Q2 2020 Live Nation Entertainment Inc Earnings Call
[music].
Ladies and gentlemen, thanks to see operator today's conference is scheduled to begin momentarily until that time you were mindful once again be placed on musical. Thank you for your patience.
[music].
Good day, everyone. My name is arrogant I will be your conference operator on today's call.
At this time I would like to welcome everyone to Livenation Entertainments second quarter 2020 earnings Conference call.
Today's conference is being recorded.
Following management's prepared remarks, well open the call for Q1 day instructions will be given at that time.
Before we begin live nation has asked me to remind you that this afternoons call will contain certain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ including statements related to the companys anticipated financial performance.
Business prospects, new development and simulate matters.
Please refer to live nation, FTC filings, including the risk factors and cautionary statements included in the company's most recent filings on form 10-K, 10-Q, and asking for a description of risks and uncertainties that could impact the actual results.
My name will also refer to some non-GAAP measures on this call.
In accordance with the FTC regulation G. Live nation has provided a full reconciliation to the most comparable GAAP measures and their earnings release.
The release reconciliation and other financial or statistical information to be discussed on this call can be found under the financial information action on live nation's website and investors not live nation Entertainment Dot com.
It is now my pleasure to turn the conference over to Michael look you know President and Chief Executive Officer of live Nation Entertainment. Please go ahead Sir.
Good afternoon, Thank you for joining us.
Over the past three months or top priority, that's been strengthening our financial position to ensure that we have the liquidity and flexibility to get through an extended period with no live events.
Our expectation that live events would turn upscale is the summer 2021 with ticket sales ramping up in the quarter's leading up to these shows.
Certainly we remain confident that fans will return to live events when it's safe to do so.
Our strongest indicator of demand is a fans are holding onto their tickets, even when given the option of a refund.
He was he ended the second quarter, 86% of called through fans are keeping their tickets for rescheduled shows demonstrating the continued desire to attend concerts in the future. Despite the current uncertainty.
Our expectation for robust outdoor summer season in 2021 or also reinforced by the two thirds of fans keeping their tickets for cancel festivals. So they can go to next year show along with a strong early ticket sales for the festivals in the UK next summer for example, download in the I love White or pace.
Well ahead of last year.
Between the ticket held by fans for the rescheduled shows and these festival on sales we've already sold 19 million tickets to more than 4000 culture from festival schedule for 2021.
Creating a strong base load.
The man that is pacing well ahead of this point last year.
At the same time surveys continue to show concerts remain fans highest priority social events. When it is safe together with almost 90% of fans globally planning on attending concerts again.
[noise] understanding it'll be sometime before we put oncology scale, we're innovating to find nuq and creative ways to help artist keep.
Fans connected in the meantime.
Virtual concerts, a proven to be a huge demand withstands. So we established a lie from home platform.
To provide a convenient place for fans of all types to find performances from their favorite artists.
The second quarter, we had 67 million fans the over 18000 concerts and festivals globally.
Among the our highlights this past weekend, we streamed hundred 50 performances from our virtual Lollapalooza Festival.
Given the tremendous popularity of these shows we're seeing the potential for live streaming to become an additional long term component of our culture business, allowing fans in other cities or those who cannot attend to enjoy the concert as well.
At the same time, recognizing fans want to get back to attendant concerts in person soon as possible. We have lunch socially distance shows when and where permitted included in New Zealand, France, Denmark, Spain, Germany, Finland, and as well as cities across the U.S.
Well this is a challenging time for everyone. The live events business in particular, there are few things that I'm confident about.
We are well positioned to whether this crisis and we will get through this when it is safe to return we will have an abundance of fan and artist ready to join live music again.
Like nation, we'll do everything and its power to meet our responsibilities to artist fads, our employees and everyone else affected by the shutdown by bringing back as much like music as fast as possible. When is responsible do so with that I will turn call over to Joe for more detailed in our results.
Thanks, Michael and good afternoon, everyone.
As Michael mentioned, our top priority. During this time has been strengthening our financial position, we're confident that our actions taken to cut costs and increased liquidity will provide us with the runway we need until the time is right to bring shows back.
We have now reduced cost for this year by over $800 million and where do you start you cash usage by $1.4 billion relative to our pre covert plants.
With these reductions we have lowered the estimate on our operational cash burn rate to $125 million per month.
And our gross burn rate to $185 million per month on average for the second quarter through the end of year.
