finance
Page: 8
The largest publicly traded music companies gained this week as investors digested the impacts of another increase in the Federal Reserveâs benchmark interest rate.
Billboardâs Global Music Index rose 2.1% this week to 1,213.30 despite 11 of its 20 stocks being in negative territory. Shares of Universal Music Group, the most valuable component of the 20-stock Index, rose 6.7% to 22.82 euros ($24.58). K-pop company HYBE rose 4.5% to 187,500 won ($144.70), Warner Music Group improved 4.3% to $31.50, SiriusXM rose 3.6% to $3.77 and Spotify was up 1% to $128.30.
The Indexâs greatest gainer was streaming company LiveOne, which climbed 13.1% to $1.12. On Tuesday, LiveOne said it is extending the record date for the previously announced spinoff of its PodcastOne subsidiary to April 7. âWe expect the special dividend and trading of PodcastOne to begin in April,â said Robert Ellin, LiveOne CEO and chairman. The company also announced it gained 136,000 paid subscribers since Jan. 1, to more than 2 million monthly paying members, and plans to reach 2.75 million subscribers by the end of the year.
Broadcast radio company Audacy, a relatively small component of the Index, had the weekâs biggest decline of 21.4%. On March 16, a B. Riley analyst cut the price target for Audacy shares from 50 cents to 10 cents. The stock closed at 11 cents per share on Friday and is down 52% year to date.
The U.S. Federal Reserve Bank raised its benchmark interest rate a quarter of a percentage point on Wednesday â from 4.75% to 5% â and suggested additional hikes may not be needed âto return inflation to 2% over time,â the Federal Open Market Committee said in a statement. That decision sent markets into negative territory on Wednesday: both the Dow Jones Industrial Average and Nasdaq composite fell 1.6% while the S&P 500 dropped 1.7%. But stocks rallied on Thursday and Friday. The Dow finished the week up 1.2% while the Nasdaq composite and S&P 500 rose 1.7% and 1.4%, respectively.
The Nettwerk Music Group has recapitalized, bringing in a new investor in the form of Flexpoint Asset Opportunity Fund II and additional funding from existing investors Beedie Capital and Vistara Growth. Flexpoint Asset Opportunity Fund II is a buyout fund managed by Flexpoint Ford, a private equity firm with approximately $7.8 billion of assets under management. Terms of the funding werenât disclosed.
âThe capital from Flexpoint will enable Nettwerk to invest in artists and make music catalogue acquisitions that will benefit from the fast-growing independent sector of the music industry,â Nettwerk CEO and co-founder Terry McBride said in a statement. âWeâre excited to partner with Flexpoint as we continue to execute on our vision of connecting artists with their fans globally.â
Nettwerk describes itself as a full-service artist development and music intellectual property brand builder with a history spanning nearly 40 years. Its current roster includes Passenger, Syml, Banners, the Album Leaf, Matt Maltese, Wild Rivers and Wrabel among many others.
âNettwerk has been at the forefront of the evolution in the independent music sector building a compelling catalogue of music by offering white-glove services and growth opportunities to independent artists traditionally reserved for superstars,â Flexpoint managing director Mike Morris said in a statement. âWe believe Terry and the team are well positioned to prosper in the rapidly evolving music industry and are excited to help the team execute their vision.â
Beedie Capital managing director David Bell added, âThe team at Nettwerk are differentiated leaders in a complex industry, and we are excited to support them through continued execution of their unique, artist-centric strategy.â
Artisan served as buyside financial advisor and Latham & Watkins and Bennett Jones served as legal counsel to Flexpoint. Cooley and Morgan Daniels Slager served as legal counsel to Nettwerk.
Chinaâs leading music streaming company Tencent Music Entertainment Group (TME) reported on Tuesday a 9.3% decline in the companyâs annual revenues last year, as falling earnings from its social entertainment services business compounded a decline in monthly active users on its music platform.
TMEâs total revenues fell to RMB 28.34 billion (USD $4.11 billion) in 2022 from RMB 31.24 billion 2021, with revenues for the fourth quarter ending Dec. 31 having fallen by 2.4% to RMB 7.43 billion ($1.08 billion) compared to the fourth quarter in 2021.
