one genre. Most 19-year-olds love Taylor Swift when they're feeling lovesick and they want to party with the latest EDM artist and they head over to a Rihanna show for pop. So our basics is, when we talk to sponsors, it's about the scale of the 19-year-old we have, the amount we can touch, we create incredible sponsorship program for 800 sponsors.

And then the way we're going to touch and communicate to those customers is why we always believed in our Ticketmaster strategy is we have 400 million consumers buying an average $163 ticket directly from us. We know their name, we have their credit card, we have a communication platform with them. We have now on-site apps at Live Nation and Ticketmaster that are doing more and more for you on-site. And you can see in the future that the value we can bring to the Live Nation Ticketmaster app, whether it's upgrading your seat when you're at the venue, whether it's buying T-shirts, cash less ordering drinks.

So we've already got the scale. We got the LN and Ticketmaster brands and mobile applications that are talking directly to you ongoing. We have 800 powerful sponsors who want to participate in that. So we don't -- we're not obsessed with any specific genre around creating an one-on-one. We're very obsessed with having massive scale that lets us talk to a lot of consumers about a lot of shows.

Now within those brands, House of Blues, Insomniac, a lot of our European festivals, they all have their own apps, their own websites and their own customer base, they do a great job on a one-to-one basis talking directly to them as kind of a sub brand. So we have a lot of sub brands, but we have the scale of the master brands that really if how we've unlocked the 800 sponsors and are unlocking our 400 million plus database.

One quick little question and it might not be an easy question to answer. But what percentage of the growth we've been seeing over the last let's call it 18 months, has been from social marketing, which you're doing evidently very well, feels like Yahoo, if you could provide a little color on that? And what percentage is coming from the expansion of the big data from Ticketmaster? Can you quantify it or qualify it in any way?

No, I mean we're not breaking that data out specific, it's a lot of our secret sauce because no one else in the industry would have the breadth of resources and data that we have. But we've said it out loud over the last couple of years that we believe the greatest opportunity we have is if 23,000 shows and a Ticketmaster, well over 100,000 events on sale, the greatest opportunity we have to grow this business is to sell 10 more tickets to each event. You sell an extra 10, 20, 30 tickets to our 20,000 shows or Ticketmaster's 100,000 plus shows, those are millions of dollars to the bottom line, incremental high margin.

And we believe that the root to get there was always the unsophisticated industry becoming more sophisticated with the way it markets and talks to its customers. So taking the three year ago historic unsophisticated industry that spent all their money on print and radio and very shotgun to this year we are tracking well over 40% of our marketing spend is now on let's call it one to one digital advertising directly to those 90 million Rihanna fans when you have a Rihanna concert, talking to them directly through our database and finding like minded Rihanna fans and activating them.

You look three years ago, we sent a billion e-mails a year with basically the same campaign. And in 2013 we sent over 1.5 million -- 1.5 billion e-mails when we had over 900 campaigns customized to different customers, to different targets with different offers. And most of those are ending up in the young kids mobile phone with some rich video or visuals and the open rate and conversion is incredibly encouraging.

So we do believe that, yes, a lot of it is as just us using our data, our customer research and converting our marketing spend to be much more efficient and try to find those 10 or 15 as well fans that are thinking of going to Rihanna, but we were getting them with the billboard on Sunset or hitting them with a very direct marketing campaign. And we got a ton of engineers working on algorithms to figure out to keep finding a casual and a non-buying Rihanna fan and get her to that next show. And we think the data will be the sweet spot and the unique differentiator on how to bring more and more fans to those current shows.

Thank you.

John Tinker, Maxim.

Terrific quarter, congratulations. Could you clarify a little more how your deal with Yahoo is going to work? You going to own the content that's streamed or do the artist own that?

Sure, thanks, John, for asking. We're wildly excited. We've spent the last couple years talking to a lot of different distributors. The obvious ones on could we repackage some of our content and not just provide it as a production fee to help someone else's platform, but could we partake in a branding and the advertising?

Kathy and Marissa saw the vision. The deal was, in the simplest context is they've agreed to underwrite the cost to deliver the content and shoot it. Obviously we've already invested in the show, so we've done our part. We will then co-sell the advertising units, and we'll share that on a 50/50 basis once Yahoo has recovered its cost basis. We're very encouraged because we're highly subscribed already talking to advertisers before we launched it.

So that's why you saw me reference in my script that we'll -- this will be a positive revenue channel almost day one. And we get our Live Nation branding, which is very important to continue to show 800 sponsors and others that we have the potential to take these 23,000 shows behind the scenes, on the stage, and et cetera, to bundle up some great content.

The deal is with Yahoo. The content is owned by both of us for the first broadcast of it, and then we will revert the rights back to the artist after a certain time period. So part of the value to the artist in keeping them a cost up front low is let us shoot your show, we don't pan on paying you, we're going to bring an incredible audience to your show. We're going to shoot it quality, and we're going to let you reuse that content when our window is done.

Great, thank you.

Doug Arthur, Evercore.

Joe, I want to go back to some of your nuance comment on the third quarter.

Not letting them off, hey, Doug?

Well the thing is in the first quarter the number of shows, the attendee per show were all on trend. The big delta was the revenue per attendee was up 16% it had been trending down year over year for the last few quarters. So obviously the arena -- you made mentioned numerous times of the arena impact in the first quarter. Is it the revenue per attendee -- obviously it's hard to circulate a couple of quarters out, but is that something that could be based on the skew of shows you're seeing right now for Q3 and obviously you have the festivals, et cetera, could that be a positive surprise in the third quarter or is it too early to tell -- get that refined on the mix?

So a couple things. First of all the first quarter, right, as you said there's obviously some mix in there, and the first quarter what you have is really indoor. So you're seeing arenas, theaters and clubs, so if you skew towards arenas, you'll see just from that mix issue some increased attendance per show and increased revenue per attendee. Generally those ticket prices are going to be higher. So that's part of what you'll see in the first quarter.

As I talked about the third quarter, what I talked about being strong in the third quarter, in particular, were Festivals. And you've seen our Festival growth in the third quarter in stadiums. And a lot of our stadium growth in the third quarter. Both of those venue types just at a broad level are high ticket price because you're buying the more expensive full day ticket for the festival, and an average you're stadium pricing is going to be higher than your arena or amphitheater. So you should see some positive revenue per ticket or per ticket pricing from a mix in Q3, yes.

Okay. Great, thank you.

And this does conclude our question-and-answer session. I'll turn the call back over to Mr. Rapino for closing remarks.

All right, thank you, everybody, and we'll talk to you on Q2.

Ladies and gentlemen, this concludes the Live Nation Entertainment first-quarter 2014 earnings conference call. You may now disconnect.