At the same time, we raised an additional $1.2 billion, providing us with the $1.8 billion of free cash at the end of the second quarter.
Along with over $950 million of available debt capacity.
Totaling over $2.7 billion and readily available liquidity.
And last week, we amended our credit agreement to spend our maintenance covenant to a more favorable liquidity metric Q4 of 2021.
Providing us with added flexibility until business returns.
Turning to our Q2 results starting with AOL.
Oh I for the quarter was a loss of $432 million driven primarily by operational fixed costs of $334 million inclusive of approximately $60 million and benefits from various government payroll funding programs.
So with our cost initiatives, we expect operational fixed cost averaged approximately $125 million per month for the second quarter through the end of year.
We then had negative $98 million in contribution margin.
Partially driven by onetime events and Ticketmaster and our concerts business.
For Ticketmaster recording refunds for 11 million tickets across 42000 shows generated a loss of approximately $79 million for our portion of the service fees.
In our concerts business, writing off sunk costs associated with concerts that had been canceled or rescheduled for 2021 generated an expense of approximately 87 million about two thirds of which is a write off of advertising expenses given the calendar year ship can show timing.
Partially offsetting these expenses, we had $68 million of contribution margin generated by business operations and insurance recoveries for events impacted by the pandemic.
Looking at free cash we ended the first quarter with approximately $820 million and free cash.
Added $1.2 billion in cash from additional debt during the second quarter, and then ended the quarter with 1.8 billion of free cash.
Yes implies $250 million in cash used during the quarter as part of this we had a timing benefit to free cash of $415 million, which will flip back out in Q3 in Q4.
Of this timing benefit $225 million is accrued, but not yet paid ticket refunds and $190 million is working capital timing.
This puts our total effective cash burn at $665 million for the quarter.
The largest onetime impact was the payment of Ticketmaster refunds, which totaled $110 million for our portion of service fees refunded to fans during the quarter.
We then had our operational cash burn starting with our $334 million and operational fixed costs, and adding back $54 million them noncash benefits, our operational cash burn totals $388 million for the quarter.
In addition, we had $217 million of ongoing non operational cash burn items, including capital expenditures acquisition activity net advances and interest payments.
These items ran slightly higher for the quarter due to contractually obligated payments for past acquisitions.
So we expect this non operational component to our cash burn to average approximately $60 million per month for the second quarter through the end of year.
Finally, we had $50 million of inflows from operations and improved cash management.
Lastly, let me give you an update on ticket refunds and how that's impacted our deferred revenue.
Ticket refunds first.
The global refund rate for live nation concerts that are rescheduled enter and or have gone through a refund window is 14% through the end of Q2.
Festivals have generally cancel this year's events, but for festivals, where fans can retain their tickets for next year show as Michael mentioned about two thirds of them are keeping their tickets.
Across both concerts and festivals, we refund to $218 million for reschedule shows since March.
In addition, we have refund at $477 million for canceled shows over this period.
Oh this $695 million total $230 million was funds held by third party venues and $465 million from live nation helped funds.
We still have some shows in the process of rescheduling or are we scheduled but not yet offering refunds.
If we apply the same fan behavior and mix on these events, we forecast approximately $270 million and additional fan refunds of which about $180 million will be from live nation held funds.
Given this estimate we have shifted these funds from deferred revenue to accrued, but not yet paid ticket refunds.
Now to look at how these refunds flow through our event related deferred revenue.
We ended the first quarter, our deferred revenue for events over the next 12 months was $2 billion.
At the end of the second quarter deferred revenue for events in the next 12 months was $941 million.
Hi, this approximately $1 billion decrease.
$405 million was due to a shift from short term deferred revenue to long term deferred revenue as a number of concerts were shifted into the second half of 2021.
As a result, we had $486 million of long term deferred revenue at the end of the second quarter of which we estimate approximately $400 million will shift back to short term deferred revenue or over the course of the year.
The nation concert ticket refunds recorded in the quarter, then accounted for $465 million.
An estimated additional future refunds from live nation held cash totals $180 million.
We then had ticket sales in the quarter that generated roughly $30 million of new deferred revenue.
Looking at the rest of the year, our forecast for event related deferred revenue at the end of the year prior to additional ticket sales and based on our projected refund rates is approximately $1.3 billion.
Given all the uncertainty in the market and timing of shows we cannot give you any further guidance beyond these burn rates in refund levels. We just gave you.
