Edgar Filing: Live Nation Entertainment, Inc.

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011,

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-32601

LIVE NATION ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)


Delaware		20-3247759
(State of Incorporation)		(I.R.S. Employer Identification No.)

9348 Civic Center Drive

Beverly Hills, CA 90210

(Address of principal executive offices, including zip code)

(310) 867-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

On October 28, 2011, there were 189,477,803 outstanding shares of the registrant’s common stock, $0.01 par value per share, including 3,331,901 shares of unvested restricted stock awards and excluding 585,570 shares held in treasury.

LIVE NATION ENTERTAINMENT, INC.

INDEX TO FORM 10-Q


		Page

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)		2

	Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010		2

	Consolidated Statements of Operations for the three and nine months ended September 30, 2011 and 2010		3

	Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2011 and 2010		4

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010		5

	Notes to Consolidated Financial Statements		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		50

Item 4.	Controls and Procedures		51

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings		51

Item 1A.	Risk Factors		54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		54

Item 3.	Defaults Upon Senior Securities		55

Item 5.	Other Information		55

Item 6.	Exhibits		56

LIVE NATION ENTERTAINMENT, INC.

GLOSSARY OF KEY TERMS


AEG		Anschutz Entertainment Group
AMG		Academy Music Holdings Limited Group
AOI		Adjusted operating income (loss)
Azoff Trust		The Azoff Family Trust of 1997, of which Irving Azoff is co-Trustee
Clear Channel		Clear Channel Communications, Inc.
Comcast		Comcast-Spectacor, L.P.
Company		Live Nation Entertainment, Inc. and subsidiaries
CTS		CTS Eventim AG
DOJ		United States Department of Justice
FASB		Financial Accounting Standards Board
FLMG		FLMG Holdings Corp., a wholly-owned subsidiary of Live Nation
Front Line		Front Line Management Group, Inc.
GAAP		United States Generally Accepted Accounting Principles
IAC		IAC/InterActiveCorp
Liberty Media		Liberty Media Corporation
Live Nation		Live Nation Entertainment, Inc., formerly known as Live Nation, Inc., and subsidiaries
LN—Haymon		LN—Haymon Ventures, LLC
Merger		Merger between Live Nation, Inc. and Ticketmaster Entertainment, Inc. announced in February 2009 and consummated in January 2010
Merger Agreement		Agreement and Plan of Merger, dated February 10, 2009 and consummated on January 25, 2010, between Live Nation, Inc. and Ticketmaster Entertainment, Inc.
MSG		Madison Square Garden, L.P.
OCI		Other comprehensive income (loss)
Paciolan		Paciolan, Inc.
SEC		United States Securities and Exchange Commission
Separation		The contribution and transfer by Clear Channel of substantially all of its entertainment assets and liabilities to Live Nation
Serviticket		Serviticket, S.A.
SME		Sports Marketing and Entertainment, Inc.
Spincos		Collective referral to Ticketmaster and other companies spun off from IAC on August 20, 2008
TGLP		Ticketmaster Group Limited Partnership
Ticketmaster		For periods prior to May 6, 2010, Ticketmaster means Ticketmaster Entertainment LLC and its predecessor companies (including without limitation Ticketmaster Entertainment, Inc.); for periods on and after May 6, 2010, Ticketmaster means the Ticketmaster ticketing business of the Company
Ticketnet		Ticketnet S.A.
TicketsNow		TNow Entertainment Group, Inc.
Vector		Vector Management LLC and Vector West LLC

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

CONSOLIDATED BALANCE SHEETS


	September 30, 2011			December 31, 2010
	(unaudited)			(audited)
	(in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	782,573		$	892,758
Accounts receivable, less allowance of $12,480 as of September 30, 2011 and $10,898 as of December 31, 2010		489,236			329,947
Prepaid expenses		324,256			348,309
Other current assets		40,736			32,483

Total current assets		1,636,801			1,603,497
Property, plant and equipment
Land, buildings and improvements		853,141			850,124
Computer equipment and capitalized software		240,279			218,294
Furniture and other equipment		170,280			168,508
Construction in progress		56,094			24,528

		1,319,794			1,261,454
Less accumulated depreciation		604,038			524,390

		715,756			737,064
Intangible assets
Definite-lived intangible assets, net		896,837			997,268
Indefinite-lived intangible assets		377,508			375,214
Goodwill		1,247,752			1,226,416
Investments in nonconsolidated affiliates		51,187			30,077
Other long-term assets		242,860			226,024

Total assets	$	5,168,701		$	5,195,560

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable, client accounts	$	413,347		$	462,301
Accounts payable		108,272			76,876
Accrued expenses		561,925			498,864
Deferred revenue		273,950			335,539
Current portion of long-term debt		56,563			54,150
Other current liabilities		24,007			46,491

Total current liabilities		1,438,064			1,474,221

Long-term debt, net		1,667,939			1,677,714
Long-term deferred income taxes		177,419			219,143
Other long-term liabilities		162,502			215,273
Commitments and contingent liabilities (Note 6)

Redeemable noncontrolling interests		-			107,541

Stockholders’ equity
Common stock		1,867			1,724
Additional paid-in capital		2,233,479			2,053,233
Accumulated deficit		(645,666	)		(662,175	)
Cost of shares held in treasury		(5,313	)		(6,122	)
Accumulated other comprehensive loss		(5,072	)		(22,244	)

Total Live Nation Entertainment, Inc. stockholders’ equity		1,579,295			1,364,416
Noncontrolling interests		143,482			137,252

Total stockholders’ equity		1,722,777			1,501,668


Total liabilities and stockholders’ equity	$	5,168,701		$	5,195,560

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands except share and per share data)
Revenue	$	1,790,025		$	1,835,806		$	4,198,316		$	3,825,902
Operating expenses:
Direct operating expenses		1,286,304			1,388,295			2,971,579			2,769,334
Selling, general and administrative expenses		282,462			244,694			822,226			729,189
Depreciation and amortization		83,341			70,249			237,749			197,190
Loss (gain) on sale of operating assets		231			(779	)		866			3,155
Corporate expenses		27,385			27,660			73,011			86,666
Acquisition transaction expenses		5,493			2,581			7,864			17,992

Operating income		104,809			103,106			85,021			22,376

Interest expense		30,388			29,280			90,462			85,773
Loss on extinguishment of debt		-			-			-			21,172
Interest income		(1,023	)		(709	)		(2,848	)		(2,143	)
Equity in earnings of nonconsolidated affiliates		(2,777	)		(629	)		(5,549	)		(2,884	)
Other expense (income), net		6,461			(212	)		7,207			(1,845	)

Income (loss) from continuing operations before income taxes		71,760			75,376			(4,251	)		(77,697	)
Income tax expense (benefit)		8,739			10,338			(29,544	)		10,755

Income (loss) from continuing operations		63,021			65,038			25,293			(88,452	)
Loss from discontinued operations, net of tax		-			(3,213	)		-			(3,893	)

Net income (loss)		63,021			61,825			25,293			(92,345	)
Net income attributable to noncontrolling interests		11,309			10,818			8,784			11,648

Net income (loss) attributable to Live Nation Entertainment, Inc.	$	51,712		$	51,007		$	16,509		$	(103,993	)


Basic net income (loss) per common share attributable to common stockholders:
Income (loss) from continuing operations attributable to Live Nation Entertainment, Inc.	$	0.28		$	0.32		$	0.09		$	(0.62	)
Loss from discontinued operations attributable to Live Nation Entertainment, Inc.		-			(0.02	)		-			(0.02	)

Net income (loss) attributable to Live Nation Entertainment, Inc.	$	0.28		$	0.30		$	0.09		$	(0.64	)


Diluted net income (loss) per common share attributable to common stockholders:
Income (loss) from continuing operations attributable to Live Nation Entertainment, Inc.	$	0.27		$	0.32		$	0.09		$	(0.62	)
Loss from discontinued operations attributable to Live Nation Entertainment, Inc.		-			(0.02	)		-			(0.02	)

Net income (loss) attributable to Live Nation Entertainment, Inc.	$	0.27		$	0.30		$	0.09		$	(0.64	)

Weighted average common shares outstanding:
Basic		186,127,846			170,285,159			181,115,853			162,285,785
Diluted		188,531,130			172,302,273			183,306,799			162,285,785

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands)
Net income (loss)	$	63,021		$	61,825		$	25,293		$	(92,345	)
Other comprehensive income (loss), net of tax:
Realized loss (gain) on cash flow hedges		-			(250	)		-			6,724
Unrealized loss on cash flow hedges		(21	)		(68	)		(158	)		(293	)
Change in funded status of defined benefit pension plan		(1	)		-			(33	)		-
Foreign currency translation adjustments		(37,290	)		57,985			17,363			(13,841	)

Comprehensive income (loss)		25,709			119,492			42,465			(99,755	)
Comprehensive income attributable to noncontrolling interests		11,309			10,818			8,784			11,648

Comprehensive income (loss) attributable to Live Nation Entertainment, Inc.	$	14,400		$	108,674		$	33,681		$	(111,403	)

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine Months Ended September 30,
	2011			2010
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	25,293		$	(92,345	)
Reconciling items:
Depreciation		94,184			90,239
Amortization		143,565			106,951
Deferred income tax benefit		(40,679	)		(7,089	)
Amortization of debt issuance costs		4,365			3,265
Amortization of debt discount/premium, net		5,342			5,109
Provision for uncollectible accounts receivable and advances		1,955			16,661
Non-cash loss on extinguishment of debt		-			8,272
Non-cash compensation expense		40,556			45,532
Unrealized changes in fair value of contingent consideration		(8,828	)		2,965
Loss on sale of operating assets		866			7,048
Equity in earnings of nonconsolidated affiliates		(5,549	)		(2,884	)
Other, net		2,136			-
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Increase in accounts receivable		(164,392	)		(153,403	)
Decrease (increase) in prepaid expenses		25,704			(110,428	)
Increase in other assets		(56,645	)		(27,083	)
Increase (decrease) in accounts payable, accrued expenses and other liabilities		(27,682	)		86,200
Increase (decrease) in deferred revenue		(67,732	)		34,696

Net cash provided by (used in) operating activities		(27,541	)		13,706

CASH FLOWS FROM INVESTING ACTIVITIES
Collections and advances of notes receivable		(1,091	)		485
Distributions from nonconsolidated affiliates		8,804			6,019
Investments made in nonconsolidated affiliates		(6,437	)		(775	)
Purchases of property, plant and equipment		(69,573	)		(49,165	)
Proceeds from disposal of operating assets, net of cash divested		7,361			22,119
Cash paid for acquisitions, net of cash acquired		(25,499	)		560,732
Purchases of intangible assets		(118	)		(1,371	)
Other, net		(842	)		(246	)

Net cash provided by (used in) investing activities		(87,395	)		537,798

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt issuance costs		(596	)		1,318,132
Payments on long-term debt		(22,699	)		(1,191,712	)
Redemption of preferred stock		-			(40,000	)
Contributions from noncontrolling interests		-			14
Distributions to and purchases/sales of noncontrolling interests		(61,808	)		(10,538	)
Proceeds from exercise of stock options		3,210			4,526
Proceeds from sale of common stock		76,492			-
Equity issuance costs		-			(357	)
Payments for purchases of common stock		-			(1,567	)
Payments for deferred and contingent consideration		(13,807	)		(11,109	)

Net cash provided by (used in) financing activities		(19,208	)		67,389
Effect of exchange rate changes on cash and cash equivalents		23,959			(232	)

Net increase (decrease) in cash and cash equivalents		(110,185	)		618,661
Cash and cash equivalents at beginning of period		892,758			236,955

Cash and cash equivalents at end of period	$	782,573		$	855,616

See Notes to Consolidated Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Recent Developments in the Business

On January 25, 2010, the Company merged with Ticketmaster and changed its name from Live Nation, Inc. to Live Nation Entertainment, Inc. Ticketmaster’s results of operations are included in the Company’s consolidated financial statements beginning January 26, 2010. See Note 3—Acquisitions for prior year pro forma information regarding the impacts of the Merger.

Seasonality

Due to the seasonal nature of shows at outdoor amphitheaters and festivals, which primarily occur May through September, the Company experiences higher revenue for the Concerts segment during the second and third quarters. The Artist Nation segment’s revenue is impacted, to a large degree, by the touring schedules of the artists it represents. Generally, the Company experiences higher revenue in this segment during the second and third quarters as the period from May through September tends to be a popular time for touring events. The Ticketing segment’s sales are impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by its clients. The Company’s seasonality also results in higher balances in cash and cash equivalents, accounts receivable, prepaid expenses, accrued expenses and deferred revenue at different times in the year. Therefore, the results to date are not necessarily indicative of the results expected for the full year.

Preparation of Interim Financial Statements

The interim consolidated financial statements included in this report are unaudited; however in the opinion of management, they include all normal and recurring accruals and adjustments necessary to present fairly the results of the interim periods shown. Certain financial presentations and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

The Company has reclassified all periods presented to conform to the current period presentation. Certain of the line items for the three and nine months ended September 30, 2010 have been recast from the amounts that were previously reported in the Company’s Form 10-Q for the period ending September 30, 2010. These recast amounts relate to purchase accounting adjustments for the Merger, which occurred in the first quarter of 2010, that were identified in the subsequent quarters of 2010 and, pursuant to the FASB guidance, are required to be reflected in the period of the respective business combinations.

The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2010 Annual Report on Form 10-K filed with the SEC on February 28, 2011.

Recent Accounting Pronouncements

Recently Adopted Pronouncements

In October 2009, the FASB issued guidance on multiple-deliverable revenue arrangements which requires an entity to allocate consideration at the inception of an arrangement to all of its deliverables based on their relative selling prices. This guidance eliminates the use of the residual method of allocation and requires allocation using the relative-selling-price method in all circumstances in which an entity recognizes revenue for an arrangement with multiple deliverables. The Company adopted this guidance on January 1, 2011 and is applying it prospectively. The adoption of this guidance did not have a material effect on the Company’s financial position or results of operations.

In December 2010, the FASB issued guidance on disclosure of supplementary pro forma information for business combinations which amends and requires additional pro forma disclosure requirements for material business combinations on an individual or aggregate basis including pro forma revenue and earnings of the combined entity as if the acquisition date(s) had occurred as of the beginning of the comparable prior annual reporting period. This guidance also expands the supplemental pro forma disclosure requirements to include a description of the nature and amount of any material non-recurring adjustments that are directly attributable to the business combination. The Company adopted this guidance and is applying it prospectively to business combinations with an acquisition date on or after January 1, 2011.

Recently Issued Pronouncements

In May 2011, the FASB issued guidance that improves comparability of fair value measurements presented and disclosed in financial statements. This guidance clarifies the application of existing fair value measurement requirements including (1) the application of the highest and best use and valuation premise concepts, (2) measuring the fair value of an instrument classified in a reporting entity’s stockholders’ equity, and (3) quantitative information required for fair value measurements categorized within Level 3. It also requires additional disclosure for Level 3 measurements regarding the sensitivity of the fair value to changes in unobservable inputs and any interrelationships between those inputs. The amendments in this guidance are to be applied prospectively, and are effective for interim and annual periods beginning after December 15, 2011. The Company will adopt this guidance on January 1, 2012 and does not expect the adoption of this standard to have a material effect on its financial position or results of operations.

In June 2011, the FASB issued guidance which revises the manner in which entities present comprehensive income in their financial statements. The new guidance eliminates the presentation option to report other comprehensive income and its components in the statement of changes in stockholders’ equity and requires entities to report components of comprehensive income in either a continuous statement of comprehensive income or in two separate, but consecutive, statements. This guidance is effective for interim and annual periods beginning after December 15, 2011. Early adoption of the new guidance is permitted and full retrospective application is required.

In September 2011, the FASB issued guidance which gives companies the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount and, in some cases, bypass the two-step impairment test. This guidance is effective for goodwill impairment tests performed in interim and annual periods beginning after December 15, 2011. Early adoption of the new guidance is permitted. The Company adopted this guidance on October 1, 2011.

