Live Nation Entertainment, Inc.

Good day, everyone. My name is Erica, and I will be your conference operator on today's call. At this time, I would like to welcome everyone to Live Nation Entertainment's second quarter 2020 earnings conference call. Today's conference is being recorded. Following management's prepared remarks, we will open the call for Q&A. Instructions will be given at that time. 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 risk and uncertainties that could cause actual results to differ, including statements related to the company's anticipated financial performance, business prospects, new developments, 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 Form 10-K, 10-Q, and S-K for a description of risk and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided a full reconciliation to the most comparable gap measures in 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 section on Live Nation's website at investors.livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapinoe, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Good afternoon and thank you for joining us. Over the past three months, our top priority has 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 will return at scale is the summer of 2021. with ticket sales ramping up in the quarters leading up to these shows. Importantly, we remain confident that fans will return to live events when it is safe to do so. Our strongest indicator of demand is that fans are holding on to their tickets, even when given the option of a refund. Through the end of the second quarter, 86% of concert fans are keeping their tickets for rescheduled shows, demonstrating their continued desire to attend concerts in the future despite the current uncertainty. Our expectations for a robust outdoor summer season in 2021 are also reinforced by the two-thirds of fans keeping their tickets for cancelled festivals so they can go to next year's show. Along with the strong early ticket sales for the festivals in the UK next summer, for example, downloads in the Isle of Wight are pacing well ahead of last year. Between the tickets held by fans for the rescheduled shows and these festivals on sales, we have already sold 19 million tickets to more than 4,000 concerts and festivals scheduled for 2021, creating a strong baseload of demand that is pacing well ahead of this point last year. At the same time, surveys continue to show that concerts remain fans' highest priority social event when it is safe to gather. with almost 90% of fans globally planning on attending concerts again. Understanding that it'll be some time before we put on concerts at scale, we're innovating to find new and creative ways to help artists keep fans connected in the meantime. Virtual concerts have proven to be a huge demand with fans, so we established a live-from-home platform to provide a convenient place for fans of all types to find performances from their favorite artists. In the second quarter, we had 67 million fans view over 18,000 concerts and festivals globally. Among our highlights, this past weekend, we streamed 150 performances from our virtual Lollapalooza Festival. Given the tremendous popularity of these shows, we are seeing the potential for live streaming to become an additional long-term component of our concert business, allowing fans in other cities or those who can't attend to enjoy the concert as well. At the same time, recognizing fans want to get back to attending concerts in person as soon as possible, we've launched socially distanced shows when and where permitted, included in New Zealand, France, Denmark, Spain, Germany, Finland, and as well as cities across the U.S. While this is a challenging time for everyone, the live events business in particular, there are a few things that I'm confident about. We are well positioned to weather this crisis, and we will get through this. When it is safe to return, we will have an abundance of fans and artists ready to join Live Music again. And Live Nation will do everything in its power to meet our responsibilities to artists, fans, our employees, and everyone else affected by the shutdown by bringing back as much live music as fast as possible when it is responsible to do so. With that, I will turn the call over to Joe for more detail on our results.

Thanks, Michael, and good afternoon, everyone. As Michael mentioned, our top priority during this time has been strengthening our financial position. We are confident that our actions taking to cut costs and increase liquidity will provide us with the runway we need until the time is right to bring shows back. We have now reduced costs for this year by over $800 million and reduced our cash usage by $1.4 billion relative to our pre-COVID plans. 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 the year. At the same time, we raised an additional $1.2 billion, providing us with $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 in readily available liquidity. And last week, we amended our credit agreement to suspend our maintenance covenant to a more favorable liquidity metric to Q4 of 2021, providing us with added flexibility until business returns. Turning to our Q2 results, starting with AOI, our AOI for the quarter was a loss of $432 million. driven primarily by operational fixed costs of $334 million, inclusive of approximately $60 million in benefits from various government payroll funding programs. So with our cost initiatives, we expect operational fixed costs to average approximately $125 million per month for the second quarter through the end of the year. We then had negative $98 million in contribution margin, largely driven by one-time events in Ticketmaster and our concerts business. For Ticketmaster, recording refunds for 11 million tickets across 42,000 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 have 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 shift in 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 pre-cash, we ended the first quarter with approximately $820 million in pre-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. This 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 we'll flip back out in Q3 and 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 one-time impact was the payment of Ticketmaster refunds, which totaled $110 million for our portion of service fees refunded to PANS during the quarter. We then had our operational cash burn, starting with our $334 million in operational fixed costs, then adding back $54 million of non-cash 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 the 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 and are in or have gone through a refund window is 14% through the end of Q2. Festivals have generally canceled this year's events, but for festivals where fans can retain their tickets for next year's show, as Michael mentioned, about two-thirds of them are keeping their tickets. Across both concerts and festivals, we've refunded $218 million for rescheduled shows since March. In addition, we have refunded $477 million for canceled shows over this period. Of this $695 million total, $230 million was funds held by third-party venues and $465 million from live nation health funds. We still have some shows in the process of rescheduling or are rescheduled but not yet offering refunds. If we apply the same fan behavior and mix on these events, we forecast approximately $270 million in 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, at the end of 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. Of 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 over the course of the year. The Live Nation concert ticket refunds recorded in the quarter then accounted for $465 million, and 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 and refund levels we just gave you. And with that, I will turn the call over to Kathy.

