What changed in this filing

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Item 1A. Risk Factors

2022-02-23 compared with 2021-03-01 · 64 added, 51 removed, 407 unchanged (22% of the section changed)

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Risks Relating to the COVID-19 Pandemic

The global COVID-19 pandemic has had, and is likely to continue to have, a material negative impact on our business and operating results.

The global COVID-19 pandemic has had, and may continue to have, a material negative impact on our business and operating results.

The ultimate magnitude of this impact will depend on a variety of factors, including the duration of the pandemic, restrictions or new operational requirements in place or that result as our operations recommence on a jurisdiction by jurisdiction basis, the state of the global economy as a result of the pandemic, and the public’s willingness to attend events with large numbers of people, all of which are unknowable at this time.

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Each of our segments—Concerts, Ticketing and Sponsorship & Advertising—depends on live music and sporting events in order to generate most of its revenue.

As of the date of this report, certain sports leagues have recommenced, but they have largely done so without fans or at greatly reduced capacity, and thus without the typical need for ticketing.

There has also been extremely limited concert activity, largely outside of the United States, at reduced capacity.

Until such time as fans are allowed at sporting events at capacity and concerts recommence in a meaningful way, our revenue will be minimal;

While most sports leagues have recommenced, some have done so at reduced capacity, and thus without the typical need for ticketing.

Similarly, concerts have resumed on a jurisdiction by jurisdiction basis, often at reduced capacity and with the potential for cancellations and rescheduled events.

Our revenue will continue to be negatively impacted until such time as concerts and sporting events resume full activity levels at full capacity on a global basis;

the possibility exists that these circumstances might continue for a longer period of time than current expectations.

We have never previously experienced a complete cessation of our live music operations, and as a result, our ability to gauge the impact of such a cessation on our company and its future prospects is uncertain.

Due to the unprecedented nature of the global COVID-19 pandemic and its impacts on our business, our ability to forecast our cash inflows is hampered, and therefore our focus is on forecasting and managing operating costs and cash outflows against our overall liquidity position.

At this time, it is impossible to know or predict when events will once again be held at a meaningful scope and scale, as at the outset of the pandemic national and local governments around the world placed various restrictions on gatherings of people and implemented social distancing requirements that prohibit the holding of these events, and have largely not relaxed these restrictions in a way that would again allow such events.

In addition, it is currently unclear as to what restrictions will be placed on events once they recommence at various points in time in the 46 countries in which we operate.

The company faces ancillary risks and uncertainties arising from the global COVID-19 pandemic in addition to the current shutdown of its revenue-generating operations.

Due to the unprecedented nature of the global COVID-19 pandemic, particularly the non-linear recovery due in part to surges of the virus and its variants that in some instances has halted or reversed the lessening of restrictions on activities and the return to pre-pandemic life, our ability to forecast our cash inflows is hampered, and therefore our focus is on forecasting and managing operating costs and cash outflows against our overall liquidity position.

At this time, it is impossible to know or predict whether the positive steps we saw toward returning to pre-pandemic event levels in various global jurisdictions in 2021 will continue or be hampered by additional waves of the virus, potentially causing national and local governments around the world to once again place or retain various restrictions on gatherings of people that prohibit or greatly impair the ability to hold concert and sporting events.

This uncertainty exists on a jurisdiction by jurisdiction basis in the in the 45 countries in which we operate.

We face ancillary risks and uncertainties arising from the global COVID-19 pandemic in addition to any partial or complete shutdown of its revenue-generating operations.

Many of these risks and uncertainties are more fully described below in this Item 1A.

whether or not such risk factors identify the global COVID-19 pandemic as the underlying cause, and many extend beyond the duration of the current shutdown due to the uncertainty as to how the live music and sporting industries, and the world in general, will change in the short and long term as a result of the pandemic.

whether or not such risk factors identify the global COVID-19 pandemic as the underlying cause, and many extend beyond the initial impact of the pandemic on our business due to the uncertainty as to how the live music and sporting industries, and the world in general, will change in the short and long term as a result of the pandemic.

The risks and uncertainties described herein should be read in conjunction with those set forth below.