NOTE 2—LONG-LIVED ASSETS

Property, Plant and Equipment

During the third quarter of 2011, the Company recorded an impairment charge of $5.7 million related to an amphitheater that was no longer in operation in the Concerts segment. It was determined that this asset was impaired since the estimated undiscounted cash flows associated with this asset was less than its carrying value. See Note 5—Fair Value Measurements for further discussion of the inputs used to determine the fair value. The impairment charge was recorded as a component of depreciation and amortization. During 2010, the Company recorded no significant impairment charges.

Definite-lived Intangible Assets

The Company has definite-lived intangible assets which are amortized over the shorter of either the respective lives of the agreements or the period of time the assets are expected to contribute to the Company’s future cash flows. The amortization is recognized on either a straight-line or units of production basis. The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the nine months ended September 30, 2011:


	Balance as of December 31, 2010			Acquisitions			Divestitures			Amortization Expense			Foreign Currency and Other (1)			Balance as of September 30, 2011
	(in thousands)
Revenue-generating contracts:
Gross carrying amount	$	482,588		$	31,190		$	-		$	-		$	17,182		$	530,960
Accumulated amortization		(112,575	)		-			-			(44,280	)		787			(156,068	)

Net		370,013			31,190			-			(44,280	)		17,969			374,892

Client/vendor relationships:
Gross carrying amount		365,344			(10,174	)		(4,299	)		-			(16,531	)		334,340
Accumulated amortization		(30,314	)		-			361			(27,464	)		279			(57,138	)

Net		335,030			(10,174	)		(3,938	)		(27,464	)		(16,252	)		277,202

Non-compete agreements:
Gross carrying amount		175,740			(5,178	)		(100	)		-			101			170,563
Accumulated amortization		(68,833	)		-			61			(19,021	)		487			(87,306	)

Net		106,907			(5,178	)		(39	)		(19,021	)		588			83,257

Venue management and leaseholds:
Gross carrying amount		115,225			3,828			-			-			(1,810	)		117,243
Accumulated amortization		(30,878	)		-			-			(8,000	)		2,030			(36,848	)

Net		84,347			3,828			-			(8,000	)		220			80,395

Technology:
Gross carrying amount		95,102			1,614			-			-			386			97,102
Accumulated amortization		(11,797	)		-			-			(14,880	)		(126	)		(26,803	)

Net		83,305			1,614			-			(14,880	)		260			70,299

Trademarks and naming rights:
Gross carrying amount		23,998			105			-			-			(1,596	)		22,507
Accumulated amortization		(9,522	)		-			-			(6,246	)		1,685			(14,083	)

Net		14,476			105			-			(6,246	)		89			8,424

Other:
Gross carrying amount		6,429			12			-			-			(17	)		6,424
Accumulated amortization		(3,239	)		-			-			(841	)		24			(4,056	)

Net		3,190			12			-			(841	)		7			2,368

Total:
Gross carrying amount		1,264,426			21,397			(4,399	)		-			(2,285	)		1,279,139
Accumulated amortization		(267,158	)		-			422			(120,732	)		5,166			(382,302	)

Net	$	997,268		$	21,397		$	(3,977	)	$	(120,732	)	$	2,881		$	896,837

(1)	Other includes reclassifications between categories of definite-lived intangible assets resulting from the finalization of valuations and netdowns of fully amortized or impaired assets.

During 2011, the Company recorded definite-lived intangible assets totaling $21.4 million, primarily related to revenue-generating contracts. Additions primarily related to the January 2011 acquisition of TGLP, a primary ticketing business in the Washington D.C. metro area and the April 2011 acquisition of Serviticket, a Spanish ticketing company.

The 2011 additions to definite-lived intangible assets have weighted average lives as follows:


	Weighted Average Life (years)

Revenue-generating contracts		10
Non-compete agreements		2
Venue management and leaseholds		6
Technology		7
Trademarks and naming rights		4
Other		1
All categories		9

During 2011, the Company recorded a divestiture of $4.4 million relating to the sale of an artist management company.

Amortization expense from definite-lived intangible assets for the three months ended September 30, 2011 and 2010 was $38.8 million and $32.9 million, respectively, and amortization expense for the nine months ended September 30, 2011 and 2010 was $120.7 million and $83.7 million, respectively. The increase in amortization expense is primarily driven by the additional definite-lived intangible assets obtained in the Merger, the acquisition of the remaining 49% interest in, and control of, LN—Haymon in April 2010 and the acquisitions of Ticketnet in November 2010 and Serviticket. Also adding to the increase in amortization expense for the nine months ended September 30, 2011 as compared to the same period of the prior year was a $6.1 million reduction to amortization expense in 2010 related to a non-cash gain on the settlement of a pre-existing relationship with LN—Haymon.

For the three months ended September 30, 2011 and 2010, the Company recorded amortization expense related to nonrecoupable ticketing contract advances of $9.3 million and $2.9 million, respectively, and for the nine months ended September 30, 2011 and 2010, recorded $22.8 million and $7.6 million, respectively.

As acquisitions and dispositions occur in the future and the valuation of intangible assets for recent acquisitions are completed, amortization expense may vary.

Goodwill

The following table presents the changes in the carrying amount of goodwill in each of the Company’s segments for the nine months ended September 30, 2011:


	Concerts			Ticketing		Artist Nation			eCommerce		Sponsorship		Other			Total
	(in thousands)
Balance as of December 31, 2010:
Goodwill	$	375,487		$	557,856	$	267,992		$	214,927	$	80,056	$	13,037		$	1,509,355
Accumulated impairment losses		(269,902	)		-		-			-		-		(13,037	)		(282,939	)

Net		105,585			557,856		267,992			214,927		80,056		-			1,226,416

Acquisitions—current year		1,769			17,955		-			-		-		-			19,724
Acquisitions—prior year		(1	)		2,956		(7,592	)		-		-		-			(4,637	)
Dispositions		-			-		(147	)		-		-		-			(147	)
Foreign currency		2,807			609		-			-		2,980		-			6,396

Balance as of September 30, 2011:
Goodwill		380,062			579,376		260,253			214,927		83,036		13,037			1,530,691
Accumulated impairment losses		(269,902	)		-		-			-		-		(13,037	)		(282,939	)

Net	$	110,160		$	579,376	$	260,253		$	214,927	$	83,036	$	-		$	1,247,752

Included in the current year acquisitions above is $17.9 million related to the acquisition of Serviticket.

Included in the prior year acquisitions above are reductions primarily due to a tax valuation adjustment relating to the Merger offset by the addition of $3.0 million related to the finalization of the valuation for the Ticketnet acquisition.

The Company is in the process of finalizing its acquisition accounting for recent acquisitions which could result in a change to the associated purchase price allocations, including goodwill.

Investments in nonconsolidated affiliates

The Company has investments in various nonconsolidated affiliates that are accounted for under the equity method of accounting whereby the Company records its investments in these entities in the balance sheet as investments in nonconsolidated affiliates. The Company’s interests in their operations are recorded in the statement of operations as equity in earnings of nonconsolidated affiliates. For the nine months ended September 30, 2011, one of the Company’s investments, which is in a ticketing distribution services company, is considered significant. The Company owns a 33% interest in this company.

Summarized unaudited income statement information for the Company’s significant nonconsolidated affiliate is as follows (at 100 percent):


	Nine Months Ended September 30,
	2011		2010
	(in thousands)
Revenue	$	34,217	$	27,668
Operating income	$	19,515	$	16,049
Net income	$	14,075	$	10,580

Long-lived Asset Disposals

In January 2011, the Company sold its 50% controlling interest in an artist management company. In May 2011, the Company completed the sale of the Selma amphitheater in San Antonio. In connection with the Merger, the Company reached an agreement with the DOJ that Ticketmaster would divest its Paciolan ticketing business and, in March 2010, the Company completed this sale to Comcast.

The table below summarizes the asset and liability values at the time of disposal and the resulting loss or gain recorded.


Divested Asset	Segment	Gain (Loss) on Sale			Current Assets		Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
	(in thousands)
*2011 Divestiture*
Selma amphitheater	Concerts	$	798		$	-	$	3,206	$	-	$	-
Artist management company	Artist Nation	$	(1,256	)	$	3	$	4,145	$	119	$	-

*2010 Divestiture*
Paciolan	Ticketing	$	(5,218	)	$	8,357	$	33,492	$	7,595	$	6,364

Certain agreements relating to disposals of businesses provide for future contingent consideration based on the financial performance of the businesses sold. The Company will record additional amounts related to such contingent consideration, with a corresponding adjustment to gain (loss) on sale of operating assets, if and when it is determinable that the applicable financial performance targets will be met. The aggregate of these contingent considerations, if all existing performance targets are met, would not significantly impact the results of operations of the Company. The last contingency period for which the Company has an outstanding contingent consideration is for the year ended December 31, 2013.

NOTE 3—ACQUISITIONS

During 2011, the Company completed its acquisitions of Full Circle Live Limited, Serviticket, TGLP and LN Ontario Concerts LP. These acquisitions were accounted for as business combinations under the acquisition method of accounting and were not considered significant on an individual basis or in the aggregate.

Ticketmaster

In January 2010, the Company completed the merger of Ticketmaster with and into a wholly-owned subsidiary of Live Nation pursuant to the Merger Agreement. The following unaudited pro forma information presents the consolidated results of Live Nation and Ticketmaster for the three and nine months ended September 30, 2010, with adjustments to give effect to pro forma events that are directly attributable to the Merger and have a continuing impact, as well as to exclude the impact of pro forma events that are directly attributable to the Merger and are one-time in nature. The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the results of operations of future periods or the results of operations that actually would have been realized had the entities been a single company during the entirety of the periods presented or the results of the combined company after the Merger. The unaudited pro forma information does not give effect to the potential impact of current financial conditions, regulatory matters or any synergies, operating efficiencies or cost savings that resulted from the Merger. The unaudited pro forma information also does not include any integration costs, dis-synergies or transaction costs that the companies may have incurred related to the Merger as part of combining the operations of the companies.

The unaudited pro forma consolidated results of operations, assuming the acquisition had occurred on January 1, 2009, are as follows:


	For the Three Months Ended September 30, 2010		For the Nine Months Ended September 30, 2010
	(in thousands)
Unaudited pro forma consolidated results:
Revenue	$	1,829,768	$	3,851,264
Income (loss) from continuing operations	$	71,994	$	(42,880	)
Net income (loss) attributable to Live Nation Entertainment, Inc.	$	57,963	$	(57,469	)

The Company has incurred a total of $65.8 million of acquisition transaction expenses to date relating to the Merger, of which $4.2 million and $3.7 million are included in the results of operations for the three months ended September 30, 2011 and 2010, respectively, and $13.9 million and $14.2 million are included in the results of operations for the nine months ended September 30, 2011 and 2010, respectively.

In connection with the Merger, the Company has incurred a total of $13.6 million of severance costs, of which $0.5 million was recorded as a component of selling, general and administrative expenses for the three months ended September 30, 2010 in its Ticketing segment. For the nine months ended September 30, 2010, the Company recorded $1.1 million, $7.0 million, $0.1 million and $0.7 million as a component of selling, general and administrative expenses in its Artist Nation, Ticketing, Sponsorship and eCommerce segments, respectively, and $4.7 million as a component of corporate expenses. The Company did not incur additional severance costs in the first nine months of 2011, and does not expect to incur additional significant severance costs in future periods directly as a result of the Merger.

Front Line

In the first quarter of 2011, the Company acquired all of the remaining equity interests of Front Line that it did not previously own in a series of transactions. As a result of these transactions, the Company is able to further simplify its operating structure and it expects to achieve future savings through reduced cash taxes, noncontrolling interest distributions and other synergies.

Under the terms of the stock purchase agreement, the Company purchased all restricted and unrestricted shares of common stock of Front Line held by Irving Azoff, the Company’s Executive Chairman and Chairman of the board of directors, and the Azoff Trust (collectively the “Azoff Sellers”), purchased all in-the-money options for common stock of Front Line held by the Azoff Sellers and purchased all shares of common stock of Front Line held by MSG. The Company also paid an amount equal to the 2010 dividend paid by Front Line to the Azoff Sellers and MSG, pro rated for the period from January 1, 2011 through the closing date, and paid Mr. Azoff a contractually-owed tax gross-up associated with his restricted Front Line common stock and dividend. In total, under the stock purchase agreement, the Company paid $56.3 million in cash and $18.6 million in newly-issued shares of Live Nation common stock to the Azoff Sellers and $0.2 million in cash and $41.0 million in newly issued shares of Live Nation common stock to MSG. These shares were valued using the closing price of the Company’s stock on the date of the transaction. Of the total shares of Live Nation stock issued, the Azoff Sellers received 1.8 million shares of common stock and MSG received 3.9 million shares of common stock.

As part of individual redemption agreements, the Company also purchased the remaining smaller holdings of outstanding Front Line restricted shares of common stock from other individuals for a total of $12.8 million in cash.

The shares purchased under all of these agreements had redemption features and, previous to these repurchases, the Azoff Sellers’ and MSG’s common shares and the Azoff Sellers’ options were classified as redeemable noncontrolling interests and all of the remaining shares were classified as liabilities. All of these instruments were carried at their fair values and amounts paid as part of these agreements were recorded in the income statement to the extent they were in excess of the amount recorded on the balance sheet, with the exception of the unrestricted shares of common stock held by the Azoff Sellers and MSG which were accounted for as the acquisition of noncontrolling interests and any difference between the carrying value and settlement value was recorded in additional paid-in capital. Tax gross-up amounts paid were recorded in the income statement to the extent the amount paid exceeded the amount already accrued. As a result of the repurchases, the Company recorded $24.4 million in selling, general and administrative expenses in the first quarter of 2011, which is classified as stock-based compensation. Further, cash flows from financing activities reflects a $47.9 million use of cash as a result of these transactions and cash flows from operating activities reflects a $21.4 million use of cash. Total non-cash consideration was $59.6 million and is not included in the statement of cash flows.

NOTE 4—DERIVATIVE INSTRUMENTS

The Company primarily uses forward currency contracts in addition to options to reduce its exposure to foreign currency risk associated with short-term artist fee commitments. The Company also enters into forward currency contracts to minimize the risks and/or costs associated with changes in foreign currency rates on forecasted operating income. At September 30, 2011 and December 31, 2010, the Company had forward currency contracts outstanding with notional amounts of $40.8 million and $85.7 million, respectively. These forward currency contracts have not been designated as hedging instruments. Any change in fair value is reported in earnings during the period of the change. The Company’s foreign currency derivative activity, including the related fair values, are not material to any period presented.

Additionally, the Company has entered into certain interest rate swaps and cap agreements to limit its exposure to variable interest rates, related to portions of the Company’s outstanding debt, some of which have been designated as cash flow hedges. At September 30, 2011 and December 31, 2010, the Company had interest rate swaps and cap agreements outstanding with notional amounts of $137.2 million and $141.4 million, respectively. In May 2010, in conjunction with the refinancing of certain of its debt arrangements, the Company settled three interest rate swap agreements, one of which was designated as a cash flow hedge, that were associated with the term loans under the Company’s December 2005 senior secured credit facility. The Company recognized expense of $4.5 million for the settlement of the interest rate swap agreements as a component of loss on extinguishment of debt. Excluding the debt extinguishment settlements, the Company’s interest rate swaps and caps activity, including the related fair values, are not material to any period presented.

The Company’s 2.875% convertible senior notes issued in July 2007 include certain provisions which are bifurcated from the notes and accounted for as derivative instruments. At the date of issuance and as of September 30, 2011 and December 31, 2010, the fair value of these provisions was considered to be de minimis.

The Company does not enter into derivative instruments for speculation or trading purposes and does not anticipate any significant recognition of derivative activity through the income statement in the future related to the instruments currently held. See Note 5—Fair Value Measurements for further discussion and disclosure of the fair values for the Company’s derivative instruments.

NOTE 5—FAIR VALUE MEASUREMENTS

The Company currently has various financial instruments carried at fair value, such as marketable securities, derivatives and contingent consideration, but does not currently have nonfinancial assets and nonfinancial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from all levels of the fair value hierarchy as defined in the FASB guidance for fair values. For this categorization, only inputs that are significant to the fair value are considered. The three levels are defined as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.

Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (i.e., market corroborated inputs).

Level 3—Unobservable inputs that reflect assumptions about what market participants would use in pricing the asset or liability. These inputs would be based on the best information available, including the Company’s own data.