That I will turn the call over to Kathy.
Thanks, Joey and good afternoon, everyone.
I will review our second quarter in six months result, and provide updates on our balance sheet.
All of our results for this quarter in the first six months of the year had been significantly impacted by the shutdown of our shows since mid March to the covered 19 pandemic, which is driving all of the variances for both periods in total and across all segments.
For the quarter, our revenue was 74 million compared to 3.2 billion last year down 98%.
Oh I was a loss of 432 million for the quarter compared to earnings of 319 million in 2019.
Our operating loss was 588 million compared to 172 million in operating income last year.
Net loss for the quarter was 568 million compared to net income of 103 million in 2018.
For the first six months, we generated 1.4 billion in revenue compared to 4.9 billion last year down 71%.
Most of this revenue in 2020 was driven by our show activity in the first two enhancements to the year prior to the shutdown.
Oh I was a loss of 452 million for the first six months compared to income of 435 million in 2019.
Operating loss was 761 million compared to 148 million in operating income last year.
Net loss for the first six months was 752 million compared to net income of 51 million in 2019.
Now onto our balance sheet.
As of June Thirtyth, we had total cash of 3.3 billion, which includes a free cash balance of 1.8 billion.
Our total cash includes 941 million of current event related deferred revenues as well as 486 million of long term deferred revenue for events that have been rescheduled more than one year out as of June thirtyth.
This is part of our operating cash and therefore provides us additional liquidity.
As Joe outlined we estimate that are actions to conserve cash eliminate or differs approximately 1.4 billion in cash outflows for 2020, which includes the cash portion of our approximately 800 million in cost savings.
Along with a reduction in capital expenditures lower acquisition activity and reduced concert and ticketing advances.
In May 2020, we issued 1.2 billion principal amount of six and a half person senior secured notes due 2027.
As of the ended the quarter. Our total debt was 4.9 billion with a weighted average cost at 4.4%.
We also have 966 million of available debt capacity between our revolvers and Undrawn term loan anyway.
Last week, we completed an amendment to our credit agreement, which immense and further suspend our net leverage covenant until December 31st 2021, if we choose replacing it with a minimum liquidity test of $500 million, which is measured against our free cash available debt capacity and.
Up to 250 million of our event related deferred revenue.
We believe that are free cash together with our undrawn debt capacity gives us sufficient liquidity to maintain critical operations until shows return.
Capital expenditures for the quarter were 55 million, giving us a total for the six months of 129 million.
We are now estimating our full year spend to be approximately 215 million down from or initial estimate for the year of 375 million.
Of the remaining 86 million and capital expenditures for the year approximately 30 million is for capitalized labor for updates to our ticketing system with the remainder largely venue related long term projects.
With that we'll open up for questions operator.
You asking question you would need to press star one on your telephone.
Your question press the pound key please stand by we'll think about the roster.
And your first question comes from the line of Brandon Ross with Lightship partner.
Good afternoon, guys. Thanks for the.
Very detailed prepared remarks couple of questions first can you tell us how you're approaching on sells for 2021 should we expect a similar cadence to the typical years, where are you guys going to take more of a wait and see approach.
Given everything that's going on and I assumed in your cash burn guidance that you gave.
There's no topline in there at all and you're assuming no on sales in 2021 and half a follow up.
Its Joe I'll start these in terms of the on sales timing.
As we indicated we expect could be returning to scale with next summer, particularly focused on the amphitheaters and festivals first [laughter]. So I think that we would expect for usual timing of those on sales, which would typically be for amphitheaters around to the ended the year.
So.
We don't expect for the full year. The same we expect it to be more back half loaded, but we do expect beyond sales to be somewhere around.
A few towards the end of year and the bulk of them as we get into the first quarter of the year.
Second question in terms of the cash burn cash burn.
His with I'll call it relatively limited a inflows more similar to what we have in Q2. So we did have some inflows, but not obviously of scale or substantial cash burn numbers. We gave you are assuming the status quo through Q4.
And as we move further into it and we have better visibility on Q4, if there is some ramp ups and activity, which would give us both increased contribution margin as well as increased costs will guide you to that as we get closer but we've got a more prudent simple thing to do at this point is to give you. The the status quo and then as for as we.
More going on will increase both sides from there.