Such additional or attendant risks and uncertainties include, among other things:

• the impact of any lingering economic downturn or recession resulting from the pandemic, including without limitation any reduction in discretionary spending or confidence for both consumers and sponsors/advertisers, such as a decline in ticket sales, attendance and revenue that the company has generally avoided in prior economic slowdowns but experienced during and after the global financial crisis in 2010;

• the increased risk of litigation in the current and future environment, such as pending lawsuits challenging aspects of the company’s ticket refund policies and procedures;

• a reduction in the profitability of our operations when concerts resume, whether due to increased operating costs of complying with governmental restrictions or safety precautions and protocols voluntarily undertaken, such as the need to supply personal protective equipment or conduct health screenings at points of ingress, or due to a reduction in revenue arising from such precautions, such as the potential that venues may not be able to be filled to capacity due to spacing and social distancing limitations in place at such time;

• the impact on our workforce, including as a result of employee furloughs as part of our cost-savings initiatives, which may include loss of key personnel as furloughed employees find other employment or choose not to return to the company, lowered employee morale, inability to replace hourly/seasonal workforce, or loss of important subcontractors, all of which may negatively impact our ability to quickly capitalize on opportunities as pandemic restrictions are eased or to conduct our operations in the future;

• The impact of tightening labor markets across the globe with unemployment rates dropping, resignations reaching record highs, and upward pressure on salaries and wages due to inflation and demand for skilled workers in numerous fields;

combined with, continuing supply chain issues could impact our ability to produce tours and festivals as well as open and maintain venues without timing and cost disruptions;

• the increased risk of litigation in the current and future environment, such as pending lawsuits challenging aspects of our ticket refund policies and procedures;

• a reduction in the profitability of our operations, whether due to increased operating costs of complying with governmental restrictions or safety precautions and protocols voluntarily undertaken, such as the need to supply personal protective equipment or conduct health screenings at points of ingress, or due to a reduction in revenue arising from such precautions, such as the potential that venues may not be able to be filled to capacity due to spacing and social distancing limitations in place at such time;

• potential decreased willingness of artists to tour, or impracticability of touring due to varying restrictions from jurisdiction to jurisdiction, including the possibility that national or sub-national borders are closed to travel;

• potential changes to consumer preferences for consumption of live music or sporting events due to fears of, or restrictions on, large gatherings;

• some customers of our ticketing business may not receive refunds for ticket purchases if the venue/client hosting the impacted event is unable or unwilling to return the funds;

• loss of ticketing clients due to the economic impacts of the pandemic whereby they are no longer in operation, reducing the number of events to which our ticketing business can sell tickets;

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• the incurrence of additional expenses related to compliance, precautions and management of our company during and after this period.

The likelihood of the realization or intensification of these risks and uncertainties and the ultimate magnitude of their impact on the company are not knowable or quantifiable at this time.

The global COVID-19 pandemic and its impacts may continue to endure for an unknown period of time.

In addition, as has already occurred in various locations, the potential exists for further waves of the pandemic after the current wave of infections subsides, which may lead to stronger restrictions being put into place for a greater duration of time.

Different jurisdictions will lift social distancing guidelines and restrictions on gatherings of people at different times, and will have different rules in place thereafter.

The longer the duration of the global COVID-19 pandemic, and the greater the ancillary and lingering effects, the greater the material negative impact on the company and its results of operations will be.

While vaccination programs have begun around the world, we are still at the early stages and the ultimate impact of such programs on the pandemic and its duration, and thus on our business, are unknown.

In addition, due to the reduction in cash flows we have experienced and are likely to experience in the future from the global COVID-19 pandemic, we have proactively taken a number of steps to enhance our liquidity position, including our cost-savings and cash management programs described in Item 8.—Financial Statements—Note 2—Impact of the Global COVID-19 Pandemic, the additional debt issuances and the amendments we made to our senior secured credit facility described in Item 8.—Financial Statements—Note 5—Long-Term Debt.

The likelihood of the realization or intensification of these risks and uncertainties and the ultimate magnitude of their impact on us are not knowable or quantifiable at this time, as the global COVID-19 pandemic and its impacts may continue for an unknown period of time.

Thus far, there have been several waves—periods where infection rates subside followed by spikes due to variants of the virus or other factors—of the pandemic, which may lead to stronger restrictions being put into place for a greater duration of time.

Different jurisdictions have and will continue to lift social distancing guidelines and restrictions on gatherings of people at different times, will have varied rules in place thereafter and will respond to any future waves of the virus in different ways.

The longer the duration of the global COVID-19 pandemic, and the greater the ancillary and lingering effects, the greater the material negative impact on the Company and its results of operations may be.

While vaccination programs are now in place, the changing and evolving nature of the COVID-19 virus presents challenges to such programs, making the future course and duration of the pandemic uncertain, which impacts our business in a manner that is unknowable at this time.