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis, as of September 30, 2011 and December 31, 2010, which are classified as cash and cash equivalents, other current assets, other long-term assets, other current liabilities and other long-term liabilities:


	Fair Value Measurements at September 30, 2011								Fair Value Measurements at December 31, 2010
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)								(in thousands)
Assets:
Cash equivalents	$	220,604	$	-	$	-	$	220,604	$	96,293	$	-	$	-	$	96,293
Forward currency contracts		-		1,475		-		1,475		-		6		-		6
Interest rate cap		-		9		-		9		-		167		-		167
Investments in rabbi trusts		-		-		-		-		3,576		-		-		3,576
Stock options		-		-		1,126		1,126		-		-		278		278

Total	$	220,604	$	1,484	$	1,126	$	223,214	$	99,869	$	173	$	278	$	100,320


Liabilities:
Interest rate swaps	$	-	$	2,968	$	-	$	2,968	$	-	$	2,119	$	-	$	2,119
Forward currency contracts		-		-		-		-		-		2,769		-		2,769
Contingent consideration		-		-		7,806		7,806		-		-		17,894		17,894
Other current liabilities		-		-		-		-		3,576		-		-		3,576

Total	$	-	$	2,968	$	7,806	$	10,774	$	3,576	$	4,888	$	17,894	$	26,358

Cash equivalents consist of money market funds. Fair values for cash equivalents are based on quoted prices in an active market. Fair values for forward currency contracts are based on observable market transactions of spot and forward rates. Investments in rabbi trusts include exchange-traded equity securities and mutual funds. Fair values for these investments are based on quoted prices in active markets. Fair values for the interest rate swaps and the interest rate cap are based on inputs corroborated by observable market data with similar tenors. Other current liabilities represent deferred compensation obligations to employees under a certain benefit plan. The liabilities related to this plan were adjusted based on changes in the fair value of the underlying employee-directed investments and therefore were classified consistent with the investments. In December 2010, the Company terminated this plan and all related assets were distributed to employees in 2011.

The Company has certain contingent consideration obligations for those acquisitions that occurred after December 31, 2008, which are measured at fair value using Level 3 inputs. The amounts due to the sellers are based on the achievement of agreed-upon financial performance metrics by the acquired companies where the contingent obligation is either earned or not earned. The Company records the liability at the time of the acquisition based on management’s best estimates of the future results of the acquired companies compared to the agreed-upon metrics. The most significant estimate involved in the measurement process is the projection of future results of the acquired companies. The Company uses an implied probability method, which is based on one set of projections as its best estimate of future results of the acquired companies and, as a result, the Company does not develop a range of outcomes. By comparing these estimates to the agreed-upon metrics, the Company estimates the amount, if any, anticipated to be paid to the seller at a future date. For obligations payable at a date greater than twelve months from the acquisition date, the Company applies a discount rate to present value the estimated obligations. The discount rate is intended to reflect the risks of ownership, time-value of money and the associated risks of realizing the stream of projected cash flows. Subsequent to the date of acquisition, the Company updates the original valuation to reflect current projections of future results of the acquired companies and the passage of time. Accretion of, and changes in the valuations of contingent consideration are reported in acquisition transaction expenses. During the three and nine months ended September 30, 2011, the Company recognized an increase of $0.2 million and a decline of $8.7 million, respectively, for its contingent consideration obligations. The decrease for the nine months ended September 30, 2011 was primarily driven by a reduction in earnings from certain artist relationships and the timing of a key artist tour. See Note 6—Commitments and Contingent Liabilities for additional information related to the contingent payments.

The Company has stock options in a company that became publicly-traded in the third quarter of 2011 which are measured at fair value using Level 3 inputs. The stock options were received as consideration in connection with a licensing agreement entered into by a subsidiary of the Company and became fully-vested in the second quarter of 2011. The Company has recorded an asset for these options which was valued using the Black-Scholes option pricing model. The Company

utilized information from the most recently available public filing and stock price of the company at the valuation date for assumptions with respect to share price, volatility and dividend yield inputs and utilized the remaining contractual period of the options as the expected term input and a risk-free rate consistent with that expected term. The Company has recorded revenue based on the valuation of the options as of the measurement date, which was the vesting date. The changes in the valuation after the measurement date are recorded in other expense (income), net.

The following table summarizes the changes in fair value of the Company’s Level 3 assets and liabilities for the nine months ended September 30, 2011:


	Stock Options		Contingent Consideration
		(in thousands)
Balance as of December 31, 2010	$	278	$	(17,894	)
Total gains and losses (realized/unrealized)
included in earnings		848		8,828
Purchases		-		1,260

Balance as of September 30, 2011	$	1,126	$	(7,806	)


The amount of total gains and losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at September 30, 2011	$	848	$	8,741

Due to the short maturity, the carrying amounts of accounts receivable, accounts payable and accrued expenses approximated their fair values at September 30, 2011 and December 31, 2010.

The Company’s outstanding debt held by third-party financial institutions is carried at cost, adjusted for premiums or discounts. The Company’s debt is not publicly-traded and, as it relates to the Company’s debt that accrues interest at a variable rate, the carrying amounts typically approximate their fair value. The estimated fair values of the 8.125% senior notes, the 10.75% senior notes and the 2.875% convertible senior notes were $241.3 million, $300.2 million and $197.3 million at September 30, 2011, respectively. The estimated fair values of the 8.125% senior notes, the 10.75% senior notes and the 2.875% convertible senior notes were $252.0 million, $311.4 million and $195.8 million at December 31, 2010, respectively. The estimated fair value of the Company’s third-party fixed-rate debt is based on third-party quotes, which are considered to be Level 2 inputs. The Company has fixed rate debt held by noncontrolling interest partners with a face value of $26.0 million and $29.5 million at September 30, 2011 and December 31, 2010, respectively. The Company is unable to determine the fair value of this debt.

The following table shows the fair value of the Company’s financial assets that have been adjusted to fair value on a non-recurring basis which had a significant impact on the Company’s results of operations for the nine months ended September 30, 2011:


	Fair Value Measurements at September 30, 2011
			Fair Value Measurements Using				Total Losses
Description			Level 1	Level 2		Level 3	Total Losses
	(in thousands)
Property, plant and equipment	$	5,400		$	5,400		$	5,727

							$	5,727

During the third quarter of 2011, the Company recorded an impairment charge of $5.7 million related to an amphitheater that was no longer in operation in the Concerts segment. It was determined that this asset was impaired since the estimated undiscounted cash flows associated with this asset was less than its carrying value. These cash flows were calculated using the estimated sales value for the asset being sold which was also used to approximate fair value. The estimated sales value used for this non-recurring fair value measurement is considered a Level 2 input. The impairment charge was recorded as a component of depreciation and amortization. There were no significant non-recurring fair value measurements recorded for the three and nine months ended September 30, 2010.

NOTE 6—COMMITMENTS AND CONTINGENT LIABILITIES

The Company has leases that contain contingent payment requirements for which payments vary depending on revenue, tickets sold or other variables.

Certain agreements relating to acquisitions that occurred prior to the adoption in January 2009 of the new FASB guidance for business combinations provide for purchase price adjustments and other future contingent payments based on the financial performance of the acquired companies. The Company will accrue additional amounts related to such contingent payments, with a corresponding adjustment to goodwill, if and when it is determinable that the applicable financial performance targets will be met. The aggregate of these contingent payments, if all performance targets are met, would not significantly impact the financial position of the Company. The last contingency period for which the Company has an outstanding contingent earn-out payment is for the period ending December 2017.

The Company has certain contingent obligations related to acquisitions made after the adoption in January 2009 of the FASB guidance for business combinations of various artist management companies and concert promotion companies. In accordance with the current guidance for business combinations, contingent consideration must be recorded at its fair value at the time of the acquisition. The contingent consideration is generally subject to payout following the achievement of future performance targets and some may be payable in 2011. As of September 30, 2011, the Company has accrued $0.8 million in other current liabilities and $7.0 million in other long-term liabilities and, as of December 31, 2010, the Company had accrued $1.2 million in other current liabilities and $16.7 million in other long-term liabilities representing the fair value of these estimated earn-out arrangements. The last contingency period for which the Company has an outstanding contingent earn-out payment is for the period ending December 2015. See Note 5—Fair Value Measurements for further discussion related to the valuation of the earn-out payments.

Certain agreements relating to acquisitions provide for deferred purchase consideration payments at future dates. A liability is established at the time of the acquisition for these fixed payments. For obligations payable at a date greater than twelve months from the acquisition date, the Company applies a discount rate to present value the obligations. As of September 30, 2011, the Company has accrued $7.0 million in other current liabilities and $12.3 million in other long-term liabilities and, as of December 31, 2010, the Company had accrued $13.6 million in other current liabilities and $18.1 million in other long-term liabilities related to these deferred purchase consideration payments. These deferred purchase consideration liabilities will be paid out through April 2014.

CTS Arbitration

Live Nation Worldwide, Inc. (“Live Nation Worldwide”) and CTS were parties to an agreement (the “CTS Agreement”) pursuant to which CTS was to develop and Live Nation Worldwide licensed or agreed to use ticketing software or ticketing platforms. Under the agreement, CTS was to develop software to be licensed to Live Nation Worldwide to provide ticketing services in the United States and Canada. The CTS Agreement also generally required Live Nation Worldwide to use CTS’s ticketing platforms in certain European countries so long as CTS’s existing platforms were appropriately modified to meet local market conditions. As of June 13, 2010, Live Nation Worldwide terminated the CTS Agreement because CTS materially breached the agreement by failing to deliver a North American ticketing system that met the contractual requirements of being a “world class ticketing system . . . that fits the needs of the North American market,” and by failing to deliver a ticketing system for the United Kingdom and other European countries that fit the needs of those markets as required by the CTS Agreement.

For North America, had CTS performed on the CTS Agreement, it would have been generally entitled to receive, during the then 10-year term of the CTS Agreement, a per ticket license fee upon the sale of certain tickets that Live Nation Worldwide or any of certain of its subsidiaries (collectively, the “Live Nation Worldwide entities”) controlled and had the right to distribute by virtue of certain promotion and venue management relations. This per ticket fee for events in North America was payable to CTS regardless of whether the Live Nation Worldwide entities chose to use the CTS ticketing platform, Ticketmaster’s ticketing platform or another ticketing platform for the sale of such controlled tickets. For events in certain European countries, not including the United Kingdom, Live Nation Worldwide generally was required, during a 10-year term, to exclusively book on the CTS ticketing platform all tickets that the Live Nation Worldwide entities had the right to distribute (or, to the extent other ticketing platforms were used, Live Nation Worldwide was generally required to pay to CTS the same fee that would have been payable had the CTS platform been used). For events in the United Kingdom, Live Nation Worldwide was required, for a 10-year term, to (i) book on the CTS ticketing platform all tickets controlled by Live Nation Worldwide entities that are not allocated by Live Nation Worldwide for sale through other sales channels and (ii) to offer for sale on the CTS UK website a portion of the tickets controlled by the Live Nation Worldwide entities. Finally, the CTS Agreement obligated Live Nation Worldwide and CTS to negotiate a set of noncompete agreements that, subject to

legal restrictions, could have precluded Live Nation Worldwide from offering primary market ticketing services to third parties in certain European countries during the term of the CTS Agreement.

In April 2010, CTS filed a request for arbitration with the International Court of Arbitration of the International Chamber of Commerce (“ICC”) pursuant to the CTS Agreement. In its request for arbitration, CTS asserts, among other things, that (i) the terms of the CTS Agreement, including the North America per ticket license fee, European exclusivity obligations and United Kingdom distribution obligations described above, apply to tickets sold and distributed by Ticketmaster, (ii) Ticketmaster’s sales and distribution of tickets following the completion of the Merger have resulted in various breaches of Live Nation Worldwide’s obligations under the CTS Agreement, (iii) Live Nation has failed to allocate the proper number of tickets to CTS’s system in the United Kingdom and (iv) the Merger and the Company’s subsequent actions have breached the implied covenant of good faith and fair dealing. In its request for arbitration, CTS seeks relief in the form of a declaration that Live Nation and Live Nation Worldwide are in breach of the CTS Agreement and the implied covenant of good faith and fair dealing, specific performance of Live Nation Worldwide’s obligations under the CTS Agreement, and unspecified damages resulting from such breaches. In March 2011, CTS provided further specifications on its claims and purported damages, including a claim for royalties that would have been paid over the contemplated 10- year term of the CTS Agreement and on Ticketmaster-controlled tickets (as well as tickets controlled by Live Nation Worldwide or any of certain of its subsidiaries).

In May 2010, the Company responded to CTS’s request for arbitration and filed counterclaims asserting that CTS breached the CTS Agreement by failing to provide ticketing platforms that met the standard required by the CTS Agreement for the North American and European markets. The Company is seeking relief primarily in the form of damages and a declaration that the Company validly terminated the CTS Agreement based on CTS’s material breaches. The Company denies that CTS is entitled to collect damages for royalties that would have been paid over the full 10-year term of the CTS Agreement or on Ticketmaster-controlled tickets. The matter has been assigned to an arbitrator and a hearing was conducted in late July and early August 2011, with post-hearing proceedings underway and continuing for the coming months. While it is reasonably possible that a loss related to this matter could be incurred by the Company in a future period, the Company does not believe that a loss is probable of occurring at this time. Considerable uncertainty remains regarding the validity of the claims and damages asserted against the Company. As a result, the Company is currently unable to estimate the possible loss or range of loss for this matter. The Company intends to vigorously defend the action.

Live Concert Antitrust Litigation

The Company was a defendant in a lawsuit filed by Malinda Heerwagen in June 2002 in United States District Court. The plaintiff, on behalf of a putative class consisting of certain concert ticket purchasers, alleged that anti-competitive practices for concert promotion services by the Company nationwide caused artificially high ticket prices. In August 2003, the District Court ruled in the Company’s favor, denying the plaintiff’s class certification motion. The plaintiff appealed to the United States Court of Appeals. In January 2006, the Court of Appeals affirmed, and the plaintiff then dismissed her action that same month. Subsequently, twenty-two putative class actions were filed by different named plaintiffs in various United States District Courts throughout the country, making claims substantially similar to those made in the Heerwagen action, except that the geographic markets alleged are regional, statewide or more local in nature, and the members of the putative classes are limited to individuals who purchased tickets to concerts in the relevant geographic markets alleged. The plaintiffs seek unspecified compensatory, punitive and treble damages, declaratory and injunctive relief and costs of suit, including attorneys’ fees. The Company has filed its answers in some of these actions and has denied liability. In April 2006, granting the Company’s motion, the Judicial Panel on Multidistrict Litigation transferred these actions to the United States District Court for the Central District of California for coordinated pre-trial proceedings. In June 2007, the District Court conducted a hearing on the plaintiffs’ motion for class certification, and also that month the Court entered an order to stay all proceedings pending the Court’s ruling on class certification. In October 2007, the Court granted the plaintiffs’ motion and certified classes in the Chicago, New England, New York/New Jersey, Colorado and Southern California regional markets. In November 2007, the Court extended its stay of all proceedings pending further developments in the United States Court of Appeals for the Ninth Circuit. In February 2008, the Company filed with the District Court a Motion for Reconsideration of its October 2007 class certification order. In October 2010, the District Court denied the Company’s Motion for Reconsideration and lifted the stay of all proceedings. In February 2011, the Company filed with the District Court a Motion for Partial Summary Judgment Regarding Statute of Limitations. In April 2011, the District Court granted the Company’s Motion for Partial Summary Judgment. A hearing is set for January 2012 on the Company’s forthcoming Motion for Summary Judgment and trial of the action involving the Southern California regional market is scheduled for April 2012. While it is reasonably possible that a loss related to this matter could be incurred by the Company in a future period, the Company does not believe that a loss is probable of occurring at this time. Considerable uncertainty remains regarding the validity of the claims and damages asserted against the Company. As a result, the Company is currently unable to estimate the possible loss or range of loss for this matter. The Company intends to vigorously defend all claims in all of the actions.