TME, which owns streaming platforms QQ Music, Kugou and Kuwo, plus karaoke app WeSing, said revenues from its social entertainment services and others fell 19.8% in 2022 to RMB 15.86 billion ($2.30 billion). The number of paying users fell 24.3% due to the macroeconomic environment, competition from other platforms and COVID-19, the company said.Â
Revenues from music subscriptions rose 18.6% to RMB 8.70 billion ($1.26 billion) helping TMEâs online music services revenues to increase overall by 8.9% to RMB 12.48 billion ($1.81 billion) for 2022. The number of paying subscribers grew by 22.7%. However, average revenue per user was slightly lower â RMB 8.6 in 2022 compared to RMB 8.9 in 2021 â due to higher marketing costs, and the number of mobile monthly active users (MAU) of its online music division fell 7.8% to 567 million in the fourth quarter.
âDuring the fourth quarter, as a result of macro headwinds, increased competition from other platforms and the surge in COVID cases social entertainment services MAUs and paying users declined year over year,â said Tony Yip, TME chief strategy officer, on a call discussing the companyâs earnings on Tuesday.
Chinaâs late-year increase in COVID cases as it loosened pandemic restrictions and increased competition also led to the year-over-year decline in online music mobile MAUs, Yip said.
Declining social entertainment services revenues held one benefit for TME: lower revenue sharing fees in 2022. That contributed to a savings of more than RMB 2.27 billion, as its cost of revenues for the year fell 10.4% year-over-year to RMB 19.57 billion ($2.84 billion).
This helped TME achieve an operating profit up nearly 17% to RMB 4.44 billion ($644 million) in 2022. Operating income is the income that remains after accounting for nearly all costs of doing business.
TME expects 2023 total revenues and profitability to be up from last year, and for the share of quarterly revenues coming from online music services will exceed those coming social entertainment services at some point this year as they continue to achieve âhigh quality growth in both subscription and non-subscription revenue,â Yip said.
Tencent Music Entertainment Groupâs 2022 Highlights:
Mobile monthly active users (MAU) for its online music division fell 7.8% to 567 million in the fourth quarter 2022 from 615 million in the fourth quarter 2021
Mobile MAU for social entertainment fell 16.6% to 146 million in the fourth quarter of 2022 from 175 million in the fourth quarter 2021
Paying users of TMEâs online music platform rose 16.1% to 88.5 million in the fourth quarter 2022 from 76.2 million in the fourth quarte 2021
Paying users of TMEâs social entertainment platform fells 15.6% to 7.6 million in the fourth quarter 2022 from 9 million in the fourth quarter
Only four of the 20 stocks in Billboardâs Global Music Index were in positive territory this week: Spotify climbed 4.5% to $127.09, Tencent Music Entertainment rose 4.4% to $7.85, Warner Music Group increased 1.5% to $30.21 and Reservoir Media improved 0.2% to $6.15.
Stock markets were rattled again this week by problems in the banking sector. Following a run at Silicon Valley Bank last week, Signature Bank and First Republic faltered this week. Credit Suisse required the backing of the Swiss National Bank on Wednesday after its biggest shareholder refused to inject money to provide much-needed stability. The Dow Jones Industrial Average fell 0.1% this week after dropping 1.2% on Friday (March 17). The S&P 500 improved 1.4% on the week despite falling 1.1% on Friday.
The Global Music Index declined just 0.4% to 1,188.02 despite most stocks falling into negative territory. Spotify and Warner Music Group are two of the most valuable companies in the index. Other large companies had only small declines: Universal Music Group dropped 1.7% to 21.38 euros, SiriusXM fell 0.8% to $3.64 and Live Nation declined 0.4% to $66.36.