Thanks, Joe, and good afternoon, everyone. I will review our second quarter and six-month results and provide updates on our balance sheet. All of our results for this quarter and the first six months of the year have been significantly impacted by the shutdown of our shows since mid-March due to the COVID-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%. AOI 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. And net loss for the quarter was $568 million compared to net income of $103 million in 2019. 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 and a half months of the year prior to the shutdown. AOI was a loss of 452 million for the first six months compared to income of 435 million in 2019. Our operating loss was 761 million compared to $148 million in operating income last year. And 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 30th, 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 revenue, as well as $486 million of long-term deferred revenue for events that have been rescheduled more than one year out, as of June 30th. This is part of our operating cash and therefore provides us additional liquidity. As Joe outlined, we estimate that our actions to conserve cash eliminates or defers 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 6.5% senior secured notes due to 2027. As of the end of the quarter, our total debt was $4.9 billion with a weighted average cost of 4.4%. We also have $966 million of available debt capacity between our revolvers and undrawn term loan A. Last week, we completed an amendment to our credit agreement, which amends and further suspends our net leverage covenant until December 31, 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 our 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 our initial estimate for the year of $375 million. Of the remaining $86 million in capital expenditures for the year, approximately $30 million is for capitalized labor for updates to our ticketing systems, with the remainder largely venue-related and long-term projects. With that, we'll open it up for questions. Operator?

To ask a question, you will need to press star 1 on your telephone. To respond to your question, press the pound key. Please stand by. We'll be compiled a Q&A roster. And your first question comes from the line of Brandon Ross with LightShed Partners.

Good afternoon, guys. Thanks for the very detailed prepared remarks. A couple of questions. Can you tell us how you're approaching on sales for 2021? Should we expect a similar cadence to the typical years, or are you guys going to take more of a wait and see approach given everything that's going on? And I assume in your cash burn guidance that you gave, there's no top line in there at all, and you're assuming no on sales in 2021. Then I have a follow-up.

Joe, I'll start these. In terms of the on-sales timing, as we indicated, we expect to be returning to scale with next summer, particularly focused on the amphitheaters and festivals first. So I think that we would expect the usual timing of those on-sales, which would typically be for amphitheaters around the end of 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 the on-sales to be somewhere around a few towards the end of the year and the bulk of them as we get into the first quarter of the year. Second question, in terms of the cash burn, the cash burn is with, I'll call it, relatively limited inflows, more similar to what we have in Q2. So we did have some inflows, but not obviously at scale or substantial inflows. The 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 in activity, which would give us both increased contribution margin as well as increased costs, we'll guide you to that as we get closer. But we thought the more prudent, simple thing to do at this point is to give you the status quo, and then as we have more going on, we'll increase both sides from there.

Got it. And then it was widely reported, I guess in the rags, that you tried to adjust artist terms for festivals and were met with pushback. Can you talk about what happened there and what was the outcome? And as you contract for 21 shows, have you been able to share your risk with artists at all? And how have contracts been structured differently for 21 shows and maybe going forward from there?