Ticketing Fees Consumer Class Action Litigation

In October 2003, a putative representative action was filed in the Superior Court of California challenging Ticketmaster’s charges to online customers for shipping fees and alleging that its failure to disclose on its website that the charges contain a profit component is unlawful. The complaint asserted a claim for violation of California’s Unfair Competition Law (“UCL”) and sought restitution or disgorgement of the difference between (i) the total shipping fees charged by Ticketmaster in connection with online ticket sales during the applicable period, and (ii) the amount that Ticketmaster actually paid to the shipper for delivery of those tickets. In August 2005, the plaintiff filed a first amended complaint, then pleading the case as a putative class action and adding the claim that Ticketmaster’s website disclosures in respect of its ticket order-processing fees constitute false advertising in violation of California’s False Advertising Law. On this new claim, the amended complaint seeks restitution or disgorgement of the entire amount of order-processing fees charged by Ticketmaster during the applicable period. In April 2009, the Court granted the plaintiff’s motion for leave to file a second amended complaint adding new claims that (a) Ticketmaster’s order processing fees are unconscionable under the UCL, and (b) Ticketmaster’s alleged business practices further violate the California Consumer Legal Remedies Act. Plaintiff later filed a third amended complaint, to which Ticketmaster filed a demurrer in July 2009. The Court overruled Ticketmaster’s demurrer in October 2009.

The plaintiff filed a class certification motion in August 2009, which Ticketmaster opposed. In February 2010, the Court granted certification of a class on the first and second causes of action, which allege that Ticketmaster misrepresents/omits the fact of a profit component in Ticketmaster’s shipping and order processing fees. The class would consist of California consumers who purchased tickets through Ticketmaster’s website from 1999 to present. The Court denied certification of a class on the third and fourth causes of action, which allege that Ticketmaster’s shipping and order processing fees are unconscionably high. In March 2010, Ticketmaster filed a Petition for Writ of Mandate with the California Court of Appeal, and plaintiffs also filed a motion for reconsideration of the Superior Court’s class certification order. In April 2010, the Superior Court denied plaintiffs’ Motion for Reconsideration of the Court’s class certification order, and the Court of Appeal denied Ticketmaster’s Petition for Writ of Mandate. In June 2010, the Court of Appeal granted the plaintiffs’ Petition for Writ of Mandate and ordered the Superior Court to vacate its February 2010 order denying plaintiffs’ motion to certify a national class and enter a new order granting plaintiffs’ motion to certify a nationwide class on the first and second claims. In September 2010, Ticketmaster filed its Motion for Summary Judgment on all causes of action in the Superior Court, and that same month plaintiffs filed their Motion for Summary Adjudication of various affirmative defenses asserted by Ticketmaster. In November 2010, Ticketmaster filed its Motion to Decertify Class.

In December 2010, the parties entered into a binding term sheet that provided for the settlement of the litigation and the resolution of all claims therein. The settlement was memorialized in a long-form agreement in April 2011. On June 3, 2011, after a hearing on the plaintiffs’ Motion for Preliminary Approval of the settlement, the Court declined to approve the settlement reached by the parties in its then-current form. Litigation continued, and on September 2, 2011, the Court granted in part and denied in part Ticketmaster’s Motion for Summary Judgment. The parties reached a new settlement on September 2, 2011 and subsequently entered into a long-form agreement. The plaintiffs filed a Motion for Preliminary Approval of the new settlement on September 27, 2011. On October 19, 2011, the Court preliminarily approved the new settlement. Ticketmaster and its parent, Live Nation, have not acknowledged any violations of law or liability in connection with the matter, but agreed to the settlement in order to eliminate the uncertainties and expense of further protracted litigation.

As of September 30, 2011, the Company has accrued $35.8 million, its best estimate of the probable costs associated with the settlement referred to above.

Canadian Consumer Class Action Litigation Relating to TicketsNow

In February 2009, five putative consumer class action complaints were filed in various provinces of Canada against TicketsNow, Ticketmaster, Ticketmaster Canada Ltd. and Premium Inventory, Inc. All of the cases allege essentially the same set of facts and causes of action. Each plaintiff purports to represent a class consisting of all persons who purchased a ticket from Ticketmaster, Ticketmaster Canada Ltd. or TicketsNow from February 2007 to present and alleges that Ticketmaster conspired to divert a large number of tickets for resale through the TicketsNow website at prices higher than face value. The plaintiffs characterize these actions as being in violation of Ontario’s Ticket Speculation Act, the Amusement Act of Manitoba, the Amusement Act of Alberta or the Quebec Consumer Protection Act. The Ontario case contains the additional allegation that Ticketmaster’s and TicketsNow’s service fees run afoul of anti-scalping laws. Each lawsuit seeks compensatory and punitive damages on behalf of the class.

As of September 30, 2011, the Company has accrued $6.2 million, its best estimate of the probable costs associated with the resale market claims of this matter, the full amount of which is anticipated to be funded by an escrow established in connection with Ticketmaster’s 2008 acquisition of TicketsNow.

While it is reasonably possible that a loss related to the primary market claims of this matter could be incurred by the Company in a future period, the Company does not believe that a loss is probable of occurring at this time. Considerable uncertainty remains regarding the validity of the claims and damages asserted against the Company. As a result, the Company is currently unable to estimate the possible loss or range of loss for the primary market claims of this matter. The Company intends to vigorously defend all claims in all of the actions.

United States Consumer Class Action Litigation Relating to TicketsNow

From February through June 2009, eleven putative class action lawsuits asserting causes of action under various state consumer protection laws were filed against Ticketmaster and TicketsNow in United States District Courts in California, New Jersey, Minnesota, Pennsylvania and North Carolina. The lawsuits allege that Ticketmaster and TicketsNow unlawfully deceived consumers by, among other things, selling large quantities of tickets to TicketsNow’s ticket brokers, either prior to or at the time that tickets for an event go on sale, thereby forcing consumers to purchase tickets at significantly marked-up prices on TicketsNow.com instead of Ticketmaster.com. The plaintiffs further claim violation of the consumer protection laws by Ticketmaster’s alleged “redirecting” of consumers from Ticketmaster.com to TicketsNow.com, thereby engaging in false advertising and an unfair business practice by deceiving consumers into inadvertently purchasing tickets from TicketsNow for amounts greater than face value. The plaintiffs claim that Ticketmaster has been unjustly enriched by this conduct and seek compensatory damages, a refund to every class member of the difference between tickets’ face value and the amount paid to TicketsNow, an injunction preventing Ticketmaster from engaging in further unfair business practices with TicketsNow and attorneys’ fees and costs. In July 2009, all of the cases were consolidated and transferred to the United States District Court for the Central District of California. The plaintiffs filed their consolidated class action complaint in September 2009, to which Ticketmaster filed its answer the following month. In July 2010, Ticketmaster filed its Motion for Summary Judgment. In April 2011, the parties filed a Stipulation wherein they stated that they have agreed on all material terms of a proposed settlement. On October 17, 2011, the plaintiffs filed a Motion for Preliminary Approval of Settlement in accordance with the terms to which the parties had previously agreed. As of September 30, 2011, the Company has accrued $2.1 million, its best estimate of the probable costs associated with this settlement. This liability includes an estimated redemption rate. Any difference between the Company’s estimated redemption rate and the actual redemption rate it experiences will impact the final settlement amount; however, the Company does not expect this difference to be material.

Other Litigation

From time to time, the Company is involved in other legal proceedings arising in the ordinary course of its business, including proceedings and claims based upon violations of antitrust laws and tortious interference, which could cause the Company to incur significant expenses. The Company also has been the subject of personal injury and wrongful death claims relating to accidents at its venues in connection with its operations. As required, the Company has accrued its estimate of the probable settlement or other losses for the resolution of any outstanding claims. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, including, in some cases, estimated redemption rates for the settlement offered, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings. In addition, under the Company’s agreements with Clear

Channel, it has assumed and will indemnify Clear Channel for liabilities related to its business for which they are a party in the defense.

NOTE 7—CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS

Transactions with Clear Channel

The Company has a non-employee director as of September 30, 2011 who is also a director and executive officer of Clear Channel. This director receives directors’ fees, stock options and restricted stock awards on the same basis as other non-employee directors. As of September 30, 2011, the Company also has an employee director who is a director of Clear Channel.

From time to time, the Company purchases advertising from Clear Channel and its subsidiaries in the ordinary course of business. For the three months ended September 30, 2011 and 2010, the Company recorded $1.8 million and $1.9 million, respectively, and for the nine months ended September 30, 2011 and 2010, the Company recorded $3.2 million and $3.6 million, respectively, in total as either components of direct operating expenses or selling, general and administrative expenses for these advertisements.

Transactions with IAC

For purposes of governing certain of the ongoing relationships between IAC and Ticketmaster at and after the spin-off of the Spincos from IAC, and to provide for an orderly transition, IAC, Ticketmaster and the other Spincos entered into a separation agreement and a tax sharing agreement, among other agreements.

The tax sharing agreement governs the respective rights, responsibilities and obligations of IAC and Ticketmaster after the spin-off with respect to taxes for the periods ended on or before the spin-off. Generally, IAC agreed to pay taxes with respect to Ticketmaster’s income included on its consolidated, unitary or combined federal or state tax returns, including audit adjustments with respect thereto, but other pre-distribution taxes that are attributable to Ticketmaster, including taxes reported on separately-filed returns and all foreign returns including audit adjustments with respect thereto, were agreed to be borne solely by Ticketmaster. The tax sharing agreement contains certain customary restrictive covenants that generally prohibit Ticketmaster (absent a supplemental United States Internal Revenue Service ruling or an unqualified opinion of counsel to the contrary, in each case, in a form and substance satisfactory to IAC in its sole discretion) from taking actions that could jeopardize the tax free nature of the spin-off. Ticketmaster agreed to indemnify IAC for any taxes and related losses resulting from its non-compliance with these restrictive covenants, as well as for the breach of certain representations in the spin-off agreements and other documentation relating to the tax-free nature of the spin-off.

The Company currently occupies office space in a building in Los Angeles that is owned by IAC. Since the Company had a non-employee director until January 2011 who was also a director and executive officer of IAC, this rental arrangement was considered a related party transaction for 2010. Rental expense for this office space charged to the Company by IAC for the three months ended September 30, 2010 was $0.5 million and from the Merger date through September 30, 2010 was $1.5 million. These charges were recorded as selling, general and administrative expenses.

Agreements with Liberty Media

In connection with the Merger Agreement, in February 2009 the Company entered into a stockholder agreement with Liberty Media and Liberty USA Holdings, LLC (the “Liberty Stockholder Agreement”) regarding certain corporate governance rights, designation rights and registration rights with respect to the Company’s common stock to be received by Liberty Media in the Merger. The Liberty Stockholder Agreement became effective upon consummation of the Merger. Among other things, subject to certain restrictions and limitations set forth in the Liberty Stockholder Agreement, Liberty Media has exercised its right to nominate two directors to serve on the Company’s board of directors. The Liberty Stockholder Agreement also contains provisions relating to limitations on the ownership of the Company’s equity securities by Liberty Media and its affiliates following the Merger and on transfers of the Company’s equity securities and rights and obligations under the Liberty Stockholder Agreement following the Merger.

In February 2011, the Company entered into a subscription agreement with Liberty Media. Pursuant to the subscription agreement, in February and June 2011, the Company sold to Liberty Media 1.8 million and 5.5 million shares, respectively, of the Company’s common stock for aggregate cash consideration of $18.8 million and $57.7 million, respectively.

Transactions Involving Executives

ATC Aviation, Inc. (“ATC”), which is owned by Irving Azoff owns an aircraft. An aircraft management and charter company, unrelated to either the Company or ATC, manages and operates the aircraft on ATC’s behalf and charges market rates for the use of the aircraft when used by Mr. Azoff or other executives on Company business, a portion of which is paid to ATC. For the three months ended September 30, 2011 and 2010, the Company made payments totaling $0.6 million and $0.2 million, respectively, and for the nine months ended September 30, 2011 and from the Merger date through September 30, 2010, the Company made payments totaling $1.2 million and $0.5 million, respectively.

The Azoff Trust was a party to the Second Amended and Restated Stockholders’ Agreement of Front Line dated as of June 9, 2008, as amended (the “Front Line Stockholders’ Agreement”). The Front Line Stockholders’ Agreement governed certain matters related to Front Line and the ownership of securities of Front Line, including board designation rights, transaction approval requirements, share transfer provisions, and put and call rights. The Front Line Stockholders’ Agreement also provided for the annual pro rata dividend to be paid to the stockholders as soon as reasonably practicable after the end of each fiscal year. The Front Line Stockholders’ Agreement was terminated in connection with the first quarter 2011 acquisition of the remaining equity interests in Front Line. See Note 3—Acquisitions for further discussion of this 2011 transaction.

In March 2010, the board of directors of Front Line declared a dividend payable in cash to the holders of record of Front Line common stock. This dividend was paid in March 2010 and totaled $20.6 million of which the Company received $15.0 million. The Azoff Trust received a pro rata portion of this dividend totaling $3.0 million with respect to the 25,918.276 shares of Front Line common stock held by the trust. Mr. Azoff received a gross-up payment of $0.7 million related to the difference between ordinary income and capital gains tax treatment for the portion of the dividend relating to his unvested shares, which gross-up was pursuant to his restricted stock grant agreement. Prior to the payment of the dividend, FLMG made a loan to Front Line in the amount of $21.3 million principally to fund the dividend, evidenced by a promissory note from Front Line to FLMG with a principal amount of $21.3 million and bearing interest at a rate of 4.5%, payable no later than November 30, 2010. This loan was paid off in the fourth quarter of 2010.

In January 2011, the board of directors of Front Line declared a dividend payable in cash to the holders of record of Front Line common stock. This dividend was paid in January 2011 and totaled $20.1 million of which the Company received $15.0 million. The Azoff Trust received a pro rata portion of this dividend totaling $3.0 million. In connection with the January 2011 dividend, Mr. Azoff received a gross-up payment of $0.6 million. Prior to the payment of the dividend, FLMG made a loan to Front Line in the amount of $20.7 million, evidenced by a promissory note from Front Line to FLMG with a principal amount of $20.7 million and bearing interest at a rate of 4.5%, payable no later than December 31, 2011. The proceeds from the note were used to pay the dividend.

Other Related Parties

During the nine months ended September 30, 2011 and 2010, the Company paid $6.8 million and $6.9 million, respectively, for deferred consideration due in connection with an acquisition of a company owned by various members of management of one of the Company’s subsidiaries. The acquired company holds the lease of a venue.

In January 2011, the Company sold a 49.9% noncontrolling interest in its clubs and theaters venue promotion business in Boston to a company partially owned by two employees of one of the Company’s subsidiaries in exchange for assets and cash valued at $12.6 million.

The Company conducts certain transactions in the ordinary course of business with companies that are owned, in part or in total, by various members of management of the Company’s subsidiaries or companies over which it has significant influence. These transactions primarily relate to venue rentals, concession services, equipment rentals, ticketing, marketing and other services and reimbursement of certain costs. As of September 30, 2011 and December 31, 2010, the Company had a combined receivable balance of $15.2 million and $22.4 million, respectively, from certain of these companies. The following table sets forth expenses incurred and revenue earned from these companies for services rendered or provided in relation to these business ventures.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)
Other related parties revenue	$	733	$	908	$	1,542	$	1,329

Other related parties expenses	$	1,644	$	3,383	$	7,163	$	11,938

None of these transactions were with directors or executive officers of the Company.

NOTE 8—INCOME TAXES

The Company calculates interim effective tax rates in accordance with the FASB guidance for income taxes and applies the estimated annual effective tax rate to year-to-date pretax income (loss) at the end of each interim period to compute a year-to-date tax expense (or benefit). This guidance requires departure from effective tax rate computations when losses incurred within tax jurisdictions cannot be carried back and future profits associated with operations in those tax jurisdictions cannot be assured beyond any reasonable doubt. Accordingly, the Company has calculated and applied an expected annual effective tax rate of approximately 19% (as compared to 16% in the prior year), excluding significant, unusual or extraordinary items, for ordinary income associated with operations, which are principally outside of the United States, for which the Company currently expects to have annual taxable income. The Company has not recorded tax benefits associated with losses from operations for which future taxable income cannot be reasonably assured. As required by this guidance, the Company also includes tax effects of significant, unusual or extraordinary items in income tax expense in the interim period in which they occur.

