Live Nation Selling Assets Solely To Repay Debt?
You know it’s tough all over when one of the biggest success stories in recent years is flogging the silver to reduce it’s debts. Live Nation, the biggest live music company in the States, who have been signing massive deals all over in the past couple of years, including those with Madonna, U2 and Jay-Z. Now the company has divested itself of three profitable London venues; The Lyceum, the Apollo Victoria and The Dominion. The sale is reportedly worth $160 million to the company, allowing them to ‘de-lever’ their balance sheet, or in laymans terms, reduce the operating debt that was previously balanced against the worth of the companies assets. So why the slim-down? Last month there was opposition from the Office of Fair Trading to a proposed merger between Ticketmaster and Live Nation, a move which if allowed to go ahead would create a ‘near monopoly’ in the live music market, the fear being that the merged entity could essentially set the price of live music in the majority of venues across the country without fear of being undercut by any serious opposition, effectively eliminating any threat of competition (sorry if this is baby-speak).
Of course, if one wanted to take a less pessimistic view of Live Nation’s cash raising activities in the context of the proposed Ticketmaster deal, one could comment that the two companies’ stock prices have been essentially mirroring one another since the move was first posited at the beginning of the year, and it’s possible that Live Nation is trying to break this match, make the balance sheets look better and get a little more cash in the coffers, gain a stronger stock price and share buying war chest in advance of permission being granted by the OFC (nothing but the wildest speculation, of course!).