Sorry, Brandon. Sorry, Brandon. I had to pick up my mic. Yeah, the press got a hold of kind of a work in progress, which was too bad because it wasn't meant to be that. We, for a living, are negotiating deals with agents and managers. That's the business model. Their job is to look for competition, and our job is to bid on these shows and different terms for different artists in different times. So the process is always fluid. We're obviously trying to do our side of the negotiation and the agents doing their side. This looked, I guess, as it got reported, it was just a mid-statement. It wasn't meant to be anything more than that. But what we really wanted to accomplish is 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 artists all have been very cooperative that understand that if you had a show this year and you wanted to reschedule next year, some compromise in 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 we've seen, have been surprisingly really strong 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 cash outlet, but it's also just a bigger time commitment. They don't tend to be as local as your average concert. So we wanted to make sure going into 21, if you were a headline artist that was going to play a certain festival this year and you still wanted to play it next year, The two things we wanted 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 drama from the press leak aside. Those are the two things we wanted to make sure, that we weren't stuck paying the same price in 20 if we had a 31% refund rate on a festival. Now, if those tickets all sold back through, and that festival ended up at the same place it was in 20, then we should all share the upside. And every agent and artist and manager have been incredibly accommodating to all the promoters in the business who are all looking for some help in terms of rescheduling next year's shows and taking in refunded insurance and making sure we are clear on those two terms. So that was the net result of it all. The rest was a wish list of things as we head into any negotiation. We'd all like to win, but those are the two points that made sense that were most important for our business and for the festival P&Ls.

What about for shows that are in 21 that were not pushed from 2020? Are those contracts being structured differently than historical deals?

Well, I would say that what the industry did in general, overall, is every show you basically had, you had the chance to cancel it, right? Every show basically was canceled in some sense, not to our doing. So everyone was in the same boat. 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 and the artist decided to pull it down and not go forward with it, regardless of COVID. So any tour that you rescheduled you have the opportunity to look at that deal and at that show and at the number of dates, et cetera, and negotiate with the agent and manager and the artist on what was the best go forward strategy. So anything, you know, we talk about 2021 is going to be a spectacular year in the sense of the stuff that did get pushed. You can guarantee was all of the stuff that was selling well and high demand. So that stuff is all going to those shows will still be continuing next year. We didn't have anything really on sale for 21 ahead of our 20 season of any substance. 95% of what we were dealing with was 2020 reschedule to 21 shows. Got it. Thank you.

Your next question is from David Karnofsky with J.P. Morgan.

Hi, thank you. When you look at planning the 2021 concert season, can you talk about how it might look coming back in terms of venues? Joe mentioned before focused on maybe the amphitheater footprint initially. So how much can you lean into your amps? And you know, can you book artists there that might have otherwise played, you know, an arena or stadium?

I'll start and then Joe will jump in. I mean, first, you think about our business, it's 50% international 50% America. A lot of what we're doing is what we're going to happen outside of America versus here. The summer season in international is the heartbeat of their business, festivals, from small outdoor shows to larger festivals. Europe will 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 boutique festivals. So, yes, we would be looking right now, I think, at the business as a strong amphitheater festival, outdoor business in Europe and into America, and then most of your touring indoor stuff will start to ramp up in the fall into winter.

Yeah, I agree. The only thing I'd add is I think this is – This is a place where 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 them. And then even the 100-plus clubs and theaters we have, as one would expect that some of the the lower volume of number of people gathering will happen sooner than some of the large gathering indoor because we have those buildings, because we can manage the processes with them. I think that'll let us ramp up faster than otherwise would be able to.

Okay. And then I think earlier you did mention some international regions and concerts being done at limited capacity. I mean, are there other countries or markets where you operate where you think you can get to some level of scale prior to summer 2021 at this point?

Yeah, I mean, we're definitely, we all see that news. The US looks like the one that will be the longest, but the other markets, whether it's Australia, New Zealand, Denmark, Germany, Finland, some of those markets, they all seem to be moving along on 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, operating in 40 different countries, expect certain markets, especially from theater up into clubs and into arenas, to be happening in some of those markets before the spring. Okay, thank you.

Your next question is from Ben Swinburne with Morgan Stanley.

Hi, good evening or good afternoon. Michael, can you talk a little bit more about artists' appetite to get back on the road in this environment? I know a lot are either postponing releasing new music, or at least some have. Others, I'm sure, are trying to be sensitive to the economic pressures that their fans are seeing. What are you hearing from artists that you have relationships 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. I think there have been some who have decided to cancel in order to help their fans get their money back faster. I didn't know if that was something you thought would grow as the year progressed. And then I just had a follow-up on the deferred revenue point.