Net income tax benefit from continuing operations is $29.5 million for the nine months ended September 30, 2011. The components of tax expense that contributed to the net income tax benefit for the nine months ended September 30, 2011 primarily consisted of income tax expense of $16.7 million based on the expected annual rate pertaining to income for the nine month period ending on September 30, 2011, state and local taxes of $4.1 million, withholding taxes of $3.5 million, federal tax benefits of $14.9 million attributable to the carryback of net operating losses and a discrete tax benefit of $39.5 million for the reversal of valuation allowances recorded against United States federal and state deferred tax assets driven by deferred tax attributes relating to the acquisition of the remaining interests in Front Line. See Note 3—Acquisitions for further discussion regarding the 2011 acquisition of the remaining equity interests in Front Line.

As of September 30, 2011 and December 31, 2010, the Company had unrecognized tax benefits of approximately $11.4 million and $10.9 million, respectively. During the nine months ended September 30, 2011, unrecognized tax benefits increased by approximately $0.5 million for interest and penalty accruals. All of these unrecognized tax benefits would favorably impact the effective tax rate if recognized in the future.

Historically, the Company has reinvested all foreign earnings in its continuing foreign operations. The Company currently believes all undistributed foreign earnings will be indefinitely reinvested in its foreign operations.

The tax years 2001 through 2010 remain open to examination by the major tax jurisdictions to which the Company is subject.

NOTE 9—STOCKHOLDERS’ EQUITY

Common Stock

In February 2011, the Company issued 5.7 million shares of common stock in connection with the acquisition of the remaining interests in Front Line. See Note 3—Acquisitions for further discussion regarding this 2011 transaction.

In February and June 2011, the Company issued 1.8 million and 5.5 million shares, respectively, of common stock pursuant to a subscription agreement with Liberty Media.

In May 2011, the Company issued 0.7 million shares of common stock in connection with the acquisition of the remaining interests in Vector.

Redeemable Noncontrolling Interests

Due to pre-existing obligations acquired pursuant to the Merger, the Company was subject to fair value put arrangements, some of which were currently redeemable and some of which were not currently redeemable, with respect to the common securities that represent the noncontrolling interests of certain non-wholly-owned Ticketmaster subsidiaries. Certain of these put arrangements were exercisable at fair value by the counterparty outside of the control of the Company, but were settled either in cash or stock at the discretion of the Company and were therefore classified as mezzanine equity. Accordingly, to the extent the fair value of these redeemable interests exceeded the value determined by normal noncontrolling interests accounting, the value of such interests was adjusted to fair value with a corresponding adjustment to additional paid-in capital. For these redeemable interests, the redemption value was their estimated fair value which was based upon a discounted cash flow analysis using estimated cash flows. Changes to the estimated fair value were computed based upon the impact of changes in the projected cash flows each reporting period which took into account the current expectations regarding profitability and the timing of revenue-generating events and were discounted to a present day fair value. In instances where the put arrangements held by the noncontrolling interests were not currently redeemable, for increases in fair value, or reductions in fair value to the extent increases had been recognized previously, the Company accreted changes in fair value over the period from the date of issuance to the earliest redemption date of the individual securities. Accounting guidance prohibits the recognition of reductions in value below issuance date value, in this case the date of the Merger. In accordance with the FASB guidance for business combinations, the redeemable noncontrolling interests were recorded at their fair value as of the consummation of the Merger on January 25, 2010.

In the first quarter of 2011, the Company acquired all of the noncontrolling interests in Front Line, a Ticketmaster subsidiary, all of which were not currently redeemable. Specifically, the Company repurchased 27,821 shares of Front Line common stock and 3,402 vested options. These instruments had a combined carrying value of $82.4 million at December 31, 2010. As part of the same transaction, although classified in other long-term liabilities on the consolidated balance sheet, the Company also acquired 15,376 shares of participating restricted Front Line common shares not currently redeemable that had a carrying value of $24.0 million at December 31, 2010. See Note 3 – Acquisitions for further discussion of this 2011 transaction.

The common stock of two subsidiaries of Front Line held by noncontrolling interests also included put arrangements. The put arrangements did not have a determinable redemption date, but were considered to be currently redeemable based on the terms of redemption. The stock held by the noncontrolling interests had an estimated redemption fair value and carrying value of $22.5 million as of December 31, 2010. In the second quarter of 2011, the Company acquired all of these remaining noncontrolling interests for $14.7 million in cash and newly issued shares of Live Nation’s common stock. Amounts paid as part of this transaction were recorded to additional paid-in capital to the extent they were in excess of the amount on the consolidated balance sheets.

Noncontrolling Interests

As of September 30, 2011, for the non-wholly-owned subsidiaries of the Company, the common securities held by the noncontrolling interests do not include put arrangements exercisable outside of the control of the Company. Such noncontrolling interests are recorded in stockholders’ equity, separate from the Company’s own equity.

The following table shows the reconciliation of the carrying amount of redeemable noncontrolling interests, total stockholders’ equity, stockholders’ equity attributable to Live Nation Entertainment, Inc. and stockholders’ equity attributable to noncontrolling interests:


	Redeemable Noncontrolling Interests			Live Nation Entertainment, Inc. Stockholders’ Equity			Noncontrolling Interests			Comprehensive Income (Loss)			Total Stockholders’ Equity
	(in thousands)			(in thousands)
Balances at December 31, 2010	$	107,541		$	1,364,416		$	137,252		$	-		$	1,501,668
Non-cash compensation		-			18,472			-						18,472
Common shares issued for business acquisitions		-			64			-						64
Exercise of stock options		-			3,210			-						3,210
Sale of common shares		-			76,492			-						76,492
Acquisitions of noncontrolling interests		(98,027	)		84,711			2,084						86,795
Sales of noncontrolling interests		-			-			(2,699	)					(2,699	)
Fair value of redeemable noncontrolling interests adjustments		1,722			(1,722	)		-						(1,722	)
Cash dividends		(5,570	)		-			(6,733	)					(6,733	)
Other		(861	)		(29	)		(11	)					(40	)
Comprehensive income (loss):
Net income (loss)		(4,805	)		16,509			13,589			30,098			30,098
Unrealized loss on cash flow hedges		-			(158	)		-			(158	)		(158	)
Other		-			(33	)		-			(33	)		(33	)
Currency translation adjustment		-			17,363			-			17,363			17,363

Total comprehensive income										$	47,270			47,270

Balances at September 30, 2011	$	-		$	1,579,295		$	143,482					$	1,722,777

The purchase or sale of additional ownership in an already controlled subsidiary is recorded as an equity transaction with no gain or loss recognized in consolidated net income or comprehensive income. In the first nine months of 2011, the Company acquired the remaining equity interests in Front Line, Vector and other smaller companies. See Note 3—Acquisitions for further discussion regarding the Front Line acquisition. The following schedule reflects the change in ownership interests for these transactions.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)
Net income (loss) attributable to Live Nation Entertainment, Inc.	$	51,712	$	51,007	$	16,509	$	(103,993	)

Transfers (to) from noncontrolling interest:
Increase in Live Nation Entertainment, Inc.’s paid in capital for purchase of noncontrolling interests, net of transaction costs		274		1,181		84,711		1,181

Net transfers from noncontrolling interest		274		1,181		84,711		1,181

Change from net income (loss) attributable to Live Nation Entertainment, Inc. and transfers (to) from noncontrolling interest	$	51,986	$	52,188	$	101,220	$	(102,812	)

Earnings per Share

The following table sets forth the computation of basic and diluted net income (loss) per common share:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2011		2010			2011		2010
	(in thousands, except for per share data)
Net income (loss) attributable to Live Nation Entertainment, Inc.	$	51,712	$	51,007		$	16,509	$	(103,993	)
Less loss from discontinued operations, net of tax		-		(3,213	)		-		(3,893	)

Net income (loss) from continuing operations attributable to common stockholders—basic and diluted	$	51,712	$	54,220		$	16,509	$	(100,100	)

Weighted average common shares—basic		186,128		170,285			181,116		162,286
Effect of dilutive securities:
Stock options, restricted stock and warrants		2,403		2,017			2,191		-
2.875% convertible senior notes		-		-			-		-

Diluted weighted average common shares—diluted		188,531		172,302			183,307		162,286

Basic income (loss) from continuing operations per common share	$	0.28	$	0.32		$	0.09	$	(0.62	)
Diluted income (loss) from continuing operations per common share	$	0.27	$	0.32		$	0.09	$	(0.62	)

The calculation of diluted net income (loss) per common share includes the effects of the assumed exercise of any outstanding stock options and warrants, the assumed vesting of shares of restricted stock awards and units and the assumed conversion of the 2.875% convertible senior notes where dilutive. The following table shows securities excluded from the calculation of diluted net income (loss) per common share because such securities are anti-dilutive:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)
Options to purchase shares of common stock		16,234		17,143		16,234		21,257
Restricted stock awards and units - unvested		2,582		3,236		2,582		3,649
Warrants		500		500		500		500
Conversion shares related to 2.875% convertible senior notes		8,105		8,105		8,105		8,105

Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding		27,421		28,984		27,421		33,511

NOTE 10—STOCK-BASED COMPENSATION

The following is a summary of stock-based compensation expense recorded by the Company during the respective periods:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)
Selling, general and administrative expenses	$	3,045	$	7,899	$	36,616	$	24,208
Corporate expenses		5,153		4,996		14,539		21,969

Total stock-based compensation expense from continuing operations	$	8,198	$	12,895	$	51,155	$	46,177

In the third quarter of 2011, the Company granted 0.7 million shares of restricted stock with a total fair market value of $6.7 million, 0.3 million shares of market-based or performance-based awards with a total fair market value of $2.7 million

and 2.5 million stock options with a total fair market value of $13.0 million to certain employees under the Company’s stock incentive plans. These awards will all vest over four years with the exception of the market-based awards which will vest over four years if a specified stock price is achieved over a specified number of consecutive days during the four years.

In the first quarter of 2011, the Company acquired the remaining equity interests of Front Line. As a result of this acquisition, the Company recorded $24.4 million of stock-based compensation in selling, general and administrative expenses. See Note 3—Acquisitions for further discussion regarding the 2011 acquisition of the remaining equity interests in Front Line.

In the first nine months of 2010, the Company accelerated and modified the vesting of 1.4 million shares of unvested outstanding stock-based equity awards granted to certain employees of Ticketmaster effective upon termination, all of which had been converted to Live Nation equity awards in the Merger. The Company also accelerated 1.1 million shares of unvested outstanding stock-based equity awards as a result of the Merger based on employment contract “change of control” provisions for certain employees. As a result of these accelerations, the Company recognized $14.7 million of stock-based compensation expense for the nine months ended September 30, 2010. Of this amount, $8.3 million was recorded in corporate expenses and $6.4 million was recorded in selling, general and administrative expenses. There was no stock-based compensation expense related to these accelerations and modifications for the three months ended September 30, 2010. There were no accelerations or other modifications of outstanding Live Nation stock-based equity awards in the first nine months of 2011.

As of September 30, 2011, there was $69.4 million of total unrecognized compensation cost related to unvested stock-based compensation arrangements for stock options, restricted stock awards and restricted stock units.

Azoff Trust Note

As part of the Merger, a note was issued to the Azoff Trust in exchange for shares of Ticketmaster’s series A convertible redeemable preferred stock held by the Azoff Trust. The note accrues interest equal to 3.0% of the outstanding principal balance and is payable in monthly installments of $0.8 million through October 1, 2013, subject to Mr. Azoff’s continued employment with the Company. For the three months ended September 30, 2011 and 2010, the Company recorded $1.6 million in each of the respective periods and for the nine months ended September 30, 2011 and from the date of the Merger through September 30, 2010, the Company recorded $4.8 million and $4.3 million, respectively, related to this note as a component of corporate expenses.

NOTE 11—SEGMENT DATA

The Company’s reportable segments are Concerts, Ticketing, Artist Nation, eCommerce and Sponsorship.

The Concerts segment involves the promotion of live music events globally in the Company’s owned and/or operated venues and in rented third-party venues, the production of music festivals and the operation and management of music venues and is the aggregation of the Company’s North American Concerts and International Concerts operating segments. The Ticketing segment involves the management of the Company’s global ticketing operations including providing ticketing software and services to clients and is the aggregation of the Company’s North American Ticketing and International Ticketing operating segments. The Artist Nation segment provides management services to artists and other services including merchandise, artist fan sites and VIP tickets and is the aggregation of the Company’s Artist Management and Artist Services operating segments. The eCommerce segment provides online access for customers relating to ticket and event information and is responsible for the Company’s primary websites, www.livenation.com and www.ticketmaster.com. The Sponsorship segment manages the development of strategic sponsorship programs in addition to the sale of international, national and local sponsorships and placement of advertising including signage and promotional programs.

Revenue and expenses earned and charged between segments are eliminated in consolidation. Corporate expenses and all line items below operating income (loss) are managed on a total company basis.

The Company manages its working capital on a consolidated basis. Accordingly, segment assets are not reported to, or used by, the Company’s management to allocate resources to or assess performance of the segments, and therefore, total segment assets have not been disclosed.


	Concerts			Ticketing			Artist Nation			eCommerce		Sponsorship		Other			Corporate			Eliminations			Consolidated
	(in thousands)
Three Months Ended September 30, 2011
Revenue	$	1,280,297		$	287,073		$	121,375		$	36,598	$	72,722	$	779		$	-		$	(8,819	)	$	1,790,025
Direct operating expenses		1,066,140			130,645			80,994			5,736		12,300		-			(893	)		(8,618	)		1,286,304
Selling, general and administrative expenses		131,805			105,923			20,551			16,797		6,263		1,123			-			-			282,462
Depreciation and amortization		33,103			36,246			10,693			2,708		88		13			691			(201	)		83,341
Loss (gain) on sale of operating assets		13			(2	)		15			-		-		204			1			-			231
Corporate expenses		-			-			-			-		-		-			27,385			-			27,385
Acquisition transaction expenses		826			216			276			-		-		-			4,175			-			5,493

Operating income (loss)	$	48,410		$	14,045		$	8,846		$	11,357	$	54,071	$	(561	)	$	(31,359	)	$	-		$	104,809

Intersegment revenue	$	1,978		$	4,333		$	2,166		$	342	$	-	$	-		$	-		$	(8,819	)	$	-

Three Months Ended September 30, 2010
Revenue	$	1,380,527		$	261,175		$	110,960		$	25,822	$	69,534	$	1,569		$	-		$	(13,781	)	$	1,835,806
Direct operating expenses		1,192,486			123,629			70,212			2,377		10,324		-			2,417			(13,150	)		1,388,295
Selling, general and administrative expenses		128,680			75,638			22,984			10,202		6,230		960			-			-			244,694
Depreciation and amortization		29,741			25,920			12,285			2,239		66		6			623			(631	)		70,249
Loss (gain) on sale of operating assets		(776	)		(13	)		7			-		-		(1	)		4			-			(779	)
Corporate expenses		-			-			-			-		-		-			27,660			-			27,660
Acquisition transaction expenses		(2,863	)		373			1,290			-		-		-			3,781			-			2,581

Operating income (loss)	$	33,259		$	35,628		$	4,182		$	11,004	$	52,914	$	604		$	(34,485	)	$	-		$	103,106

Intersegment revenue	$	6,563		$	-		$	7,218		$	-	$	-	$	-		$	-		$	(13,781	)	$	-

Nine Months Ended September 30, 2011
Revenue	$	2,811,796		$	867,238		$	293,941		$	103,414	$	147,145	$	2,385		$	333		$	(27,936	)	$	4,198,316
Direct operating expenses		2,353,774			404,820			197,261			16,785		28,164		-			(1,895	)		(27,330	)		2,971,579
Selling, general and administrative expenses		400,421			261,888			89,466			46,828		21,440		2,183			-			-			822,226
Depreciation and amortization		87,818			103,186			37,305			8,173		276		40			1,557			(606	)		237,749
Loss (gain) on sale of operating assets		(677	)		(93	)		1,256			5		-		374			1			-			866
Corporate expenses		-			-			-			-		-		-			73,011			-			73,011
Acquisition transaction expenses		(5,289	)		1,167			(1,906	)		-		-		-			13,892			-			7,864

Operating income (loss)	$	(24,251	)	$	96,270		$	(29,441	)	$	31,623	$	97,265	$	(212	)	$	(86,233	)	$	-		$	85,021

Intersegment revenue	$	9,790		$	8,036		$	9,138		$	972	$	-	$	-		$	-		$	(27,936	)	$	-
Capital expenditures	$	15,825		$	41,833		$	5,318		$	3,879	$	892	$	-		$	4,606		$	-		$	72,353

Nine Months Ended September 30, 2010
Revenue	$	2,648,147		$	734,722		$	269,228		$	62,801	$	129,596	$	3,483		$	-		$	(22,075	)	$	3,825,902
Direct operating expenses		2,226,341			355,196			175,443			8,755		22,360		-			1,639			(20,400	)		2,769,334
Selling, general and administrative expenses		384,784			222,215			69,587			30,782		19,594		2,227			-			-			729,189
Depreciation and amortization		79,897			80,788			30,754			5,323		187		19			1,897			(1,675	)		197,190
Loss (gain) on sale of operating assets		(2,045	)		5,192			6			-		6		(8	)		4			-			3,155
Corporate expenses		-			-			-			-		-		-			86,666			-			86,666
Acquisition transaction expenses		(2,718	)		373			6,024			-		-		-			14,313			-			17,992

Operating income (loss)	$	(38,112	)	$	70,958		$	(12,586	)	$	17,941	$	87,449	$	1,245		$	(104,519	)	$	-		$	22,376

Intersegment revenue	$	10,895		$	-		$	11,180		$	-	$	-	$	-		$	-		$	(22,075	)	$	-
Capital expenditures	$	14,856		$	25,372		$	647		$	1,568	$	60	$	297		$	5,787		$	-		$	48,587

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

“Live Nation” (which may be referred to as the “Company”, “we”, “us” or “our”) means Live Nation Entertainment, Inc. and its subsidiaries, or one of our segments or subsidiaries, as the context requires. You should read the following discussion of our financial condition and results of operations together with the unaudited consolidated financial statements and notes to the financial statements included elsewhere in this quarterly report.

