Live Nation shares drop after analyst cuts rating, cites concern about rising artist costs

Live Nation shares sink after analyst cuts rating

SEATTLE — Shares of concert promoter and ticket seller Live Nation Entertainment Inc. sank Tuesday after an analyst cut his rating on the stock.

THE SPARK: Benjamin Mogil, an analyst for Stifel Nicolaus, lowered his rating on Live Nation to “Hold” from “Buy” over worries that any gains from the improving concert business are going straight to increasing artist costs.

THE BIG PICTURE: The summer concert season was weak amid economic uncertainty this year. Live Nation says it doesn’t have a big-name lineup for the rest of the year. U2 has delayed a North American tour while its lead singer, Bono, recovers from back surgery. And major acts including The Eagles, Rihanna and Simon and Garfunkel, to name a few, have canceled or postponed tours due to poor ticket sales.

THE ANALYSIS: Mogil wrote that he thinks the concert industry’s problem is not one of low ticket demand — it’s that artists with limited appeal are booking too many tour stops to make up for falling record royalties. The analyst said he would like to see signs that the industry is committed to reducing artist payment guarantees.

SHARE ACTION: Live Nation’s stock fell 64 cents, or 6.5 percent, to $9.19 in early afternoon trading.