The biggest loser of the week was K-pop company SM Entertainment, which fell 23.5% to 113,000 won after HYBE canceled its bid to take control of the company. Last week, SM Entertainment was the Global Music Indexâs biggest gainer, improving 14.4% to 147,800 won, after Kakao announced a tender offer to acquire up to a 35% stake from minority shareholders at 150,000 won per share.Â
The soft advertising market continued to be a problem for radio companiesâ stocks. iHeartMedia dropped 12% to $4.31 and Audacy fell 12.5% to $0.14. Morgan Stanley analysts cut the price target for iHeartMedia to $5 from $8 due to âconcerns regarding the long-term growth potential of broadcast radio,â according to a March 16 investor note. Year to date, iHeartMedia is down 29.7%, Cumulus Media is off 35.9% and Audacy has declined 39.1%.Â
The U.S. recorded music business posted its seventh consecutive year of growth in 2022 as the industry continues to benefit from streaming services such as Spotify, Apple Music and YouTube. After spending most of the last two decades in a painful freefall â piracy devastated CD sales and the download-driven unbundling of the album didnât make up for it â the recorded music business has enjoyed a great run. Last year, paid subscription revenues surpassed $10 billion for the first time, according to the RIAA, and overall revenues reached $15.9 billion.
Hereâs the bad news: Last yearâs growth, in terms of both dollar and percentage increases, was the lowest since 2016, when the recorded music business started to recover from a 15-year downturn. Happy days may be here again, but theyâre not getting happier like they were.
Total recorded music revenues grew 6.1%, but thatâs about a quarter of 2021âs 23.2% gain. Paid streaming revenues improved 7.2% in 2022, a third of the 22.2% growth in 2021. It was the first time that this segmentâs growth rate fell into the single digits since 2010. That year paid streaming revenues rose just 2.9% to $212 million. Over the next decade, as annual paid streaming grew to 57.8% of total recorded music revenue in 2022, the segmentâs annual growth often exceeded 50% and fell below 20% only twice.
Ad-supported streamingâs revenue growth rate also fell into the single digits, also for the first time in more than a decade. Slowed by an advertising malaise that has also affected companies ranging from Alphabet to iHeartMedia, streaming servicesâ advertising royalties to record labels grew 5.6% compared to 44.4% in 2021 and 16.8% in 2020. In dollar terms, last yearâs revenue growth was the lowest since 2015.
The slowdown shouldnât catch anybody by surprise given the industryâs reliance on streaming, subscription servicesâ unwillingness â until recently â to raise prices and a finite number of potential customers. The problem comes down to basic math: Fees from subscription services accounted for 57.9% of recorded music revenues in 2022. At just 2.4% of total revenues, a high-growth segment like synchronization barely moves the needle despite rising 24.8% in 2022. Vinyl sales were strong once again â up 17.2% â but accounted for just 7.7% of total recorded music revenues.
Up-and-coming revenue streams such as TikTok, Facebook and Instagram are just that â not yet ready to deliver meaningful royalties despite their popularity. Their revenues are included in the ad-supported streaming bucket that increased just 5.5% in 2022. TikTok faces high expectations but large uncertainty, too, as it faces pressure from politicians at the state and federal level that could reduce its importance. In addition, the company has installed parental controls that are likely to reduce engagement and further reduce its potential value to artists and labels.
A positive trend is subscription servicesâ decisions to raise prices on individual and family plan tiers. In 2022, Apple Music, Amazon Music and Deezer raised prices in the U.S. Spotify has not yet announced a price hike for standard subscription plans but has hinted it will follow suit in 2023. Labels are eagerly awaiting Spotifyâs move. âWe are the lowest (cost) form of entertainment,â Warner Music Group CEO Robert Kyncl said Thursday. âWe have the highest âŚengagement, highest form of affinity and lowest per-hour price. That doesnât seem right.â
Globally, the situation looks better. The industry in China, the worldâs most populous country, is flourishing thanks to streaming companies such as Tencent Music Entertainment and Cloud Music. In Japan, the worldâs second-largest recorded music market, streaming revenues increased 125% in 2022, according to the RIAJ. At Spotify, which operates in 184 markets, revenue increased 21.3% in 2022 to 11.7 billion euros ($12.4 billion), with about equal growth rates from paid and ad-supported streaming. Annual revenues of two smaller streaming companies, Europe-focused Deezer and MENA-focused Anghami, grew 13% and 36%, respectively.