Special Note About Forward-Looking Statements

Certain statements contained in this quarterly report (or otherwise made by us or on our behalf from time to time in other reports, filings with the SEC, news releases, conferences, internet postings or otherwise) that are not statements of historical fact constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, notwithstanding that such statements are not specifically identified. Forward-looking statements include, but are not limited to, statements about our financial position, business strategy, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition, the effects of future legislation or regulations and plans and objectives of our management for future operations. We have based our forward-looking statements on our beliefs and assumptions based on information available to us at the time the statements are made. Use of the words “may,” “should,” “continue,” “plan,” “potential,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “outlook,” “could,” “target,” “project,” “seek,” “predict,” or variations of such words and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those set forth below under Part II Item 1A.—Risk Factors, as well as other factors described herein or in our annual, quarterly and other reports we file with the SEC (collectively, cautionary statements). Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. We do not intend to update these forward-looking statements, except as required by applicable law.

Executive Overview

We continue to progress our vision of being the leading live event company, which began with our merger with Ticketmaster in January 2010, and continues with the delivery of strong results for the nine months to date in 2011, as reflected in our improved revenue and operating results growth over the prior year. We are focused on the value drivers of acquiring content, selling tickets and creating an advertising network and we believe that we are well-positioned to better serve artists, teams, fans and venues. Our strategy remains centered on expanding our presence in the world’s largest markets, leveraging our leadership position in the live entertainment industry to sell more tickets and growing our revenue streams surrounding the ticket purchase and live event, while continuing to optimize our cost structure.

In Concerts, we have improved our operating results for the third quarter compared to last year through higher per show profitability. We reduced our number of amphitheater events, as we had planned, which resulted in less overall attendance but this concerted effort to reduce the higher risk shows helped to drive overall improvement in profitability per show in these venues. Arena and stadium events increased during the period as we focused on driving better economics with the venues and the events we were booking thereby improving the profitability. In addition, we continued to grow our festival base by investing in several new festivals, internationally and in North America.

Our Ticketing segment showed an increase in ticket sales in the quarter driven primarily by ticket volume increases due to acquisitions; organically there was a slight decline primarily due to the impact of our Concerts strategy to reduce our number of amphitheater shows as noted above and challenging year-over-year comparisons in the arts and theater category based on the available touring product. Overall our operations improved, as reflected in higher revenue and operating results, driven by fees earned on ticket sales for the 2012 London Olympics, growth from our recent acquisitions and overall fixed cost savings. These operational improvements were negatively impacted by costs related to a legal settlement in the quarter. Improvement of our ticketing platform continues on plan, which drives some increase in costs but will allow our clients to start realizing the benefits of changes this year. We continue to execute on a variety of initiatives aimed at improving the ticket buying process and overall fan and venue experience, including additional interactive seat maps, added functionality to social media platforms, additional tiered pricing and expansion of other sales channels.

For our Artist Nation segment, we saw improvements in fees earned through our artist management business during the third quarter offset by lower results in some of our artist services businesses driven by the timing of certain tours and higher costs. Our artist management business continues to focus on adding new artists, strengthening our management team by securing additional artist managers and pursuing strategic acquisitions to grow our international footprint.

Our eCommerce segment continued to show growth in online advertising this quarter as compared to last year. We also saw higher fees from online tickets sold internationally, as the eCommerce segment now manages all of our ticketing sites globally. We continue to focus on enhancing our online storefront, improving the functionality of our site in order to drive increased sales of tickets and upsell of other products. Through these efforts, we have seen an increase in the gross value of tickets sold online as well as an increased number of customers in our database. We have integrated our customer data sets into one unified data warehouse which allows us to provide data services to our clients, and to better target our marketing communications with our fans. We have launched Live Analytics in North America which provides our clients with insights, services and products to help them sell more tickets.

In Sponsorship, we delivered continued growth in revenue and operating results driven by our recent expansion of new strategic sponsors along with the renewal and growth of existing brand relationships. Our extensive on-site and online reach, global venue distribution network, artist relationships and ticketing operations are the key to securing long-term sponsorship agreements with major brands and we continue to look for ways to expand these assets further and to extend further internationally in new markets.

We remain excited about the long-term potential of our company as we continue to focus on the key elements of our business model – obtaining content, selling tickets and creating an advertising network. Our focus for the remainder of 2011, and as we look ahead, continues around four main areas surrounding the live event: growing content by adding new tours, venue clients and artists and expanding in key markets; growing ticket sales by delivering the highest quality ticketing platform, adding distribution channels, leveraging social media, improving pricing effectiveness and extending our reach into new markets; growing our global advertising business, both online and around our other assets; and continuing to drive operational efficiencies.

Our History

We were incorporated in Delaware on August 2, 2005 in preparation for the spin-off of substantially all of Clear Channel’s entertainment assets and liabilities. The Separation was completed on December 21, 2005, at which point we became a publicly traded company on the New York Stock Exchange trading under the symbol “LYV”.

Our Merger with Ticketmaster

On January 25, 2010, we completed our Merger with Ticketmaster. As part of the Merger, Ticketmaster stockholders received 1.4743728 shares of Live Nation common stock for each share of Ticketmaster common stock they owned. Effective on the date of the Merger, Ticketmaster became a wholly-owned subsidiary of Live Nation named Ticketmaster Entertainment LLC and Live Nation, Inc. changed its name to Live Nation Entertainment, Inc.; subsequently, in connection with certain financing transactions completed on May 6, 2010, Ticketmaster was merged into the Company and the separate corporate existence of Ticketmaster ceased.

Under the terms of the agreement reached with the DOJ in connection with obtaining regulatory clearance for the Merger, we agreed to divest our ticketing subsidiary, Paciolan, and to license the Ticketmaster ticketing system to AEG, for a period of up to five years, in addition to other terms intended to protect competitive conditions in ticketing and promotions. In March 2010, we sold Paciolan to Comcast.

Segment Overview

Our reportable segments are Concerts, Ticketing, Artist Nation, eCommerce and Sponsorship.

Concerts

Our Concerts segment principally involves the global promotion of live music events in our owned and/or operated venues and in rented third-party venues, the operation and management of music venues and the production of music festivals across the world. While our Concerts segment operates year-round, we experience higher revenue during the second and third quarters due to the seasonal nature of shows at our outdoor amphitheaters and festivals, which primarily occur May through September.

To judge the health of our Concerts segment, we primarily monitor the number of confirmed events in our network of owned and/or operated and third-party venues, talent fees, average paid attendance and advance ticket sales. In addition, at our owned and/or operated venues, we monitor attendance, ancillary revenue per fan and premium seat sales. For business that is conducted in foreign markets, we compare the operating results from our foreign operations to prior periods on a constant dollar basis.

Ticketing

The Ticketing segment is primarily an agency business that sells tickets for events on behalf of our clients and retains a convenience charge and order processing fee for our services. We sell tickets through a combination of websites, telephone services and ticket outlets. Our ticketing sales are impacted by fluctuations in the availability of events for sale to the public, which may vary depending upon scheduling by our clients.

To judge the health of our Ticketing segment, we primarily review the number of tickets sold through our ticketing operations, average convenience charges and order processing fees, the number of clients renewed and the average royalty rate paid to clients who use our ticketing services.

Artist Nation

The Artist Nation segment primarily provides management services to music recording artists in exchange for a commission on the earnings of these artists. Our Artist Nation segment also sells merchandise associated with musical artists at live musical performances, to retailers and directly to consumers via the internet and also provides other services to artists. Revenue earned from our Artist Nation segment is impacted to a large degree by the touring schedules of the artists we represent. Generally, we experience higher revenue during the second and third quarters as the period from May through September tends to be a popular time for touring events.

To judge the health of our Artist Nation segment, we primarily review the average annual earnings of each artist represented, percent of top artists on tour and planned album releases.

eCommerce

Our eCommerce segment manages our online, or ecommerce, activities including enhancements to our websites, bundling product offerings and online advertising at our websites. Through our websites, we sell tickets to our own events as well as tickets for our ticketing clients and disseminate event and related merchandise information online. This segment records a fee per ticket that is paid to it by the Ticketing segment on every ticket sold online via www.livenation.com and www.ticketmaster.com both domestically and internationally.

To judge the health of our eCommerce segment, we primarily review the number of unique visitors to our websites, the overall number of customers in our database, the gross value of tickets sold online, revenue related to the sale of other products and the online revenue received from sponsors advertising on our websites.

Sponsorship

Our Sponsorship segment employs a sales force that creates and maintains relationships with sponsors, through a combination of strategic, international, national and local opportunities for businesses to reach customers through our concert, venue, artist relationship and ticketing assets. We work with our corporate clients to help create marketing programs that drive their businesses.

To judge the health of our Sponsorship segment, we primarily review the average revenue per sponsor, the total revenue generated through sponsorship arrangements and percent of expected revenue under contract.

Consolidated Results of Operations


	Three Months Ended September 30,						%			Nine Months Ended September 30,						%
	2011			2010			Change			2011			2010 (1)			Change
	(in thousands)									(in thousands)
Revenue	$	1,790,025		$	1,835,806			(2	)%	$	4,198,316		$	3,825,902			10	%
Operating expenses:
Direct operating expenses		1,286,304			1,388,295			(7	)%		2,971,579			2,769,334			7	%
Selling, general and administrative expenses		282,462			244,694			15	%		822,226			729,189			13	%
Depreciation and amortization		83,341			70,249			19	%		237,749			197,190			21	%
Loss (gain) on sale of operating assets		231			(779	)		*			866			3,155			*
Corporate expenses		27,385			27,660			(1	)%		73,011			86,666			(16	)%
Acquisition transaction expenses		5,493			2,581			*			7,864			17,992			*

Operating income		104,809			103,106			2	%		85,021			22,376			*
Operating margin		5.9	%		5.6	%					2.0	%		0.6	%

Interest expense		30,388			29,280						90,462			85,773
Loss on extinguishment of debt		-			-						-			21,172
Interest income		(1,023	)		(709	)					(2,848	)		(2,143	)
Equity in earnings of nonconsolidated affiliates		(2,777	)		(629	)					(5,549	)		(2,884	)
Other expense (income), net		6,461			(212	)					7,207			(1,845	)

Income (loss) from continuing operations before income taxes		71,760			75,376						(4,251	)		(77,697	)
Income tax expense (benefit)		8,739			10,338						(29,544	)		10,755

Income (loss) from continuing operations		63,021			65,038						25,293			(88,452	)
Loss from discontinued operations, net of tax		-			(3,213	)					-			(3,893	)

Net income (loss)		63,021			61,825						25,293			(92,345	)
Net income attributable to noncontrolling interests		11,309			10,818						8,784			11,648

Net income (loss) attributable to Live Nation Entertainment, Inc.	$	51,712		$	51,007					$	16,509		$	(103,993	)

*	Percentages are not meaningful.

(1)	Consolidated results of operations for the nine months ended September 30, 2010 do not include Ticketmaster operations prior to the January 25, 2010 Merger date.

Key Operating Metrics


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Concerts (1)
Total Estimated Events:
North America		4,135		3,801		11,418		10,511
International		1,136		1,128		4,248		4,606

Total estimated events		5,271		4,929		15,666		15,117

Total Estimated Attendance (rounded):
North America		12,257,000		12,820,000		25,109,000		24,664,000
International		3,304,000		3,669,000		10,449,000		11,101,000

Total estimated attendance		15,561,000		16,489,000		35,558,000		35,765,000

Ancillary net revenue per attendee:
North America amphitheaters	$	17.54	$	16.44	$	18.08	$	16.99
Ticketing (2)
Number of tickets sold (in thousands):
Concerts		18,072		18,266		52,563		46,122
Sports		6,384		6,070		20,556		16,583
Arts and theater		5,190		4,539		14,608		12,532
Family		2,985		2,440		9,731		7,253
Other (3)		2,264		1,239		5,492		3,145

		34,895		32,554		102,950		85,635

Gross value of tickets sold (in thousands)	$	2,008,522	$	1,913,053	$	6,112,958	$	5,075,524
Sponsorship/Advertising
Online advertising revenue (in thousands)	$	13,709	$	9,881	$	35,351	$	26,708
Estimated average sponsorship dollars per sponsor (rounded)	$	102,000	$	98,000	$	206,000	$	182,000
eCommerce
Gross value of tickets sold online (in thousands)	$	1,700,025	$	1,524,429	$	5,032,914	$	4,076,512
Number of customers in database (rounded)						107,298,000		94,809,000

(1)

Events generally represent a single performance by an artist. Attendance generally represents the number of fans who were present at an event. Festivals are counted as one event in the quarter in which the festival begins but attendance is split over the days of the festival and can be split between quarters. Events and attendance metrics are estimated each quarter.

(2)

The number and gross value of tickets sold includes primary tickets only. These metrics include tickets sold during the period regardless of event timing except for our promoted concerts in our owned and/or operated buildings and certain European territories where these tickets are recognized as the concerts occur. The tickets sold listed above for 2010 do not include 7.1 million tickets with a gross value of $405.0 million for the pre-Merger period. Tickets sold for the full nine months ended September 30, 2010, including the pre-Merger period, were as follows:


Concerts			49,132
Sports			18,242
Arts and theater			13,779
Family			8,251
Other			3,376

			92,780

(3)	Other category includes tickets for comedy shows, facility tours, donations, lectures, seminars and cinema.

Revenue

Our revenue decreased $45.8 million, or 2%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of approximately $52.3 million related to the impact of changes in foreign exchange rates, revenue decreased $98.1 million, or 5%. The overall decrease in revenue was primarily due to a decrease in our Concerts segment of $100.2 million partially offset by increases in our Ticketing, Artist Nation and eCommerce segments of $25.9 million, $10.4 million and $10.8 million, respectively.

Our revenue increased $372.4 million, or 10%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of approximately $131.1 million related to the impact of changes in foreign exchange rates, revenue increased $241.3 million, or 6%. The overall increase in revenue was primarily due to increases in our Concerts, Ticketing, Artist Nation and eCommerce segments of $163.6 million, $132.5 million, $24.7 million and $40.6 million, respectively. The overall increase included incremental revenue of $77.3 million resulting from the Merger.

More detailed explanations of these changes are included in the applicable segment discussions below.

Direct operating expenses

Our direct operating expenses decreased $102.0 million, or 7%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of approximately $39.1 million related to the impact of changes in foreign exchange rates, direct operating expenses decreased $141.1 million, or 10%. The overall decrease in direct operating expenses was primarily due to a decrease in our Concerts segment of $126.3 million.