Got it and then if it was widely reported like it gets in the rags that you try to adjust Argus terms for festivals and were met with push back can you talk about what what happened there and what was the outcome and as you contract for 21 shows if you've been able to share.
Your risk with artists at all and how of contracts been structured differently for 21 shows and may be going forward from there.
Sorry brand Hello, I Oh go ahead, sorry brand that I had a [laughter] my Mike.
Yeah. This easy the press got a hold about kind of a work in progress, which was was too bad because it wasn't a wasn't meant to be that we for living are negotiating deals with what's agents and managers that stuff. So that's the business model of their job is to to look for.
Competition in our job is to bid on these shows and different terms for different artist and different time. So it's the <unk>. The process is always fluid. We're obviously, obviously trying to do our side of the negotiation and the agents doing their sites that this got look this looked like I guess a advocate.
Reported it was just a mid mid statement that wasn't meant to be or anything more than that but what we really want to do accomplishes I would just step back and say the industry overall has been amazing dealing with restructuring 20 into 21 the agents the managers and all the artist all have been very cooperative.
I understand that if you how do you show this year and you wanted to reschedule next year. Some compromising the terms would have to be met the biggest risk. We all had on the promoting side that we wanted to make sure that we could incorporate was the refunds now the refunds as weeks as we've seen have been surprisingly really strong.
Along on the concert side and we didn't know what we were going to head into when we started renegotiating, but we do know on festivals refund rates are much higher because it's a bigger oh, it's a bigger cash outlet, but it's also just a bigger time could.
They don't tend to be as local less your average concert. So we want to make sure going into 21. If you were a headline artists that was going to play certain festival. This year and we want it and you still want it to play it next year. The two things we want to make sure that we were protected in and that we both shared some of the risk was.
A refund reduction.
And insurance those are the two principles. If you take all of the DRAM or from the press a leak outside those those are the two things we wanted to make sure that we weren't stuck paying the same price 20, if we had a 31% refund rate on the festival now if those tickets all sold back through and.
Festival ended up at the same place. It wasn't 20, then we should all share the show the upside and and every agent artist and manager have been incredibly accommodating to all the promoters and the business. We're all looking for some some help in terms of rescheduling next year shows and taking in refunds in insurance.
And making sure we are clear on those two terms. So that was the net results about all the rest was a wish list of things as we head into any negotiation with all like to win but those are the two points that made sense that were most important for our business and for the festival Pn else.
What about for shows that are in 21 that we're not push from 2020 or are those contracts being structured differently than historical deals.
Well I would say that the what the interest you did in general overall is every show you basically have you had the chance to cancel it right every show basically was cancelled in some sense I'm not too are are doing so everyone was in the same but you will you were all starting with a clean slate.
So I would say to you. If you had a tour that was on sale and it wasn't doing well you in the artist decided to pull it down and not go forward with it regardless of cobot. So so any tour that you rescheduled you you have the opportunity to look.
At that deal and that that show and the number of dates et cetera, and negotiate with the agent manager and the artist on what was the best going forward strategy. So anything you know we talk about 2021 is gonna be a spectacular year in the sense. So.
The stuff that did get pushed you can guarantee was all of the stuff that was selling well in high demand. So that stuff is all going do those shows will still be continually next year. We didn't have anything really on sale for 21 ahead of our 20 season of any substance <unk> 95.
<unk> percent of what we were dealing with was 2020 reschedule to 21 shows.
Got it thank you.
Your next question is from David Karnovsky with JP Morgan.
Hi, Thank you when you look at pretty much 2021 concert season can you talk about how it might look coming back in terms of venues Joe mentioned before focused on maybe the amphitheatre footprint. Initially so how much can you read into your hands and can you book artist there that might have otherwise played a in arena.
Good.
I'll start and then Joe will jump in.
I mean force you think about our business, it's 50% International 50% America. So a lot of you know what we're doing this what we're going to happen outside of America versus here. The summer season, and then in international is a heartbeat of their business festivals from small outdoor shows two to larger festivals. So Europe.
Already continue what they do well most of their business will be outdoors.
The summer season here, we do have the advantage of our 50 amphitheaters and we think those are going to be at high utilization next summer as well as our folk teak festivals.
So, yes, we would be looking right now.
I think well at the business as a strong amphitheater festival outdoor business in Europe and into America, and then most of your touring indoor stuff well start to ramp up in the fall into winter.
Yeah I agree the only thing.
That is that this is.