In the U.S., a maturing streaming business alone cannot maintain the breakneck pace of the last seven years. Labels will need more than the status quo to return to double-digit growth.
There are twin $10 billion milestones served up in the RIAAâs 2022 year-end report on U.S. recorded music revenues: paid subscription streaming revenue reached $10.2 billion over the course of the year; and industry revenues at wholesale reached $10.3 billion, the first time either of those markers have been crossed, the trade body reports.
Those are two headline numbers of the annual report, wherein U.S. recorded music revenues grew 6.1% at retail, from $15.0 billion in 2021 to $15.9 billion in 2022. That marks the seventh straight year of growth for the business, though the percentage of that bump is the lowest since 2015 (+0.9%), the first year that retail revenues began to rise from the industryâs 2014 nadir. (The growth that year was so small, around $65 million, that it was essentially flat for all intents and purposes.) In fact, 2022 is the only year during that time period when growth has not exceeded double digits other than 2020, when a first COVID-impacted year of uncertainty still saw a 9.2% rise in revenue.
Streaming, unsurprisingly, made up the bulk of the industryâs revenues â 84%, up a tick from 83% in 2021, adding up to $13.3 billion in 2022, up 7% from $12.4 billion the year before. Within that, the aforementioned paid streaming chunk was the largest, accounting for 77% of that total for 8% year-over-year growth, and in and of itself making up just shy of 2/3s of the industryâs overall revenues; of the overall paid streaming number, so-called âlimited-tierâ subscription streaming â including the likes of Amazon Prime, Pandora Plus, Peloton and other fitness or restricted streaming options â grew 18% to surpass $1 billion, coming in at $1.1 billion overall. And ad-supported streaming â like YouTube, Spotifyâs free tier or revenues from TikTok â moved up 6% to $1.8 billion, making up 11% of all revenues for the year.
The average number of paid subscriptions in the U.S., meanwhile, reached 92 million, up 9.6% from the 84 million that existed in 2021. (The RIAA notes that this does not include limited-tier subscriptions, and counts âmulti-user plansâ as one subscription. The overall paid streaming figure of $10.2 billion includes limited-tier.) That growth, while significant given that it is higher than overall revenue growth, is down in both actual numbers and percentage growth for 2021, as was the revenue growth gleaned from paid subs, suggesting that while thereâs still room to go higher and records continue to get broken, there may be a slowdown in subscriptions in the future.
Outside of those streaming figures, digital and customized radio revenue â paid out by services such as SiriusXM â inched up 2% YoY, even as SoundExchange payouts declined 3% to $959 million; those other ad-supported platforms such as SiriusXM and other internet radio services grew 28% in revenue during the year, contributing $261 million to the overall pie. That ends a few straight years of growth from SoundExchange distributions, though the overall figure of $1.2 billion from digital and customized radio in general has remained relatively flat for the past several years.
Also within the digital realm, downloads continued their stumble down the proverbial cliff, dropping 20% across the board â both for tracks and for digital albums â to total $495 million in revenue ($242 million for tracks, $214 million for albums). The RIAA notes that in 2012, digital downloads made up 43% of the overall industryâs revenue; in 2022, that number was just 3%. Factoring other formats, total digital revenue was $13.8 billion, up 6.0% from 2021, or 87% of the total business.
For the first time since 1987, vinyl LP units outsold the number of CDs, 41.3 million to 33.4 million (vinyl overtook CDs in revenue in 2020), as its year-over-year growth streak stretches to 16 years â old enough to drive. Total physical revenue was up 4% in 2022 to $1.7 billion, of which $1.2 billion came from vinyl â up 17% YoY, making up 71% of physical revenues. CD revenue, meanwhile, continued to decline despite the one-time pandemic boost of a few years ago, down 18% to $483 million in 2022. Synch revenue also grew, up 24.8% to $382.5 million.