Our decreased cash flows have heightened and intensified the risks described under the “Risks Relating to Our Leverage” section of the risk factors in this report.

While amendments to our senior secured credit facility have relieved some of the pressure on the consolidated net leverage covenant therein, which requires us to maintain a ratio of consolidated total net debt to consolidated EBITDA (both as defined in the credit agreement), there can be no assurances that we will remain in compliance with this or other covenants in our debt and credit instruments, or that we would be able to obtain waivers or amendments in order to avoid default.

There can be no assurances that we will remain in compliance with the covenants in our debt and credit instruments, or that we would be able to obtain waivers or amendments in order to avoid default.

We will continue to evaluate and explore additional mechanisms to attempt to ensure that we have adequate capital to fund our business, including through the issuance and sale of additional debt or equity securities.

The terms of future debt agreements could include more restrictive covenants, or require incremental collateral, which may further restrict our business operations or be unavailable due to our covenant restrictions then in effect.

Due to potential liquidity concerns caused by the global COVID-19 pandemic, in March and August 2020, Moody’s downgraded our Corporate Family Ratings and in May 2020, S&P downgraded the company’s credit ratings to B+ with a negative outlook;

the likelihood that we may experience further negative credit actions increases the longer the duration of the pandemic and its ancillary effects.

In 2020, Moody’s and S&P downgraded the Company’s credit ratings and applied negative outlooks to our business.

In 2021, Moody’s and S&P both revised their outlooks from negative to stable, and in January 2022, S&P further improved their outlook to positive.

We may experience negative credit actions if the pandemic and its ancillary effects persist.

There is no guarantee that debt financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations.

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Accordingly, our ticketing business’ success depends, in part, upon the ability of these third parties to correctly anticipate public demand for particular events, as well as the availability of popular artists, entertainers and teams.

In addition, our live entertainment business typically books our live music tours two to nine months in advance of the beginning of the tour and often agrees to pay an artist a fixed guaranteed amount prior to our receiving any revenue.

In addition, our live entertainment business typically books our live music tours four to eight months in advance of the beginning of the tour and often agrees to pay an artist a fixed guaranteed amount prior to our receiving any revenue.

Therefore, if the public is not receptive to the tour, or we or an artist cancel the tour, we may incur a loss for the tour depending on the amount of the fixed guarantee or incurred costs relative to any revenue earned, as well as revenue we could have earned at booked venues.

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and a requirement to make certain clear and conspicuous disclosures and in certain instances disclose when a ticket being offered for resale is not “in-hand” as well as a requirement to monitor and enforce the compliance of third parties offering tickets on our websites with such disclosure requirements.

There are certain state laws that now ban such ticket listings, and the New York Attorney General has brought a lawsuit against resale companies for these practices.

There are certain state laws that now ban such ticket listings, and the New York Attorney General has in the past brought lawsuits against resale companies for these practices.

Other variables related to the competitive environment that could adversely affect our financial performance by, among other things, leading to decreases in overall revenue, the number of sponsors, event attendance, ticket prices and fees or profit margins include:

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While we maintain insurance policies that provide coverage within limits that are sufficient, in management’s judgment, to protect us from material financial loss for personal injuries sustained by persons at our venues or events or accidents in the ordinary course of business, there can be no assurance that such insurance will be adequate at all times and in all circumstances.

On November 5, 2021, the Astroworld music festival was held in Houston, Texas.

During the course of the festival, ten members of the audience sustained fatal injuries and others suffered non-fatal injuries.

Following these events, hundreds of civil lawsuits have been filed against Live Nation Entertainment, Inc.

and related entities, asserting insufficient crowd control and other theories, seeking compensatory and punitive damages.

These events are the subject of an ongoing investigation by local authorities in Harris County, Texas, and are the subject of an inquiry we received from the House of Representatives Committee on Oversight and Reform.

We may incur material liabilities from the 2021 Astroworld event, for which it is currently expected liability insurance can provide sufficient coverage, but at this time there are no assurances of such coverage.

In addition, this could negatively impact our business, including our ability to obtain reasonably priced insurance coverage for future events, costs of operating security at events and other cost and commercial ramifications.

These effects could have a material impact on our business, financial condition, results of operations and/or cash flows.

Poor weather adversely affects attendance at our live music events, which could negatively impact our financial performance from period to period.