This is a place where our having our managing a large number of buildings really is going to come to our advantage. So the fact that we have these 50 amphitheaters, we can manage the process with the buildings and we have all of that activity outdoor the same for the festivals, where we have the leases on the land and we can operate.
And then even the hundred plus Hudson theaters, and we have as one would expect that some of the the lower volume a number of people gathering will happen sooner than some of the large gathering indoor because we have those buildings because we can manage the process is with them, having battle lettuce ramp up faster than otherwise would be able to.
Okay, and then I think earlier you did mention some international regions.
Third thing done were limited capacity I mean, there are there other countries are markets, where you operate where do you think you can get to some level of scale prior to somebody 2021 at this point.
[noise], Yeah, I mean, we're definitely if we all see that news the U.S. looks like the one that will be the longest the other markets, whether its Australia, New Zealand, Denmark, Germany, Finland, some of those markets that they all seem to be moving along on I've done a good forward path.
They've had a very structured plan in place on when small shows can start they seem to be moving towards those timelines. So.
Although we're talking about a spring return to business outdoors, we do absolutely when operating and 40 different countries expects certain markets, especially from theater up into clubs and into arenas are to be happening in some of those markets before the spring.
Okay. Thank you.
Your next question is from Ben Swine Byrd with Morgan Stanley.
Hey, good evening or good afternoon, Michael you little bit more about artist appetite to get back on the road in this environment I know a lot or either postponing releasing new music really some has oh, there's I'm sure trying to be sensitive to the economic pressures that their fans are pursuing what do you.
Hearing from artist or that you have fallacious with around getting back on the road sooner rather than later and maybe a similar question for you on their decision process on canceling versus postponing you know I sit there have been some who have decided to cancel in order to help their fan skit their money back faster I didn't know if that was something you thought would grow.
As the year progressed.
Got it just had a follow up on on the deferred revenue point.
Yeah, I think it was our last earnings call. We were we were we were kind of view showing you. Some statistics to make sure that everyone understood. The touring had not had a structural change there was a debates back then whether fans would gather when they got out of this I think if anything we learn in three months, we got to figure out how they don't.
Gather short terms. So we can't have on [laughter] better business faster. So I would just stay I would just city that we have.
We have been really really you know we're going to play long on this one so we have artist with lots of ideas on shows they could do now we won't be doing the DJ sets in the Hamptons anytime soon or we're going up we're going to play long and play safe. So the artist you you nailed that I was talking about artist this morning.
I I think as you've read a elsewhere I think you're gonna see a creative bone.
I saw that I saw the record labels. This week also down slightly because they need new releases and Turing to happen.
The machine moving so so yeah I think 21 you have artists that are all just calling me daily saying when can I go once again to be safe. When are we gonna go I'm dying to go I got new music I want to drop music. So I think this is why we believe long term regardless of what corridor, we exactly scale at Uh Huh.
This is will be stronger than ever with the creative push by all these artists who need to get on the road to us to drive their their new music. So 21 22, you know we can debate what quarter exactly ramps, but we believe 21 into 22 will be will be record years was artist on the road, who are pent up they need to get on the road.
Anomaly and they're now powered by create creative backlog and they're all waiting I talked in ours. This morning. They were going to released in November they're going to wait till March now so they can coincide with a tour schedule later in the year 21.
So huge huge demand we are very gifted in this industry and that we have an incredible supply chain of ongoing creative genius is who hum who make their living connecting with fans on the road. So that will continue and we know now from all of the craziness. We've seen across America. The fans are going to gather we just got to make sure we can do.
Let's say.
All right as far as far as canceling postponing you know what are the things we decide it really early on was to make sure that we offered refunds on postponed events also we didn't want our deferred we didn't want deferred revenue.
To have any false narrative to it and you know we still we are leading the industry. There are many companies that are not giving refunds I think even once it got government money.
We believe that you need to offer the fans refunds schedule for proposed phones and canceled shows and we've done that so we believe our actual number when we talk about fans holding on its real we make it very easy for you to get a refund right now at Ticketmaster. If you go look at our site versus others, we even see.
As a concert sold at Ticketmaster versus other ticket sites. The take rate is higher at Ticketmaster, because it's very easy to get a refund. So I believe that the refund numbers are true they're not suppressed in any matter on our business because we're offering both options.
