Activist Valueact Spots an overlooked Opportunity at Liberty Live Group. How the Move Might Pay Off

Business:Liberty Live Group is a tracking stock that represents liberty media group’s ownership stake in live nation entertainment. Live Nation Operates as a Live Entertainment Company Worldwide. It operates through the following segments “concerts, ticketing, and sponsorship & advertising. The concerts segment promotes live music events in its owned or operated venues, and in rented third-ed Venues Other websites, retail outlets and its primery websites: Livenation.com and TicketMaster.com. The sponsorship & advertising sels internal, national and locals, as wlling of Advertising and Promotional Programs.

Stock market value: ~ $ 7B ($ 75.85 per share)

Valueact Filed A 13D on Feb. 11, Reporting a 5.51% position in Liberty Live Group (Llyva).

Liberty Live (Llyva) is a tracking stock that represents Liberty Media Group’s 30% Ownership Stake In live nation (Lyv), a global live entertainment company. John Malone’s Liberty Media Group Has Historically Used Tracking Stocks as a Hug Part of the company’s toolbox to allow investors to have a more focused expenses Jump through the legal and tax hops of a spinoff. He used this in the past with the atlanta braaves and sirius xm, and he presently uses it with live nation and f1. Valueact has taken a 5.51% position in liberty live, but it also also owns a 0.44% stake in live nation, brings the firm’s effective ownership of live nation to approximate Shareholder.

There are two characteristics that are core to value investing philosophy and that permeate many of its investments: first, the firm likes companies are founds are found Misunderstood by the MARKET. Second, it’s a long-term investment that can tolerate short-term pain. Both of those aspects are present here. As an active shareholder of spotify, Valueact has Seen Allhand How the Music Industry has transformed over the last several years. It is much Easier today for a talented artist to build a global following through streaming services and the marketing power of social media, but the monetization that is following follows is not as easy. The payouts from streaming services are relatively meager and just get smaller as additional artists are added to the platforms. As a result, live performance and touring have the most lucky ways for artists to earn – and live nation dominates this market. The company owns all fares of this ecoSystem, which allows live nation to manage an artist’s entrance tour without any external involvement. Other than the Private Peer Anschutz Entertainment Group, No Company Comes Close in Scale, and even Anschutz Lacks The full Vertical Integration of Live Nation. However, while this dominance is certain an asset, it can also be Viewed as a liability by some, mainly the US department of justice.

In May 2024, The Doj sued to break up Live Nation and Ticketmaster, Sending the stock down about 8% from $ 101.40 to $ 93.48. While this development may cause a lot of investors to run in fear, value The firm Invested in Microsoft during Concerns Over the PC Market, In Spotify when people thought streaming was dying and in disney during the writers’ Strike, so it is no surprpreise saw an Opportunity in live nation at a time of heightened uncertain. The Worst thing that doj could do is for force the breakup of live nation and ticketmaster, a structural remedy that is rarely resorted to by the justice department (at & t & t & t & t It is more likely that live nation agrees to certain changes like However, even if the Worst Case Happens and the two companies separete, Live Nation Stockhlders Bold Own Two Great Businesses with Strong Tailwinds and Best-In-Class Market Positioning. It would likely even be another buying options for investors like value.

The Final Piece of Hidden or Misundrstood Value at the company is its venue expansion. While in Major Us Cities with NBA and NHL Teams, there are massive arenas for concerts, in other citations and globally there are not brought as many as many available venues. Looking to address this gap, live nation is pursuing these projects, successfully developing the university of texas at austin’s new arena and work on Similar projects Around the work. As a result, the company has been dedicating a lot of Capex to its venue expansion goals: Capex has increased by 48% over the past two years and total debt has tripled since 2015 and has a almost 2019. Moreover, the company’s disclosure Around this has been somewhat opaque adding to more market confusion and uncertain. Building these venues is excursive in the short term but should pay off handsomely in the long term, a dynamic that value is a family is family with. Consider that the firm investment in adobe when it was converting from a product purchase to a subscription, sending short-term Revenue Down but Creating Significant Long-TERM Value. Owning these venues will give live nation more value to its clients and more revenue from venues (as opposed to renting venues). As these venues are live and utilized, investors will start realizing that there will be a good return on the investment.

Assuming the Thehis Above Is Accure, There is Significant Value to Be Had by Buying The Tracking Stock or The Common Shares of Live Nation. So, why buy the tracking stock? The answer is government stock trades at a sharp discount to live nation, and it could provide even even even more value and beyond the fundamental understanding of the business That would Haappen if the same plan was followed as with previous liberty tracking stocks such as Sirius. Liberty media has alredy announced plans To spin off liberty live into a separe public company later this year, which is What it did with siriusAt that time, the liberty live discount should compress a little but will only go away entryly if merged into live nation. That is what then Sirius. For many reasons, including the relationship between John Malone and Live Nation Ceo Michael Rapino, We Think the Spinoff and Subsequent Merger will take less time. Valueact is the kind of investor that is happy holding for five years or more as value is being created.

Ken square is the founder and president of 13d monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13d activist, a mutual funds in a mutual funds in a mutual funds in a mutual funds of Activist 13D Investments.