S&P Global Ratings Downgrades Live Nation Outlook Amid DOJ Antitrust Lawsuit: ‘A Significant Threat to the Business’

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S&P Global Ratings has downgraded its Live Nation outlook as the promoter faces a DOJ antitrust lawsuit. Photo Credit: S&P

S&P Global Ratings has downgraded Live Nation’s outlook to negative as the Ticketmaster parent grapples with a DOJ antitrust action.

The S&P Global subsidiary just recently updated its Live Nation outlook, days following the official filing of the Justice Department’s long-anticipated antitrust complaint. We’ve already covered that more than 120-page suit – and Live Nation’s retort – in detail.

Regarding brass-tacks takeaways, however, the federal government is looking to compel Live Nation to divest Ticketmaster over the combined operation’s alleged market-power abuses and resulting consumer harm.

Of course, only time will tell how the situation unfolds – a point readily acknowledged by S&P, which specifically noted the action’s “uncertain” effect “on the company and live events industry.” Nevertheless, “Live Nation’s operating performance could be hurt by the lawsuit,” according to the text.

And it’s for this reason that the credit rating agency has shifted from a stable to negative outlook for Live Nation, with the entity’s Live Nation management and governance score adjusted from neutral to moderately negative.

“The negative outlook reflects our view that the heightened regulatory scrutiny, financial costs, and potential disruption of Live Nation’s competitive position in the live events industry from the antitrust lawsuit could impair the company’s creditworthiness and thereby potentially result in a lower rating,” S&P Global Ratings wrote.

“We believe Live Nation benefits from economies of scale and vertical integration in the live events industry and that Ticketmaster is a core component of its competitive advantage,” the agency elaborated. “Therefore, we view the lawsuit as a significant threat to the business.”

On the other hand, though, the S&P Global unit affirmed “all” its Live Nation credit ratings, including a BB- issuer rating, a BB rating on senior secured debt, and a B+ rating on unsecured debt, per the breakdown.

Notwithstanding the agency’s concerns and the other hurdles Live Nation is facing – chief among them a reported Ticketmaster hack and related class action litigation – the broader market appears unfazed by the DOJ suit.

At the time of writing, Live Nation stock (NYSE: LYV) was hovering over $93.50 per share – down only slightly on the week, up modestly from 2024’s start, and 17 percent above its value in late May of 2023.

On the ratings front, Roth MKM analyst Eric Handler recently maintained a buy rating, with a $120 target price, for LYV. Contrasting S&P Global Ratings’ assessment of the Justice Department action, the former Goldman equity research analyst Handler expressed the belief that a Live Nation-Ticketmaster split “will have difficulty in succeeding.”

“The company intends to vigorously fight this lawsuit and believes it has acted in accordance with its consent decree. It is willing to discuss certain remedies, which we do not expect to be transformative for the business,” communicated Handler, indicating also that allegations “of monopolistic and anti-competitive behaviors seem tough to prove.”