And if you see an artist the canceled versus postpone it wouldn't be because he wants is fan to get money back we've offered both those options for any two or we have there. It may just be an artist that you know was wasn't going to go on that was going to go on the road, probably you know probably an older artist that is looking at it same maybe.
I'm not going to run back and try to figure out. It may is going to happen right now I'll take a year off so you've seen some of those ones that they've said I'll just wake if you're a younger artist tied to more record releases, you're probably really still waiting and and and ready to go up probably little earlier given your demo.
Got it that's helpful.
And then just sort of deferred revenue. Thank you for all the detail.
Maybe confuse <unk> deferred revenue for events I think at the end of the quarter was about 900 940 million and I think you said you thought it would be 1.3 billion at the end of the year. It's obviously is a higher number.
Which is sort of counter intuitive given there is some refund activity expected I think Joe you said that did not include any benefit from on sales. So what I'm really what's the reconciling I never did I just any material.
So you heard the numbers right then to two things one as we as part of that 941 million and that includes 180 million.
Well, we've modeled out is additional refunds. So we expect to happen because we were able to model that we needed to shift out of deferred revenue. So if our model were perfect then.
That would have already been taken out and the second phase is when we use the term deferred revenue.
It is with regards to deferred revenue for events, taking place over the next 12 months.
That's never been an important nuance in the past because deferred revenue for things over a year ago is tended to be pretty small, but in this case, because we deferred a lot of shows into the second half of 2021.
We have about $400 million.
Long term deferred revenue they will flip into deferred revenue over the next six months. So your 900, plus 400 equals to 1.3 billion died in rough numbers again, well all the experts on this by the end of year, hopefully [laughter] actually up [laughter] well.
And then we'll start selling more tickets a conflict took to confuse your deferred so.
I look forward to what we look forward to that Dick.
Thanks.
And as a reminder, ladies and gentlemen, if you would like to ask a question at this time simply press Star. Then then number one on your telephone keypad.
And that star one if he would like to asking question at this time.
And do you have a question in queue quote along with Jefferies.
Hi, good afternoon, everyone. Thanks for taking my question.
If we can just focus a little bit on M&A opportunities and obviously theres a lot of distress out there so I want to be sensitive and Todd incentives.
With but the question. So I'm just wondering what you're seeing in terms of opportunities to consolidate and what your general appetite is to pursue those opportunities.
Well I think we mentioned that last time.
I think we look on a global basis as we continue to look to build our global market share.
And we believe that over over the next 24 months still a he'll be ongoing opportunities for for us to expand our global footprint.
In foreign in international markets, we've been.
Looking to get into and build some businesses around so yes, we do think that overtime.
So this will provide us some opportunity in international markets.
Understood and if I can just just pivot a little bit towards your cost cuts you. You've clearly made a lot of progress I believe the numbers were around 500 million pre one Q1 Q was about 600 now you're at 800 million just wondering of that 800 million how much of that you think is more structural more Permian going forward.
Yeah, I don't think we're going to give an exact number but there's no question that as we've been going through this process. We've been looking at our fundamental cost structure and we do expect said, we will come out of this with some different organizational structures I'm a bit leaner a bit tighter in terms of how we do some thing so.
We will we will have some savings how much of that right. You expect ski more than 2021 is a year or that you're ramping back up and then as you're continuing to grow getting into 2022 and beyond your then reinvesting some portion of that but.
Over the next quarter to will well give more definitive numbers on that.
Understood. Thanks, very much but but to give you color I would add the only gifts to when you slow down to this level you have not had since we launched this company 15 years ago is you know you build up your own bureaucracy in your own roster 15 years in and we haven't had the luxury so our opportunity to sit back.
Division by Division and look under every rock and challenge ourselves on how are we going to go to market differently.
What are some new products, we need to go to market, where and how we're going to operate more efficiently on a global basis. So I I would say the the park that does motivate me daily is Joe and I and our teams are probably have never felt so energized around what live nation 3.0 will look like heading into 2021.
And that's our main obsession isn't just to sit still but to come out of this looking and feeling difference.
[music].
Which will have much weight loss, which which obviously will add efficiencies to our our ongoing cost structure as well [noise].
Your final question comes from Steven glad all that with Cowen.
Hi, I'm, if if we look at the phase reopenings across the U.S. and internationally concert that are still being put on in various international countries in cities for the most part.
All right pretty reduce capacity is what gives you confidence that the governments will allow live events to return to scale and the summer 21, and can you maybe define like when you say back to scale is that 75% capacity, 50% capacity in your absent festivals.
