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Live Nation Buys Stake in Red Mountain to Improve Concerts

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Live Nation Entertainment, Inc. (LYV - Free Report) announced its procurement of a majority stake in Red Mountain Entertainment. Live Nation, being the world’s leading live entertainment company, plans to incorporate Red Mountain's market expertise, as the latter happens to be one of the pre-eminent regional concert and festival promoters in the United States.

Under the terms of the acquisition, the Red Mountain team will operate from Birmingham, AL and continue to supervise all operations starting from concert and festival promotions to venue consulting. While working with Live Nation, Red Mountain will also be dynamically involved in organizing music festivals throughout the Southeast.

Increased Focus on Concert & Ticketing Business

Teaming up with Red Mountain, Live Nation is primarily trying to strengthen its hold in the U.S. concert business. Moreover, the move is perfectly in line with Live Nation’s strategy for capturing more value for artists. Red Mountain is known for promoting shows for leading artists including The Rolling Stones, Pink Floyd, Jimmy Buffett and more. Live Nation believes that if it is able to deliver a greater market value to artists through the right strategies, the average ticket price will increase, thereby benefitting the company’s ticketing business as well.

Rationale Behind the Move

Notably, in the last reported quarter, Live Nation’s concert business grew 20% year over year through efficient promotions. The company managed to promote 22% more shows for 15% more fans globally in the first quarter. For the full year of 2018, the company already booked 5,000 arena, stadium and amphitheater shows, reflecting 21% growth from 2017.

Meanwhile, Red Mountain is proficient in its amphitheater business, which can further promote Live Nation’s strategies. The procurement, as we believe, shall help the company to rake in profits for concerts from an already flourishing market. Moreover, it would improve ticket-booking experience and shall continue driving revenues, going forward.

As it is, Live Nation registered its seventh consecutive year of record results in 2017 with revenue growth across all segments. In fact, driven by a robust brand portfolio, Live Nation’s shares have rallied 35.7% in the past year, outperforming the broader industry’s growth of 0.5%.

Zacks Rank & Stocks to Consider

Live Nation currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the leisure space include Lindblad Expeditions (LIND - Free Report) , Town Sports International Holdings, Inc. (CLUB - Free Report) and RCI Hospitality (RICK - Free Report) . While Lindblad and Town Sports flaunt a Zacks Rank #1 (Strong Buy), RCI Hospitality carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lindblad, Town Sports International and RCI’s earnings for 2018 are expected to grow 155.6%, 211.8% and 52.5%, respectively.

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