Live Nation/Ocesa: rushing for the gates
After surviving near shutdown of live entertainment, concert promoter revives deal with Mexican rival
The Delta variant has pulled the plug on the hopes of live music fans this autumn. After a promising return of big music festivals and concerts, a resurgence of Covid cases has prompted artists and concert organisers to reschedule their shows.
But one company has bet that live concerts will make a high-decibel encore this year. Concert promoter Live Nation will push ahead with plans to buy a controlling stake in Mexican rival Ocesa for $8.8bn pesos ($444m).
Live Nation originally announced this deal for the industry’s third largest concert promoter in July 2019. But after last year’s pandemic triggered a near total shutdown of the live events industry the deal went on hold. Good thing, as Live Nation had a predictably bruising 2020. The company, which pre-pandemic hosted more than 40,000 events around the world, racked up $1.7bn in net losses last year amid a near total collapse in revenue. It lost another half a billion dollars in the first six months of this year.
All this makes for a strange time to revive a multimillion dollar cross border deal. That is, unless your fans have sent your stock price on a record setting run. Live Nation’s market value has more than doubled from its pandemic lows to hit an all-time high of $20bn in June. The market has admired Live Nation’s ability to generate cash flow from live streaming while cutting costs. It plans to sell shares to help pay for Ocesa.
Investors are right to be bullish on Live Nation. Before the pandemic, the company had enjoyed record revenue and profit. It has scale and pricing power as the biggest live music promoter in the world, with twice the market share of its closest rival, Anschutz Entertainment Group. It is also the biggest concert ticket seller in the world thanks to its 2010 merger with Ticketmaster.
This dominance, previously challenged by US competition watchdogs, leaves the ears of new entrants ringing, not to mention infuriating ticket buyers. A deal for Ocesa will only strengthen its position.