Our direct operating expenses increased $202.2 million, or 7%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of approximately $99.7 million related to the impact of changes in foreign exchange rates, direct operating expenses increased $102.5 million, or 4%. The overall increase in direct operating expenses was primarily due to increases in our Concerts, Ticketing and Artist Nation segments of $127.4 million, $49.6 million and $21.8 million, respectively. The overall increase included incremental direct operating expenses of $34.1 million resulting from the Merger.

Direct operating expenses include artist fees, production event expenses, ticketing client royalties and show-related marketing and advertising expenses along with other costs.

More detailed explanations of these changes are included in the applicable segment discussions below.

Selling, general and administrative expenses

Our selling, general and administrative expenses increased $37.8 million, or 15%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of approximately $6.2 million related to the impact of changes in foreign exchange rates, selling, general and administrative expenses increased $31.6 million, or 13%. The overall increase in selling, general and administrative expenses was primarily due to an increase in our Ticketing segment of $30.3 million.

Our selling, general and administrative expenses increased $93.0 million, or 13%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of approximately $18.4 million related to the impact of changes in foreign exchange rates, selling, general and administrative expenses increased $74.6 million, or 10%. The overall increase in selling, general and administrative expenses was primarily due to increases in our Concerts, Ticketing, Artist Nation and eCommerce segments of $15.6 million, $39.7 million, $19.9 million and $16.0 million, respectively. The overall increase included incremental selling, general and administrative expenses of $26.8 million resulting from the Merger and $24.4 million related to the 2011 acquisition of the remaining interests in Front Line.

Selling, general and administrative expenses for the three and nine months ended September 30, 2010 include $0.5 million and $8.9 million, respectively, of severance costs associated with the Merger.

More detailed explanations of these changes are included in the applicable segment discussions below.

Depreciation and amortization

Depreciation and amortization increased $13.1 million, or 19%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of approximately $0.7 million related to the impact of changes in foreign exchange rates, depreciation and amortization increased $12.4 million, or 18%. The overall increase in depreciation and amortization was primarily due to an increase in our Ticketing segment of $10.3 million.

Depreciation and amortization increased $40.6 million, or 21%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of approximately $3.5 million related to the impact of changes in foreign exchange rates, depreciation and amortization increased $37.1 million, or 19%. The overall increase in depreciation and amortization was primarily due to increases in our Ticketing and Artist Nation segments of $22.4 million and $6.6 million, respectively.

More detailed explanations of these changes are included in the applicable segment discussions below.

Loss (gain) on sale of operating assets

The $3.2 million loss on sale of operating assets for the nine months ended September 30, 2010 was primarily due to the $5.2 million loss resulting from our sale of Paciolan in the first quarter of 2010. There were no significant sales for the three months ended September 30, 2011 and 2010 or for the nine months ended September 30, 2011.

Corporate expenses

There was a slight decrease in corporate expenses during the three months ended September 30, 2011 as compared to the same period of the prior year.

Corporate expenses decreased $13.7 million, or 16%, during the nine months ended September 30, 2011 as compared to the same period of the prior year primarily due to $11.2 million in incremental non-cash compensation expense recorded in 2010 associated with equity awards exchanged or accelerated in connection with the Merger and $4.7 million of severance associated with the reorganization of our business units subsequent to the Merger in the second quarter of 2010.

Acquisition transaction expenses

Acquisition transaction expenses for the three and nine months ended September 30, 2011 were $5.5 million and $7.9 million, respectively, primarily due to ongoing litigation costs relating to the Merger partially offset by changes in the fair value of acquisition-related contingent consideration. Acquisition transaction expenses for the three and nine months ended September 30, 2010 were $2.6 million and $18.0 million, respectively, primarily due to costs associated with the Merger and changes in the fair value of acquisition-related contingent consideration.

Interest expense

Interest expense increased $4.7 million, or 5%, during the nine months ended September 30, 2011 as compared to the same period of the prior year primarily due to higher debt balances from the debt obtained in the Merger for a full nine months.

Our debt balances and weighted average cost of debt, excluding unamortized debt discounts and premiums, were $1.745 billion and 6.0%, respectively, at September 30, 2011, and $1.763 billion and 6.0%, respectively, at September 30, 2010.

Loss on extinguishment of debt

We recorded a loss on extinguishment of debt of $21.2 million during the nine months ended September 30, 2010, relating to the May 2010 replacement of our existing senior secured credit facilities with a new credit agreement that provides for $1.2 billion in credit facilities.

Income Taxes

We calculate interim effective tax rates in accordance with the FASB guidance for income taxes and apply the estimated annual effective tax rate to year-to-date pretax income (loss) at the end of each interim period to compute a year-to-date tax expense (or benefit). This guidance requires departure from the effective tax rate computations when losses incurred within tax jurisdictions cannot be carried back and future profits associated with operations in those tax jurisdictions cannot be assured beyond any reasonable doubt. Accordingly, we have calculated an expected annual effective tax rate of approximately 19% (as compared to 16% in the prior year), excluding significant, unusual or extraordinary items, for ordinary income associated with operations, which are principally outside of the United States, for which we currently expect to have annual taxable income. The effective tax rate has been applied to year-to-date earnings for those operations for which we currently expect to have taxable income. We have not recorded tax benefits associated with losses from operations for which future taxable income cannot be reasonably assured. As required by this guidance, we also include tax effects of significant, unusual or extraordinary items in income tax expense in the interim period in which they occur.

Net income tax benefit from continuing operations is $29.5 million for the nine months ended September 30, 2011. The components of tax expense that contributed to the net tax benefit for the nine months ended September 30, 2011 primarily consisted of income tax expense of $16.7 million based on the expected annual rate pertaining to income for the nine months ended September 30, 2011, state and local taxes of $4.1 million, withholding taxes of $3.5 million, federal tax benefits of $14.9 million attributable to the carryback of net operating losses and a discrete tax benefit of $39.5 million for reversal of valuation allowances recorded against United States federal and state deferred tax assets driven by deferred tax attributes relating to the acquisition of the remaining interests in Front Line in the first quarter of 2011.

Concerts Results of Operations

Our Concerts segment operating results were, and discussions of significant variances are, as follows:


	Three Months Ended September 30,						% Change			Nine Months Ended September 30,						% Change
	2011			2010						2011			2010
	(in thousands)									(in thousands)
Revenue	$	1,280,297		$	1,380,527			(7	)%	$	2,811,796		$	2,648,147			6	%
Direct operating expenses		1,066,140			1,192,486			(11	)%		2,353,774			2,226,341			6	%
Selling, general and administrative expenses		131,805			128,680			2	%		400,421			384,784			4	%
Depreciation and amortization		33,103			29,741			11	%		87,818			79,897			10	%
Loss (gain) on sale of operating assets		13			(776	)		*			(677	)		(2,045	)		*
Acquisition transaction expenses		826			(2,863	)		*			(5,289	)		(2,718	)		*

Operating income (loss)	$	48,410		$	33,259			46	%	$	(24,251	)	$	(38,112	)		36	%


Operating margin		3.8	%		2.4	%					(0.9	)%		(1.4	)%

Adjusted operating income **	$	83,684		$	61,914			35	%	$	62,196		$	43,661			42	%

*	Percentages are not meaningful.

**	Adjusted operating income (loss) is defined and reconciled to operating income (loss) below.

Three Months

Concerts revenue decreased $100.2 million, or 7%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $40.7 million related to the impact of changes in foreign exchange rates, revenue decreased $140.9 million, or 10%, primarily due to a decrease in global touring activity due to timing, a reduction in events and attendance for amphitheaters from our planned show reduction along with the change in timing of two festivals in 2011 to the second quarter. Partially offsetting these decreases were more shows and higher overall attendance in arenas and stadiums.

Concerts direct operating expenses decreased $126.3 million, or 11%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $34.4 million related to the impact of changes in foreign exchange rates, direct operating expenses decreased $160.7 million, or 13%, primarily due to the reduced number and timing of events noted above along with reduced costs for the events in the quarter.

Concerts selling, general and administrative expenses increased $3.1 million, or 2%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $3.3 million related to the impact of changes in foreign exchange rates, selling, general and administrative expenses declined by $0.2 million.

Concerts depreciation and amortization expense increased $3.4 million, or 11%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $0.4 million related to the impact of changes in foreign exchange rates, depreciation and amortization expense increased $3.0 million, or 10%, primarily due to an impairment charge of $5.7 million recorded in 2011 related to an amphitheater which is no longer in operation.

Concerts acquisition transaction expenses increased $3.7 million during the three months ended September 30, 2011 as compared to the same period of the prior year primarily due to reductions in the fair value of acquisition-related contingent consideration recorded in 2010 resulting from lower forecasted earnings from certain artist relationships.

The increased operating income for Concerts for the three months ended September 30, 2011 was primarily related to improved arena and stadium results partially offset by reduced show results for amphitheaters and festivals.

Nine Months

Concerts revenue increased $163.6 million, or 6%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $96.4 million related to the impact of changes in foreign exchange rates, revenue increased $67.2 million, or 3%, primarily due to increased shows and attendance in arenas and stadiums and higher global touring activity from artists such as U2 and Lady Gaga. Partially offsetting these increases was an overall decrease in events and attendance for amphitheaters from our planned show reduction.

Concerts direct operating expenses increased $127.4 million, or 6%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $84.2 million related to the impact of changes in foreign exchange rates, direct operating expenses increased $43.2 million, or 2%, primarily due to higher expenses associated with the increased event activity noted above and costs associated with investments in new festivals. Partially offsetting these increases were reduced direct operating expenses for amphitheaters driven by the reduction in shows noted above and also the 2010 impairments of certain artist advances.

Concerts selling, general and administrative expenses increased $15.6 million, or 4%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $9.4 million related to the impact of changes in foreign exchange rates, selling, general and administrative expenses increased $6.2 million, or 2%, primarily due to timing of compensation and an increase in legal fees primarily relating to the Live Concert Antitrust Litigation matter.

Concerts depreciation and amortization expense increased $7.9 million, or 10%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $1.2 million related to the impact of changes in foreign exchange rates, depreciation and amortization expense increased $6.7 million, or 8%, primarily due to a 2011 impairment charge of $5.7 million for an amphitheater no longer in operation.

Concerts acquisition transaction expenses decreased by $2.6 million during the nine months ended September 30, 2011 as compared to the same period of the prior year primarily due to less reductions in the fair value of acquisition-related contingent consideration resulting from lower forecasted earnings from certain artist relationships.

The decreased operating loss for Concerts for the nine months ended September 30, 2011 was primarily related to improved arena and stadium results partially offset by the reduced results for amphitheaters and festivals.

Ticketing Results of Operations

Our Ticketing segment operating results were, and discussions of significant variances are, as follows:


	Three Months Ended September 30,						% Change			Nine Months Ended September 30,						% Change
	2011			2010						2011			2010
	(in thousands)									(in thousands)
Revenue	$	287,073		$	261,175			10	%	$	867,238		$	734,722			18	%
Direct operating expenses		130,645			123,629			6	%		404,820			355,196			14	%
Selling, general and administrative expenses		105,923			75,638			40	%		261,888			222,215			18	%
Depreciation and amortization		36,246			25,920			40	%		103,186			80,788			28	%
Loss (gain) on sale of operating assets		(2	)		(13	)		*			(93	)		5,192			*
Acquisition transaction expenses		216			373			*			1,167			373			*

Operating income	$	14,045		$	35,628			(61	)%	$	96,270		$	70,958			36	%


Operating margin		4.9	%		13.6	%					11.1	%		9.7	%

Adjusted operating income **	$	51,819		$	63,883			(19	)%	$	204,273		$	175,087			17	%

*	Percentages are not meaningful.

**	Adjusted operating income (loss) is defined and reconciled to operating income (loss) below.

Three Months

Ticketing revenue increased $25.9 million, or 10%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $8.7 million related to the impact of changes in foreign exchange rates, revenue increased $17.2 million, or 7%, primarily due to incremental revenue of $16.1 million resulting from the acquisitions of Ticketnet in November 2010, TGLP in January 2011 and Serviticket in April 2011 along with increased ticket sales internationally and revenue from ticketing services provided for the 2012 London Olympics. Revenue related to ticketing service charges for our events where we control ticketing is deferred and recognized as the event occurs.

Ticketing direct operating expenses increased $7.0 million, or 6%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $4.2 million related to the impact of changes in

foreign exchange rates, direct operating expenses increased $2.8 million, or 2%, primarily due to incremental direct operating expenses of $7.2 million resulting from the acquisitions noted above, partially offset by lower royalty expenses.

Ticketing selling, general and administrative expenses increased $30.3 million, or 40%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $2.6 million related to the impact of changes in foreign exchange rates, selling, general and administrative expenses increased $27.7 million, or 37%, primarily due to additional litigation expenses of $14.6 million relating to the preliminary settlement of the Ticketing Fees Consumer Class Action Litigation matter, an increase in variable compensation expense, increased costs relating to our investment in technology and incremental selling, general and administrative expenses of $4.7 million resulting from the acquisitions noted above.

Ticketing depreciation and amortization increased $10.3 million, or 40%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $0.2 million related to the impact of changes in foreign exchange rates, depreciation and amortization increased $10.1 million, or 39%, primarily due to increased amortization resulting from additional non-recoupable ticketing contract advances and acceleration of the amortization for technology-related intangible assets in conjunction with the re-platforming of our ticketing system.

The decrease in operating income for Ticketing for the three months ended September 30, 2011 was primarily due to costs relating to settlement of pre-Merger litigation and investment in technology.

Nine Months

Ticketing revenue increased $132.5 million, or 18%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $26.2 million related to the impact of changes in foreign exchange rates, revenue increased $106.3 million, or 14%, primarily due to incremental revenue of $117.5 million resulting from the timing of our Merger and the acquisitions of Ticketnet, TGLP and Serviticket. In addition, we had increased ticket sales internationally, primarily in the United Kingdom and Australia, and higher fees related to ticketing services for the 2012 London Olympics. Partially offsetting these increases was a reduction in fees due to the change to the contract with AEG which was a requirement of the DOJ approval of the Merger and a reduction of $3.7 million relating to our divestiture of Paciolan in March 2010. Revenue related to ticketing service charges for our events where we control ticketing is deferred and recognized as the event occurs.

Ticketing direct operating expenses increased $49.6 million, or 14%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $12.2 million related to the impact of changes in foreign exchange rates, direct operating expenses increased $37.4 million, or 11%, primarily due to incremental direct operating expenses of $55.0 million resulting from the timing of our Merger and the acquisitions noted above and increased costs associated with the higher ticket sales internationally, partially offset by lower royalties and a reduction of $1.7 million relating to our Paciolan divestiture.

Ticketing selling, general and administrative expenses increased $39.7 million, or 18%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $8.2 million related to the impact of changes in foreign exchange rates, selling, general and administrative expenses increased $31.5 million, or 14%, primarily due to incremental selling, general and administrative expenses of $33.3 million resulting from the timing of our Merger and the acquisitions noted above. Also, we incurred additional litigation expenses of $14.6 million relating to the preliminary settlement of the Ticketing Fees Consumer Class Action Litigation matter and increased costs related to technology improvements, partially offset by a reduction of $1.1 million relating to our Paciolan divestiture.

Ticketing depreciation and amortization increased $22.4 million, or 28%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $2.3 million related to the impact of changes in foreign exchange rates, depreciation and amortization increased $20.1 million, or 25%, primarily due to incremental depreciation and amortization of $11.9 million resulting from the timing of our Merger and the acquisitions noted above along with increased amortization resulting from the addition of definite-lived intangible assets from our Merger and other acquisitions.

Ticketing loss on sale of operating assets of $5.2 million during the nine months ended September 30, 2010 is primarily related to the sale of Paciolan in March 2010.

The increase in operating income for Ticketing for the nine months ended September 30, 2011 was primarily due to the addition of the Ticketmaster ticketing operations for the full period (2010 only includes these operations after the January 25

Merger date), increased international ticket sales and earnings from the 2012 Olympics and the impact of our acquisitions noted above, partially offset by additional legal expenses.