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In particular, hardware, software or applications we develop or procure from third parties may contain defects in design or manufacture and/or may pose a security risk that could unexpectedly compromise information security.

For example, in the second quarter of 2018, we became aware that a third-party customer support product, used in certain jurisdictions outside the U.S., was infected with a malicious code that may have allowed an unauthorized party to skim customers’ personal or payment information from their browsers.

For example, in the second quarter of 2018, we became aware that a third-party customer support product, used in certain jurisdictions outside the United States, was infected with a malicious code that may have allowed an unauthorized party to skim customers’ personal or payment information from their browsers.

While we acted promptly to disable the infected third-party product, we continue to review our systems and interface with regulatory authorities as a result of this incident.

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In addition, following the withdrawal of the United Kingdom from the E.U.

on December 31, 2020, we must separately comply with the U.K.’s data protection law, under which additional fines and penalties could be imposed independent of the GDPR.

on December 31, 2020, we were required to separately comply with the U.K.’s data protection law, under which additional fines and penalties could be imposed independent of the GDPR.

In the United States, several new comprehensive privacy laws, including in California, Virginia and Colorado, which go into effect in 2023, will require us to update our policies and procedures to continue to protect data as required under those laws.

The relationship between U.K.

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will be treated.

These changes could lead to additional compliance costs and could increase our overall risk.

The changes in the E.U.,U.K.

and the United States.

could lead to additional compliance costs and could increase our overall risk.

As we expand our operations into new jurisdictions, the costs associated with compliance with applicable local data privacy laws and regulations increases.

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multinationals will often have two regulators;

activities and one for the rest of the E.U.27 where cross-border processing takes place.

Live Nation is currently re-assessing its lead authority based on its cross-border processing, so it continues to have a main point of contact for the E.U.

activities and one for the rest of the E.U.

where cross-border processing takes place.

Live Nation has been assigned a new lead authority based on its cross-border processing, so it continues to have a main point of contact for the E.U.

In addition, the U.K.

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The GDPR principle that data cannot leave the E.U.

in this case) now applies.

While a four to six month grace period is currently in effect, following this, there are two possible scenarios:

is granted adequacy by the E.U., allowing data to continue to flow to the U.K.

or (2) adequacy is not granted, in which case additional safeguards, such as contractual commitments would need to be implemented for E.U.-U.K.

Live Nation has already documented data flows to identified where U.K.

flows occur and have contractual templates prepared should scenario two materialize.

Live Nation as a tour sponsor will continue to use Tier 5 routes into the U.K.

in this case) now applies, however the U.K.

has been granted adequacy by the E.U., allowing data to continue to flow to the U.K.

Live Nation has already documented data flows to identify where U.K.

flows occur and have contractual templates prepared.

We are in the process of reviewing the U.K.’s International Data Transfer Agreement laid out before the U.K.

and will monitor whether the U.K.

will implement an adequacy system, as proposed by the U.K.

government’s data reform package, so we are prepared to comply with any transfer limitation obligations under the U.K.

Live Nation as a tour sponsor will continue to use temporary worker routes into the U.K.

now including E.U.

musicians and crew on the sponsor’s license.

and European Economic Area musicians and crew on the sponsor’s license.

For tours in Europe, U.K.

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member states and bilateral agreements reached with the U.K.

In many member states the working arrangements will be the same or similar, such as in France and Germany.

In the majority of member states the working arrangements will be similar, such as in France and Germany.

In others, there may be new requirements for the sponsor.

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• licensing, permitting and zoning, including noise ordinances;

• human health, safety and sanitation requirements;

• human health, safety, security and sanitation requirements;

• the service of food and alcoholic beverages;

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From time to time, other states, Canadian provinces and the federal government have commenced investigations or inquiries related to other aspects of our ticketing business, including a now-settled suit brought by the Canadian Competition Bureau relating to alleged deceptive marketing practices.

In addition, we recently agreed with the United States Department of Justice to extend the duration of the consent decree we entered into in connection with our merger with Ticketmaster Entertainment LLC, which places certain restraints on our business (see the risk factor entitled “We recently agreed with the United States Department of Justice to extend and clarify the court-imposed final judgment to which we became subject in connection with the merger of Live Nation, Inc.

In addition, in January 2020, we agreed with the United States Department of Justice to extend the duration of the consent decree we entered into in connection with our merger with Ticketmaster Entertainment LLC, which places certain restraints on our business (see the risk factor entitled “We recently agreed with the United States Department of Justice to extend and clarify the court-imposed final judgment to which we became subject in connection with the merger of Live Nation, Inc.

and Ticketmaster Entertainment LLC, which places certain restrictions and obligations on us which could negatively impact our business” below).

