What happened
Shares of Live Nation Entertainment (LYV 1.51%) rose 14% in June, according to data from S&P Global Market Intelligence. The ticket seller and events promoter outperformed the broader stock market, as the S&P 500 gained 6.5% over the same period.
So what
The Ticketmaster parent's June gains hinged around one event. On June 15, at a visit to the White House, Live Nation said it would start selling tickets under an "all-in pricing" policy, where the promoted price includes all fees and taxes up front. Sector rivals such as SeatGeek and TickPick joined the all-in pricing drive. However, the ticket-selling industry did not quite go all-in on the all-in pricing idea. StubHub refused to join the Greek chorus, and has criticized the industry's price-setting policy moves in the past.
Ticket prices for concerts, festivals, sporting events, and more are changing before our eyes. Ticket buyers and Live Nation investors alike widely welcomed the consumer-friendly all-in pricing idea. Share prices rose 4% that day, setting the stock chart's tone for the rest of June.
Now what
While the simpler pricing model is an improvement, it didn't come easy. Ticket buyers complained far and wide about the "dynamic pricing" system that drove stub prices sky-high for Taylor Swift's and Bruce Springsteen's 2023 tours. As a result, the Boss and Swift Act of 2023 is working its way through Congress, aiming to set firm legal limits for ticket prices, event marketing, and ticket resales.
So the government may eventually force Live Nation's hand into another round of buyer-friendly policy changes. The all-in pricing policy implements some of the proposed changes in that bill, but far from all of them. It looks like an attempted compromise that placates lawmakers and consumers without cutting too deep into Ticketmaster's top and bottom lines.
More restrictive pricing regulations would put a damper on a business model that already operates with skimpy profit margins. Live Nation's operating margin is back where it was before the COVID-19 shutdowns of 2020, but the company is only converting 4.5% of its revenue into operating profits. So it makes sense when management puts up a fight against proposed policy changes that could turn that razor-thin operating margin negative.
Live Nation investors should keep an eye on the Boss and Swift Act, also known as HR 3660 of the 118th legislative session. The outcome of this proposed bill may change the game for Live Nation and its ticket-selling subsidiaries.