â2022 was an impressive year of sustained âgrowth-over-growthâ more than a decade after streamingâs explosion onto the music scene,â RIAA chairman/CEO Mitch Glazier said in a statement accompanying the report. âContinuing that long run, subscription streaming revenues now make up two-thirds of the market with a robust record high $13.3 billion. This long and ongoing arc of success has only been possible thanks to the determined and creative work of record companies fighting to build a healthy streaming economy where artists and rightsholders get paid wherever and whenever their work is used.â
Universal Music Groupâs revenues surged 21.6% to 10.34 billion euros ($10.96 billion) for all of 2022, boosted by strong returns from recorded music subscriptions and streaming.
The worldâs biggest music company reported the revenue its recorded music division gets from subscriptions and streaming rose by nearly 19% to over 5.3 billion euros ($5.6 billion), while digital revenues in its music publishing division rose by nearly 50% to over 1 billion euros ($1.05 billion) in 2022, all helping it achieve a nearly 15% uptick in operating profit.
UMG chairman and chief executive Lucian Grainge said the earnings were evidence the companyâs diversified revenue streams has made it an example of the music businessâ steady strength amid a darkening economic outlook.
âWe continue to successfully manage the company for long term growth while driving strong results in our core business â developing great artists and introducing their music to fans around the world,â said Grainge. âOur roster ⌠achieved enormous commercial and creative success in markets around the world. We also worked to evolve and expand relationships with our existing DSP partners as well as establish new ones in fitness, health, gaming and the metaverse, driving the industry forward though leadership, creativity, innovation and collaboration.â
UMG was home to seven of the top 10 albums on the Billboard 200, 15 of the International Federation of the Phonographic Industryâs (IFPI) top 20 global artists and four of Spotifyâs top five global artists in 2022.
UMG reported adjusted earnings before interest, taxes, depreciation and amortization rose 19.4% to 2.14 million euros ($2.26 billion) for 2022 from a year ago. Adjusted EBIDTA margin fell by 0.4 percentage points to 20.6%.
The companyâs free cash flow increased by a whopping 70.2% to 638 million euros ($675 million) largely from the growth in adjusted EBITDA, according to the companyâs filings.
UMGâs Earnings Highlights:
Revenue rose 21.6%, or 13.6% in constant currency, to 10.34 billion euros ($10.96 billion) for 2022 from 8.5 billion euros ($9 billion) in 2021
EBIDTA rose 20.3%, or 12.5% in constant currency, to 2.03 billion euros ($2.15 billion) in 2022 from 1.69 billion euros ($1.78 billion) in 2021
EBITDA margin fell to 19.6% in 2022 from 19.8% in 2021
Adjusted EBITDA rose 19.4%, or 11.7% in constant currency, to 2.14 billion euros ($2.26 billion) in 2022 from 1.79 billion euros ($1.93 billion) in 2021
Operating profit rose 14.8%, or 7.9% in constant currency, to 1.6 billion euros ($1.69 billion) in 2022 from 1.39 billion euros ($1.48 billion) in 2021
Net debt fell 10% to 1.8 billion euros ($1.9 billion) in 2022 from 2 billion euros ($2.1 billion) in 2021
Free cash flow rose 70.2% to 1.09 billion euros ($1.15 billion) in 2022 from 638 million euros ($675 million) in 2021
Recorded Music Division Highlights:
Recorded music revenue overall rose 16.3%, or 8.8% in constant currency, to 7.9 billion euros in 2022 from 6.8 billion in 2021
Subscriptions and streaming revenue rose 18.7%, or 9.8% in constant currency, to 5.3 billion euros in 2022 from 4.5 billion euros in 2021
Physical revenues rose 7.7%, or 4.1% in constant currency, to 1.2 billion euros in 2022 from 1.12 billion in 2021
License and other revenue rose 19.6%, or 13.4% in constant currency, to 1 billion euros in 2022 from 896 million in 2021
Downloads and other digital revenue rose 4%, or fell 2.9% in constant currency, to 337 million euros in 2022 compared to 324 million in 2021
Music Publishing Highlights:
Music publishing revenues overall rose 34.8%, 26.3% in constant currency, to 1.8 billion euros in 2022 from 1.3 billion euros in 2021
Performance revenues rose 24.9%, or 18.2% in constant currency, to 371 million euros in 2022 from 297 million euros in 2021
Synchronization revenues rose 18.6%, or 10.3% in constant currency, to 236 million euros in 2022 from 199 million euros in 2021
Digital revenues rose 49%, or 38.7% in constant currency, to 1.04 billion euros in 2022 from 698 million euros in 2021
French music streaming company Deezer reported on Tuesday that its 2022 revenues rose 13% to 451 million euros ($478 million), as the company reduced its losses by 18 million euros ($19.1 million) through a combination of growth through partnerships and eliminating marketing spend.