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Even if we adequately address the issues raised by an investigation or proceeding or successfully defend a third-party lawsuit or counterclaim, we may have to devote significant financial and management resources to address these issues, which could harm our business, financial condition and results of operations.

In January 2020, we agreed with the United States Department of Justice to extend and clarify the court-imposed final judgment to which we became subject in connection with the merger of Live Nation, Inc.

In December 2019, we agreed with the United States Department of Justice to extend and clarify the court-imposed final judgment to which we became subject in connection with the merger of Live Nation, Inc.

and Ticketmaster Entertainment LLC, which places certain restrictions and obligations on us which could negatively impact our business.

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To service our debt and lease obligations and to fund potential acquisitions, artist and ticketing advances and capital expenditures, we will require a significant amount of cash, which depends on many factors beyond our control.

As of December 31, 2020, $53.4 million of our total indebtedness (excluding interest and unamortized debt discount and debt issuance costs) is due in 2021, $612.5 million is due in the aggregate in 2022 and 2023, $1.0 billion is due in the aggregate in 2024 and 2025 and $3.3 billion is due thereafter.

In addition, as of December 31, 2020, we had $2.4 billion in operating lease liabilities, of which $192.4 million is due in 2021 and $196.0 million is due in 2022.

All long-term debt without a stated maturity date is considered current and is reflected here as due in 2021.

See the table in Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments—Firm Commitments.

Our ability to service our debt and lease obligations and to fund potential acquisitions, artist and ticketing advances and capital expenditures will require a significant amount of cash, which depends on many factors beyond our control.

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Any such defaults could materially harm our financial condition and liquidity.

See Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments—Firm Commitments for further discussion.

We depend on the cash flows of our subsidiaries in order to satisfy our obligations.

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In addition, the ability of our subsidiaries to provide funds to us may be subject to restrictions under our senior secured credit facility and may be subject to the terms of such subsidiaries’ future indebtedness, as well as the availability of sufficient surplus funds under applicable law.

Conversion of our convertible notes may dilute the ownership interest of existing stockholders and may affect our per share results and the trading price of our common stock.

The issuance of shares of our common stock upon conversion of our convertible notes may dilute the ownership interests of existing stockholders.

Issuances of stock on conversion may also affect our per share results of operations.

Any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

General Risks Relating to our Business and Operations

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In addition, the seasonality of our businesses could create cash flow management risks if we do not adequately anticipate and plan for periods of decreased activity, which could negatively impact our ability to execute on our strategy, which in turn could harm our results of operations.

Due to the unprecedented stoppage of our concert events globally in mid-March due to the global COVID-19 pandemic, we did not experience our typical seasonality trends in 2020.

Due to the unprecedented stoppage of our concert events globally in mid-March 2020 due to the global COVID-19 pandemic, we did not experience our typical seasonality trends in 2020 and 2021 even with the resumption of events late in the second quarter of 2021.

The following table sets forth our operating income (loss) for the last eight fiscal quarters (in thousands):

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We currently secure insurance programs to address our various risks with terms, conditions and costs that are appropriate for our business.

However, heightened concerns and challenges regarding property, casualty, business interruption, contingency and other insurance coverage have resulted from terrorist and related security incidents along with varying weather-related conditions, pandemics and other incidents.

However, heightened concerns and challenges regarding property, casualty, business interruption, contingency and other insurance coverage have resulted from terrorist and other security incidents along with varying weather-related conditions, pandemics and other incidents.

Any such events that are of a massive scale causing significant losses to insurance providers could negatively impact the insurance marketplace, and as a result, we may experience increased difficulty obtaining sufficiently high policy limits of coverage at a cost we believe to be reasonable, including coverage for acts of terrorism, cyber attacks, weather-related damage and disruptions and other perils associated with our operations, including communicable diseases and/or pandemics.

We have experienced a significant increase in our cost to obtain appropriate insurance over the past several years, though it is difficult to gauge the portion of this increase that is due to conditions in the insurance marketplace generally versus that attributable to our claims history for the mass casualty, cybersecurity, the global COVID-19 pandemic and other incidents we have faced.

We have a material investment in property and equipment at each of our venues, which are generally located near major cities and which hold events typically attended by a large number of fans.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors