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Good afternoon everyone and welcome to our 2009 first quarter conference call. Our first quarter results were in line with our expectations on our key metrics that indicate that we are on track to deliver our 2009 plan. Our first quarter is historically the slowest period of the year but an important time as it provides a window into how the full year will end up.
(...) We have a very strong line up this year. U2's 360 Tour has generated incredible demand, selling 2.5 million tickets. Madonna's extended leg in Europe has been another sell out smash and artists such as Nickleback, AC/DC, Coldplay, Aerosmith, Jimmy Buffet and the Jonas Brothers are well on track to sell out some strong shows.
Q: Obviously some bands are selling well and some others, and always the case and you've obviously got a long history of knowing how different bands sell in different venues and get a sense of how to price them on the guarantee side as well. Are you seeing in any cases, do you have any flexibility in any cases with some tours that are simply not performing as you'd hoped? Do you have any kind of out or flexible clauses with artists on the guarantee to sort of the bang it down a little bit if certain thresholds aren't met?
Generally you have a contract with the band, you have a contract. But we both have the same motive. A band does not want to get on stage and have empty seats. So I would say to you that 99% of the time, if a tour goes on sale and it's not pacing well, you are sitting with the manager and agent coming up with creative ways to sell more tickets. Reduce the prices, do more promotion, excite the sale, and that end.
The good news is this. The reason we planned, and that's why I don't want any of the Q1 decline in North America to come across as consumer purchase behavior versus self implied. We knew that we had a really strong year in North America last year. We know that there's a certain amount of shows we need to fill the pipe, and then some of the shows above and beyond that are the gravy that help you deliver some higher profit or sometimes bring down your profit.
We went into 2009 with a very purposeful disciplined plan that said, let's not try to grow market share in North America this year. Let's go after the for sure bands, the for sure business. We'll leave a few bands on the table. We'll let Age's and others book a few that we might have historically chased harder.
So we purposely went out this year to say we'll fill the pipe to the level that we know we can drive our operating income. We will not go after all and every band. We'll reduce our risk and we'll go after the more for sure bands.
So we're sitting here right now and the good news I can tell, we're not sitting here right now with any tours or any shows of magnitude that are dogs, that are going to take a hit on our P&L in any big sense.
We've got a pretty solid line up of superstars and downward and we're happy with the level we have right now and we don't see any big losers this year that will impact our operating income.
Q: (...) Are you just selling the tickets a little earlier this year or are you just understating that you're going to have a strong summer.
A bit of both. I've kind of given you guidance which I don't typically do on where we think we'll end up on attendance by the end of the year. So you can look at our historic 52 million tickets last year or all in and figure out where we'll be.
We built a plan this year that said the economic crisis has to affect you somewhere. We know though that we had a super strong slate because of the stadiums and Madonna and U2 and our festival business is on fire in Europe which is a really early on sale. So we knew International was going to have a strong year, so we knew we could look for growth from international.
We knew North America we had a super year last year in our amphitheaters and we didn't want to chase that exact market share in some of those shows and get ourselves into any risky shows to try to match that exact number.
(...) So we're just looking at the strong on sales. There's a little bit of head room. In this business it's all about there's not bad bands, there's just bad deals. So when you have a strong solid plan, you don't have to then chase a lot of extra which sometimes can get you in trouble.
Q: As far as the disclosure on the Artist Nation, do you plan on doing some type of metrics and judge how the Artist Nation's doing in the future?
Absolutely we will. Probably towards the end of the year, Q3 or Q4 probably. I think once we have the entire Madonna tour cycle wrapped up, the U2 won't be wrapped by then but it will be in full motion. JZ will be in; hopefully Shakira will be staring to go out. So I think by the end of the year we'll be able to talk about how those bands did not only from a touring but a sponsorship, accessory sales and all of the pieces of how they all added up against our investment.
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