The company reported its adjusted gross profit rose 16% to 98 million ($104 million) euros in 2022 versus 2021 on greater margin improvement. The 18 million euros ($19.1 million) the company reported in savings came partly from growth â Deezer grew its top line by 51 million euros ($54 million) and improved gross margins by 30 million euros ($32 million) â and partly from reducing its marketing spends in certain emerging markets.
For years since its 2007 launch, the Paris-based company angled to gain customers by partnering with telecommunications companies. But under new chief executive Jeronimo Folgueira, Deezer has focused on a business-to-business (B2B) approach, aiming to gain more streaming users in major markets through partnerships with companies that already have established customer bases.
That piggy back approach â which is already in place with Sonos in the United States, RTL in Germany and DAZN in Italy â allows Deezer to reach prospective customers in major markets without investing to build a brand first. Folgueira, who joined Deezer in June 2021, says 2022âs earnings show the strategy has legs, and he expects his company to generate revenue growth of more than 10% in 2023 as they work toward achieving profitability by 2025.
âAll of the ground work on B2B that weâve been doing is starting to pay off,â Folgueira tells Billboard. âThose deals are just the beginning. We want to enter markets through partners, and we are targeting the United Kingdom and other major European markets like Spain.â
Last year, Deezer partnered with German broadcast giant RTL Deutschland to deliver music and video content over the app RTL+ Musik, putting Deezer in a position to compete in the crowded streaming space in the worldâs fourth-biggest recorded-music market, and it teamed up with the Italian sport subscription streaming platform DZAN.
This year, Deezer struck a long-term agreement with the U.S. speaker and hardware company Sonos to power its Sonos Radio and subscription service Sonos Radio HD, a deal that will extend Deezerâs reach to 16 countries, including the United States, Canada, the United Kingdom, France and Germany.
Deezer remains strongest in France, where it is bundled with telecom company Orange and has 4.4Â million subscribers, and in Brazil, where it partnered with TIM Celular in 2016 and has 2.7Â million subscribers, according to company filings. Worldwide, Deezer has 9.4Â million subscribers compared with Spotifyâs 195Â million subscribers and 273Â million free (ad-supported) users, while TME has 82.7Â million paying subscribers, according to the companiesâ latest earnings reports.
The company was among the first DSPs to raise prices last year when it upped the price for an individual plan to 10.99 euros ($11.66) per month from 9.99 euros ($10.60) and family plans to 17.99 euros ($19.09) per month from 14.99 ($15.91).
Those hikes helped deliver a 14.3% increase in the companyâs average revenue per user (ARPU) in 2022. Deezer had 9.4 million subscribers as of Dec. 31, 2022, down 2.2% from a year earlier.
âOn the year as a whole, there was basically no impact on churn despite a roughly 10% price increase,â Folgueira says. âPeople are willing to pay more for proper quality music.â
The Lyric Capital Group says it raised over $800 million in new financing, closing its second fund that will be deployed in music asset investments through its publishing arm, the Spirit Music Group. The company further said that the new funding breaks out about 50/50 between equity and debt, with $410 million in equity commitments coming from existing and new institutional investors.
Overall, the company said the funding exceeded its target.