Yeah, I think it was our last earnings call We were kind of showing you some statistics to make sure that everyone understood that touring had not had a structural change. There was a debate back then whether fans would gather when they got out of this. I think if anything, we learned in three months, we've got to figure out how they don't gather short term so we can't have a better business faster. So I would just say to you that we have been really, really, you know, we're going to play long on this one. So we have artists. with lots of ideas on shows they could do now. We won't be doing DJ sets in the Hamptons anytime soon. We're going to play long and play safe. So the artists, you nailed it. I was talking to an artist this morning. I think as you've read elsewhere, I think you're going to see a creative boom. I saw the record labels this week also down slightly because they need new releases and touring to happen soon. to keep the machine moving. So, yeah, I think 21, you have artists that are all just keep calling me daily saying, when can I go? When's it going to be safe? When are we going to go? I'm dying to go. I've got new music. I want to drop music. So I think this is why we believe long-term, regardless of what quarter we exactly scale at, the business will be stronger than ever with the creative push by all these artists who need to get on the road to drive their new music. So 21, 22, you know, we can debate what quarter exactly ramps, but we believe 21 into 22 will be record years with artists on the road who are pent up. They need to get on the road economically, and they're now powered by creative backlog, and they're all waiting. I talked to an artist this morning. They were going to release in November. They're going to wait until March now so they can coincide with a tour schedule later in the year in 21. So huge, huge demand. We are very gifted in this industry and that we have an incredible supply chain of ongoing creative geniuses who 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 it safely. As far as canceling and postponing, one of the things we decided really early on was to make sure that we offered refunds on postponed events also. We didn't want deferred revenue to have any false narrative to it. We are leading the industry. There are many companies that are not giving refunds, I think even ones that got government money. But we believe that you need to offer the fans refunds for postponed and canceled shows, and we've done that. So we believe our actual number, when we talk about fans holding on, it's 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 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 manner on our business because we're offering both options. And if you see an artist that canceled versus postponed, it wouldn't be because he wants his fan to get money back. We've offered both those options for any tour we have. It may just be an artist that was going to go on the road probably an older artist that is looking at it saying, maybe I'm not going to run back and try to figure out if 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 wait. If you're a younger artist tied to more record releases, you're probably really still waiting and ready to go up probably a little earlier given your demo.

Got it. That's helpful. And then just on the deferred revenue, thank you for all the detail. I may be confused. Deferred revenue for events, I think at the end of the quarter, was about $940 million. And I think you said you thought it would be $1.3 billion at the end of the year, which obviously is a higher number, which is sort of counterintuitive given there is some refund activity expected. And I think, Jill, you said that did not include any benefit from on-sales. So what's the reconciling item, or did I just maybe mishear you?

Yep. So you heard the numbers right, Ben. Two things. One is we, as part of that $941 million, that includes $180 million of what we've modeled out as additional refunds that we expect to happen. Because we were able to model it, we needed to shift that out of deferred revenue. So if our model were perfect, then... that would have already been taken out. And the second 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 has 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 of deferred long-term deferred revenue that will flip into deferred revenue over the next six months. So your $900,000 plus $400,000 equals the $1.3 billion. Rough numbers.

We'll all be experts on this by the end of the year, hopefully.

Thanks for your help. And then we'll start selling more tickets to confuse your deferred. So we look forward to that, Dave. Thanks.

And as a reminder, ladies and gentlemen, if you would like to ask a question at this time, simply press star, then the number one on your telephone keypad. Again, that is star one if you would like to ask a question at this time. And you do have a question in queue. Quo Nong 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 there's a lot of distress out there so i i want to be sensitive and cognizant of um with 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 we mentioned it last time um you know i think we we look on a global basis as we continue to look to build our global market share

And we believe that over the next 24 months, there'll be ongoing opportunities for us to expand our global footprint in foreign and international markets that we've been looking to get into and build some businesses around. So, yes, we do think that over time, this will provide us some opportunity in international markets.

Understood. And if I can just pivot a little bit towards your cost cuts, you've clearly made a lot of progress. I believe the numbers were around 500 million pre 1Q and then 1Q was about 600. Now you're at 800 million. I'm just wondering of that 800 million, how much of that you think is more structural, more permanent going forward?

Yeah, I don't think we're going to give you an exact number, but there is no question that as we've been going through this process, we've been looking at our fundamental cost structure. And we do expect that we will come out of this with some different organizational structures, a bit leaner, a bit tighter in terms of how we do some things. So we will have some savings. How much of that, right? You expect to see more of that in 2021 as a year that you're ramping back up and then As you're continuing to grow, getting into 2022 and beyond, you're then reinvesting some portion of that. But over the next quarter or two, we'll give more definitive numbers on that.