Or full capacity and if thats the expectation that would be great and then.
You know you talk on the press release like the potential revenue opportunity or are the sorry streaming excuse me as being an additional long term component of the concert business.
Can you maybe speak to that as a potential.
No revenue opportunity.
And any other adjacent products services and you guys, maybe able to offer during this difficult time.
To bring in some incremental revenue thanks.
[laughter].
Well, let me go ahead.
I'll start on stream in and then work backwards.
Oh, Yeah, I think we you know we havent natural advantage in the streaming business in the sense. We have studios called these events and the 300 festivals and 10000 theater and clubs shows alone.
We've been very created for physical execution, but though they do provide incredible digital opportunities that we haven't focused enough on.
So I think we're we're out where deep at work in our business about department and I think you'll you'll see some some new products from us and the new year that we think our complements to our core business, but but but great. Great additions. We also have such a huge sponsorship base. When you have 900 sponsors.
Adding life from home this year alone has been a big part of helping deliver some some benchmarks as well as driving concerts and some of that the reduced capacity, although not perfect on their own they've been great tools to provide sponsors with some value.
So I think you're right you're gonna see us so lots of new products that we think well will be a great complement to our core business as far as the confidence on I'm getting back to business.
Joe you and I will just discussing that you could take lead.
Sure. So first of all the answer your question what do you mean by scale.
Scale, our normal business model in the summer we'd be doing several thousand concerts.
A quarter for tens of millions of parents. So we were not can try to predict right. Now we have exact Mrs is 70% is a 90% what percent of last year is it but it's in that type of volume. So why do we think it's going to happen or a couple of things.
First of all I think the the efforts on the vaccine front are moving faster than anybody predicted three or four months ago for you listen to the experts the doctor how cheese or the world and what are they saying in terms of their expectations.
We have multiple different vaccines with multiple different approaches and their belief that something is going to happen by the end of the year is one of the vectors that gives you. Some comfort. The other is the progress being made on the treatments. We've obviously as a medical community learned a huge amount over the past four months.
[laughter].
In terms of the basic treatment in terms of the perhaps the potential of antibiotic treatments.
The use of other drugs have you remember receiver and others in terms of helping to reduce the mortality rate of it so.
Overall in terms of as we as we've talked pretty much the facts and assign fleet us.
We've been pleasantly surprise, thus far on the progress of vaccines.
Hopefully some of the testing and tracing it's been slower but still now is ramping up so between the testing the tracing the treatment also providing an opportunity. So amongst those I think we believe sitting here today, but the facts would say that by the beginning a year you're able to put on the tickets a the tickets on sale with comfort you're able to do the show.
Those next summer and then for the reasons that we've talked about we have a high degree of comfort that's romance gonna be there 86% of the people keeping their tickets for the shows two thirds of the people.
Ah keeping their tickets for festival so were cancelled this year, how about cancelled, but still saying they want to figure out of the show next year instead of getting their refund. So in total over 19 million tickets for 4000 shows that have already been sold which that alone what we've already sold for 2021 would make us.
One of the largest promoters in the world. So all those factors together I think is what gives us the comfort.
Hey, Thanks, Jon Michael in part in that part of part of the long winded answer your questions, but if I could slip one more and just on can you just discuss the.
Viability of independent venue owners in this environment.
If if venues do you know closed on a go bankrupt Todd how do you anticipate that impact in some line and concerts business and also ticketmaster's think reopened.
Yeah, well you know what would I would just city on the Ticketmaster front, it's a global business with a very very diverse portfolio less on the lots on the small venue side on on a macro level. So it would have limited effect there ticketmaster at the end the day.
As a very large sports business on a global basis in Big Bend use which is a big part of its business and then large concerts. So I don't think you'll see it there.
Any effect there.
I would say that I, you know looks like in most of the country's maybe the U.S. now you know there's ongoing let 'em stimulus programs in effect and ER that seem to be coming to life or for the life business in general or whether its employees, whether the venues smaller bags. So I would assume some of them will have.
Continued ongoing support through to government programs.
To keep them a flow.
Through this time a analysts were all in the same boat, we're all looking to figure out how to.
Get through the the downtime and reduce costs and I think there there they're banding together and hopefully they'll find their their support systems also.
Okay. Thank you very much.
Well there no further questions in queue at this time.
[noise]. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].