âI couldnât be more excited about completing our latest fundraise with the participation of existing and new investors which validates our unique and collaborative approach to acquiring high-quality assets from recording artists and songwriters,â Lyric Capital co-founder/managing partner and Spirit Music Group chairman Jon Singer said in a statement. âThanks to our relationships and proven reputation as good stewards of legendary song catalogs and recordings, we have a robust pipeline of proprietary opportunities and the capital to pursue them.â
Lyric Capital Group was formed in late 2018/early 2019 when Singer and then-Spirit vp of acquisitions and business development Ross Cameron led a buyout and recapitalization of Spirit Music.
âSince inception, Lyric Capital has transacted on over $800 million to develop outstanding catalogs of music, in partnership with artists and songwriters,â said Cameron, a Lyric Capital partner and co-founder. âOur disciplined investment approach is informed by our ownership of Spirit Music Group and supported by 25 years of proprietary music royalty data providing us with an unmatched insight when acquiring and managing copyrights. We are very pleased to close our second fund and thank our investors for their continued support of our unique platform.â
The company said it now owns and manages over 100,000 copyrights with both publishing and master recordings a part of the mix. Its catalog includes hits by The Who, Ed Sheeran, John Legend, Chicago, the Go-Goâs, Faith Hill, Tim McGraw, Camilla Cabello, Jay-Z, Ricky Martin, Brad Paisley, Toto, Madonna, Jason Aldean, Graham Nash, T.Rex, Charles Mingus, Carrie Underwood, Taylor Swift, Billy Squier, Chaka Khan, Whitney Houston, Eminem, Elvis, Frank Sinatra, Eminem, Salt-N-Pepa, Electric Light Orchestra, Tom Petty, The Traveling Wilburys and Lou Christie.
Eaton Partners served as the exclusive placement agent on the equity while Truist and Pinnacle led the debt consortium; and Ropes & Gray LLP served as legal counsel.
Live Nationâs 2022 was record-breaking across basically all key metrics â revenue, concert attendance, gross transaction value and sponsorships were all at all-time highs â and the company expects 2023 to top that.
As the company reported Thursday (Feb) with its fourth quarter earnings, total revenue reached a record $16.7 billion in 2022 â up 44% from the pre-pandemic era of 2019. That growth was spread across a number of factors: more fans, more concerts, more spending per fan, higher average ticket prices and a greater number of large sponsors.Â
Adjusted operating income improved 49% to $1.4 billion over the year, and operating free cash flow rose nearly four-fold to $1.8 billion.Â
Concert revenue in 2022 was $13.49 billion, up 43.1% from 2019 and 185.8% more than 2021. Concert attendance reached 121 million fans in 2022, up 24% from 2019 and a 246% increase from 2021, a year Live Nation began to recover from the pandemic but was not yet at full strength. The concerts division put on 43,600 events in 2022, up 153.2% from 2021 and up 8.4% from 2019. Attendance for Venue Nation, the venues operated by Live Nation, reached almost 50 million.Â
Ticketing revenues of $2.24 billion was up 44.9% from 2019 and up 97.4% from 2021. Fee-bearing ticket volume rose 28% from 2019 to 280 million. Fee-bearing gross transaction value grew to $28 billion, up more than 50% from 2019.Â
The average ticket costs were higher in 2022, too. With more tickets priced dynamically to true market value, Live Nation estimates $700 million was shifted to artists (and, presumably, away from the secondary market). That said, the average entry price for tickets remained below $35 in the U.S.Â
Even though consumers felt the pinch of high inflation throughout 2022, music fans didnât shy away from spending money at Live Nation concerts. Ancillary per-fan spending rose at least 20% across all venue types from 2019 levels.Â
Sponsorship revenue reached $968 million, up 64% from 2019 and 135% greater than 2021. Live Nation had 120 large sponsors globally, up 32% from 2019. Last year, the company added PayPal, GoPuff, Hulu and Snap as sponsors. They and other new, large sponsors accounted for 80% of sponsorshipâs revenue growth in 2022.Â
Live Nation points to a number of leading indicators that suggest 2023 will be even stronger than 2022. As of mid-February, event-related deferred revenue â tickets sales for concerts that have not yet occurred â was up $400 million to $2.7 billion. Also through mid-February, ticket sales are up 20% and fee-bearing gross transaction value of tickets sold is up 33%.Â