Understood. Thanks very much.

But to give you color, I would add, the only gift to when you slow down to this level that you have not had since we launched this company 15 years ago is you build up your own bureaucracy and your own rust 15 years in, and we haven't had the a luxury or 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 with, and how are we going to operate more efficiently on a global basis. So I would say the part that does motivate me daily is Joe and I and our teams 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 different. Which obviously will add efficiencies to our ongoing cost structure as well.

Your final question comes from Stephen Glegola with Cowan.

Hi. If we look at the phased reopenings across the US and internationally, concerts that are still being put on in various international countries and cities for the most part are at pretty reduced capacities. what gives you confidence that the governments will allow live events to return to scale in the summer of 21? And can you maybe define like when you say back to scale, is that 75% capacity, you know, 50% capacity in your amps and festivals or, or full capacity, if that's the expectation, that would be great. And then, you know, you talked on the press release, like the potential revenue opportunity, you know, or, or, or sorry, streaming, excuse me, as being an additional long-term component of the concert business. Could you maybe speak to that as a potential, you know, additional revenue opportunity and, you know, any other adjacent products or services that you guys may be able to offer during this difficult time to bring in some incremental revenue? Thanks.

All right. Go ahead.

I'll start on streaming and then work backwards. Yeah, I think we have a natural advantage in the streaming business in the sense we have studios called these events and 300 festivals and 10,000 theater and club shows alone. We've been very great at the physical execution, but they do provide incredible digital opportunities that we haven't focused enough on. So I think we're We're deep at work in our BizDev department, and I think you'll see some new products from us in the new year that we think are compliments to our core business, but great additions. We also have such a huge sponsorship base. When you have 900 sponsors, adding live from home this year alone has been a big part of helping deliver some benchmarks as well as drive-in concerts and Some of 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 going to see us launch some new products that we think will be a great complement to our core business. As far as the confidence on getting back to business, Joe, you and I were just discussing that so you could take the lead.

Sure. So first of all, to answer your question on what do we mean by scale, To us, scale our normal business model in the summer, we'd be doing several thousand concerts a quarter for tens of millions of fans. So we're not going to try to predict right now the exactness. Is it 70%? Is it 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? A couple of things. First of all, I think the efforts on the vaccine front are moving faster than anybody predicted three or four months ago. If you listen to the experts, the Dr. Fauci's of 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 in terms of the basic treatment, in terms of perhaps the potential of antibody treatments, the use of other drugs, the remdesivir and others, in terms of helping to reduce the mortality rate of it. Overall, in terms of, as we've talked, we're going to let the facts and the science lead us. We've been pleasantly surprised thus far on the progress of vaccines. Probably some of the testing and tracing has been slower, but still now is ramping up. So between the testing, the tracing, the treatment, also providing opportunities. So amongst those, I think we believe sitting here today that the facts would say that by the beginning of the year, you're able to put on the tickets safely. The tickets on sale with Comfort, you're going to be able to do the shows next summer. And then for the reasons that we've talked about, we have a high degree of Comfort that demands going to be there. Eighty-six percent of the people keeping their tickets to the shows. Two-thirds of the people keeping their tickets for festivals that were canceled this year. How about canceled, but still saying they want to go to the show next year instead of getting their refund. So in total, over 19 million tickets canceled. for 4,000 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.

Thanks, Joe and Michael. And pardon the long-winded questions, but if I can just slip one more in. Can you just discuss the viability of independent venue owners in this environment? If venues do close down or go bankrupt, how do you anticipate that impacting the live music and concerts business and also Ticketmaster as things reopen?

Yeah, I would just say to you on the Ticketmaster Front, it's a global business with a very, very diverse portfolio, less on the small venue side on a macro level. So it would have limited effect there. Ticketmaster at the end of the day has a very large sports business on a global basis in big venues, 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 it looks like in most of the countries, maybe the U.S. now, there's ongoing stimulus programs in effect that seem to be coming to life for the live business in general, whether it's the employees, whether it's the venues, small or big. So I would assume some of them will have continued ongoing support through government programs to keep them afloat. through this time. I mean, listen, we're all in the same boat. We're all looking to figure out how to get through the downtime and reduce costs. And I think they're bandied together, and hopefully they'll find their support systems also.

Okay. Thank you very much.

There are no further questions in the queue at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.