Artist Nation Results of Operations

Our Artist Nation segment operating results were, and discussions of significant variances are, as follows:


	Three Months Ended September 30,						% Change			Nine Months Ended September 30,						% Change
	2011			2010						2011			2010
	(in thousands)									(in thousands)
Revenue	$	121,375		$	110,960			9	%	$	293,941		$	269,228			9	%
Direct operating expenses		80,994			70,212			15	%		197,261			175,443			12	%
Selling, general and administrative expenses		20,551			22,984			(11	)%		89,466			69,587			29	%
Depreciation and amortization		10,693			12,285			(13	)%		37,305			30,754			21	%
Loss on sale of operating assets		15			7			*			1,256			6			*
Acquisition transaction expenses		276			1,290			*			(1,906	)		6,024			*

Operating income (loss)	$	8,846		$	4,182			*		$	(29,441	)	$	(12,586	)		*


Operating margin		7.3	%		3.8	%					(10.0	)%		(4.7	)%

Adjusted operating income **	$	19,964		$	21,802			(8	)%	$	34,990		$	32,542			8	%

*	Percentages are not meaningful.

**	Adjusted operating income (loss) is defined and reconciled to operating income (loss) below.

Three Months

Artist Nation revenue increased $10.4 million, or 9%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $0.3 million related to the impact of changes in foreign exchange rates, revenue increased $10.1 million, or 9%, primarily due to an increase in management revenue from our artists currently on tour, higher premium ticket package sales and increased merchandise sales along with incremental revenue of $3.1 million resulting from the acquisition of SME in September 2010. Partially offsetting these increases was a decline resulting from a transition of artist-related online businesses to the eCommerce segment in 2011.

Artist Nation direct operating expenses increased $10.8 million, or 15%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $0.3 million related to the impact of changes in foreign exchange rates, direct operating expenses increased $10.5 million, or 15%, primarily due to higher costs associated with increased merchandise activity and premium ticket package sales along with incremental direct operating expenses of $2.7 million resulting from the acquisition noted above. Partially offsetting these increases was a decline resulting from the transition of artist-related online businesses noted above.

Artist Nation selling, general and administrative expenses decreased $2.4 million, or 11%, during the three months ended September 30, 2011 as compared to the same period of the prior year primarily due to the transition of artist-related online businesses along with lower stock-based compensation expense.

Artist Nation acquisition transaction expense decreased $1.0 million, or 79%, during the three months ended September 30, 2011 as compared to the same period of the prior year primarily due to the 2010 increase in the fair value of acquisition-related contingent consideration relating to improved projections for several artist management businesses.

The increased operating income for Artist Nation for the three months ended September 30, 2011 was driven by higher commissions for our artist management services, premium ticket package sales and reduced stock-based compensation.

Nine Months

Artist Nation revenue increased $24.7 million, or 9%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $2.2 million related to the impact of changes in foreign exchange rates, revenue increased $22.5 million, or 8%, primarily due to incremental revenue of $14.2 million resulting from

the timing of our Merger and the acquisition of SME, along with higher commissions for our artist management services and premium ticket package sales. Partially offsetting these increases was a decline resulting from a transition of artist-related online businesses to the eCommerce segment in 2011 and a decline in merchandise sales.

Artist Nation direct operating expenses increased $21.8 million, or 12%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $2.0 million related to the impact of changes in foreign exchange rates, direct operating expenses increased $19.8 million, or 11%, primarily due to incremental direct operating expenses of $11.2 million resulting from the timing of our Merger and the acquisition noted above as well as higher costs associated with the premium ticket packages. Partially offsetting these increases were declines in direct operating expenses resulting from the transition of artist-related online businesses and reduced merchandise sales.

Artist Nation selling, general and administrative expenses increased $19.9 million, or 29%, during the nine months ended September 30, 2011 as compared to the same period of the prior year primarily due to incremental stock-based compensation expense of $24.4 million related to the first quarter 2011 acquisition of the remaining interests in Front Line.

Artist Nation depreciation and amortization increased $6.6 million, or 21%, during the nine months ended September 30, 2011 as compared to the same period of the prior year primarily due to incremental amortization expense related to definite-lived intangible assets resulting from our Merger and other acquisitions and the acceleration of amortization expense for a tradename being phased out.

Artist Nation loss on sale of operating assets of $1.3 million during the nine months ended September 30, 2011 is primarily due to the sale of an artist management company in January 2011.

Artist Nation acquisition transaction expense decreased $7.9 million during the nine months ended September 30, 2011 as compared to the same period of the prior year primarily due to the 2011 decrease in the fair value of acquisition-related contingent consideration relating to the timing of a key artist tour along with the 2010 increase in the fair value of acquisition-related contingent consideration relating to improved projections for several artist management businesses.

The increased operating loss for Artist Nation for the nine months ended September 30, 2011 was driven by incremental stock-based compensation expense related to the acquisition of the remaining interests in Front Line partially offset by improved results for the artist management business.

eCommerce Results of Operations

Our eCommerce segment operating results were, and discussions of significant variances are, as follows:


	Three Months Ended September 30,						% Change			Nine Months Ended September 30,						% Change
	2011			2010						2011			2010
	(in thousands)									(in thousands)
Revenue	$	36,598		$	25,822			42	%	$	103,414		$	62,801			65	%
Direct operating expenses		5,736			2,377			*			16,785			8,755			92	%
Selling, general and administrative expenses		16,797			10,202			65	%		46,828			30,782			52	%
Depreciation and amortization		2,708			2,239			21	%		8,173			5,323			54	%
Loss on sale of operating assets		-			-			*			5			-			*

Operating income	$	11,357		$	11,004			3	%	$	31,623		$	17,941			76	%


Operating margin		31.0	%		42.6	%					30.6	%		28.6	%

Adjusted operating income **	$	14,115		$	13,476			5	%	$	39,951		$	24,408			64	%

*	Percentages are not meaningful.

**	Adjusted operating income (loss) is defined and reconciled to operating income (loss) below.

Three Months

eCommerce revenue increased $10.8 million, or 42%, during the three months ended September 30, 2011 as compared to the same period of the prior year primarily due to increased online advertising and upsell revenue, the transition of the

artist-related online business from the Artist Nation segment in 2011 and the expansion of our eCommerce operations internationally, whereby eCommerce is now paid a fee for international online ticket sales in 2011.

eCommerce direct operating expenses increased $3.4 million, or 141%, during the three months ended September 30, 2011 as compared to the same period of the prior year primarily due to incremental direct operating expenses resulting from higher sales and the transition of the artist-related online business noted above.

eCommerce selling, general and administrative expenses increased $6.6 million, or 65%, during the three months ended September 30, 2011 as compared to the same period of the prior year primarily due to the expansion of our eCommerce operations internationally, the transition of the artist-related online business and additional expenses related to marketing costs and investment in online technology.

Nine Months

eCommerce revenue increased $40.6 million, or 65%, during the nine months ended September 30, 2011 as compared to the same period of the prior year primarily due to increased online advertising and upsell revenue, the transition of the artist-related online business from the Artist Nation segment in 2011, the expansion of our eCommerce operations internationally, whereby eCommerce is now paid a fee for international online ticket sales in 2011, and incremental revenue of $5.4 million resulting from the timing of our Merger.

eCommerce direct operating expenses increased $8.0 million, or 92%, during the nine months ended September 30, 2011 as compared to the same period of the prior year primarily due to incremental direct operating expenses resulting from higher sales and the transition of the artist-related online business noted above partially offset by a reduction of nonstrategic affiliate programs.

eCommerce selling, general and administrative expenses increased $16.0 million, or 52%, during the nine months ended September 30, 2011 as compared to the same period of the prior year primarily due to the expansion of our eCommerce operations internationally, the transition of the artist-related online business, the investment in mobile and online technology and incremental selling, general and administrative expenses of $3.0 million resulting from our Merger.

eCommerce depreciation and amortization increased $2.9 million, or 54%, during the nine months ended September 30, 2011 as compared to the same period of the prior year primarily due to additional depreciation expense relating to enhancements to our websites and online storefront.

The increased operating income for eCommerce for the nine months ended September 30, 2011 was primarily a result of higher online advertising and upsell revenue, the expansion of our eCommerce operations internationally and a full nine months of results related to our Merger, partially offset by the investment in mobile and online technology.

Sponsorship Results of Operations

Our Sponsorship segment operating results were, and discussions of significant variances are, as follows:


	Three Months Ended September 30,						% Change			Nine Months Ended September 30,						% Change
	2011			2010						2011			2010
	(in thousands)									(in thousands)
Revenue	$	72,722		$	69,534			5	%	$	147,145		$	129,596			14	%
Direct operating expenses		12,300			10,324			19	%		28,164			22,360			26	%
Selling, general and administrative expenses		6,263			6,230			1	%		21,440			19,594			9	%
Depreciation and amortization		88			66			33	%		276			187			48	%
Loss on sale of operating assets		-			-			*			-			6			*

Operating income	$	54,071		$	52,914			2	%	$	97,265		$	87,449			11	%


Operating margin		74.4	%		76.1	%					66.1	%		67.5	%

Adjusted operating income **	$	54,367		$	53,113			2	%	$	98,015		$	88,138			11	%

*	Percentages are not meaningful.

**	Adjusted operating income (loss) is defined and reconciled to operating income (loss) below.

Three Months

Sponsorship revenue increased $3.2 million, or 5%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $2.1 million related to the impact of changes in foreign exchange rates, revenue increased $1.1 million, or 2%, primarily due to primarily due to increased sponsorship deals in North America.

Sponsorship direct operating expense increased $2.0 million, or 19%, during the three months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $0.2 million related to the impact of changes in foreign exchange rates, direct operating expenses increased $1.8 million, or 17%, primarily driven by the increased revenue.

The increased operating income for the three months ended September 30, 2011 was primarily due to new or increased sponsorship relationships primarily in North America.

Nine Months

Sponsorship revenue increased $17.5 million, or 14%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $5.0 million related to the impact of changes in foreign exchange rates, revenue increased $12.5 million, or 10%, primarily due to new sponsorship agreements, renewal or expansion of existing arrangements and expansion of our sponsorship operations internationally.

Sponsorship direct operating expense increased $5.8 million, or 26%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $1.1 million related to the impact of changes in foreign exchange rates, direct operating expenses increased $4.7 million, or 21%, primarily driven by higher costs related to marketing and the increased revenue.

Sponsorship selling, general and administrative expense increased $1.8 million, or 9%, during the nine months ended September 30, 2011 as compared to the same period of the prior year. Excluding the increase of $0.2 million related to the impact of changes in foreign exchange rates, selling, general and administrative expense increased $1.6 million, or 8%, primarily due to higher compensation expenses related to the increased operating results.

The increased operating income for the nine months ended September 30, 2011 was primarily due to new or increased sponsorship relationships.

Reconciliation of Segment Operating Income (Loss)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands)
Concerts	$	48,410		$	33,259		$	(24,251	)	$	(38,112	)
Ticketing		14,045			35,628			96,270			70,958
Artist Nation		8,846			4,182			(29,441	)		(12,586	)
eCommerce		11,357			11,004			31,623			17,941
Sponsorship		54,071			52,914			97,265			87,449
Other		(561	)		604			(212	)		1,245
Corporate		(31,359	)		(34,485	)		(86,233	)		(104,519	)

Consolidated operating income	$	104,809		$	103,106		$	85,021		$	22,376

Reconciliation of Segment Adjusted Operating Income (Loss)

AOI is a non-GAAP financial measure that we define as operating income (loss) before acquisition expenses (including transaction costs, changes in the fair value of accrued acquisition-related contingent consideration arrangements, Merger bonuses, payments under the Azoff Trust note and acquisition-related severance), depreciation and amortization (including goodwill impairment), loss (gain) on sale of operating assets and non-cash and certain stock-based compensation expense (including expense associated with grants of certain stock-based awards which are classified as liabilities). We use AOI to evaluate the performance of our operating segments. We believe that information about AOI assists investors by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that

affect net income, thus providing insights into both operations and the other factors that affect reported results. AOI is not calculated or presented in accordance with GAAP. A limitation of the use of AOI as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business. Accordingly, AOI should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, AOI as presented herein may not be comparable to similarly titled measures of other companies.

The following table sets forth the computation of adjusted operating income (loss):


	Adjusted operating income (loss)			Non-cash and stock- based compensation expense		Loss (gain) on sale of operating assets			Depreciation and amortization			Acquisition expenses			Operating income (loss)
	(in thousands)
Three Months Ended September 30, 2011
Concerts	$	83,684		$	1,332	$	13		$	33,103		$	826		$	48,410
Ticketing		51,819			1,319		(2	)		36,246			211			14,045
Artist Nation		19,964			134		15			10,693			276			8,846
eCommerce		14,115			50		-			2,708			-			11,357
Sponsorship		54,367			210		-			88			(2	)		54,071
Other and Eliminations		(545	)		-		204			(188	)		-			(561	)
Corporate		(19,791	)		5,153		1			691			5,723			(31,359	)

Total	$	203,613		$	8,198	$	231		$	83,341		$	7,034		$	104,809


Three Months Ended September 30, 2010
Concerts	$	61,914		$	2,610	$	(776	)	$	29,741		$	(2,920	)	$	33,259
Ticketing		63,883			1,453		(13	)		25,920			895			35,628
Artist Nation		21,802			4,047		7			12,285			1,281			4,182
eCommerce		13,476			121		-			2,239			112			11,004
Sponsorship		53,113			133		-			66			-			52,914
Other and Eliminations		(22	)		-		(1	)		(625	)		-			604
Corporate		(23,491	)		4,996		4			623			5,371			(34,485	)

Total	$	190,675		$	13,360	$	(779	)	$	70,249		$	4,739		$	103,106


Nine Months Ended September 30, 2011
Concerts	$	62,196		$	4,321	$	(677	)	$	87,818		$	(5,015	)	$	(24,251	)
Ticketing		204,273			3,892		(93	)		103,186			1,018			96,270
Artist Nation		34,990			27,776		1,256			37,305			(1,906	)		(29,441	)
eCommerce		39,951			150		5			8,173			-			31,623
Sponsorship		98,015			477		-			276			(3	)		97,265
Other and Eliminations		(404	)		-		374			(566	)		-			(212	)
Corporate		(51,810	)		14,539		1			1,557			18,326			(86,233	)

Total	$	387,211		$	51,155	$	866		$	237,749		$	12,420		$	85,021


Nine Months Ended September 30, 2010
Concerts	$	43,661		$	6,234	$	(2,045	)	$	79,897		$	(2,313	)	$	(38,112	)
Ticketing		175,087			10,798		5,192			80,788			7,351			70,958
Artist Nation		32,542			7,244		6			30,754			7,124			(12,586	)
eCommerce		24,408			353		-			5,323			791			17,941
Sponsorship		88,138			356		6			187			140			87,449
Other and Eliminations		(419	)		-		(8	)		(1,656	)		-			1,245
Corporate		(57,374	)		21,969		4			1,897			23,275			(104,519	)

Total	$	306,043		$	46,954	$	3,155		$	197,190		$	36,368		$	22,376

Liquidity and Capital Resources

Our working capital requirements and capital for our general corporate purposes, including acquisitions and capital expenditures, are funded from operations or from borrowings under our senior secured credit facility described below. Our cash is currently centrally managed on a worldwide basis. Our primary short-term liquidity needs are to fund general working capital requirements and capital expenditures while our long-term liquidity needs are primarily related to acquisitions and debt repayment. Our primary sources of funds for our short-term liquidity needs will be cash flows from operations and borrowings under our senior secured credit facility, while our long-term sources of funds will be from cash flows from operations, long-term bank borrowings and other debt or equity financing.

Our balance sheet reflects cash and cash equivalents of $782.6 million at September 30, 2011 and $892.8 million at December 31, 2010. Included in the September 30, 2011 and December 31, 2010 cash and cash equivalents balance is $333.9 million and $384.5 million, respectively, of funds representing amounts equal to the face value of tickets sold on behalf of clients and the clients’ share of convenience and order processing charges, or client funds. The Company does not utilize client funds for its own financing or investing activities as the amounts are payable to clients. Our balance sheet reflects current and long-term debt of $1.725 billion at September 30, 2011 and $1.732 billion at December 31, 2010. Our weighted-average cost of debt, excluding the debt discounts on our term loan and convertible notes and the debt premium on our 10.75% senior notes, was 6.0% at September 30, 2011.

Our cash and cash equivalents are held in accounts managed by third-party financial institutions and consist of cash in our operating accounts and invested cash. Cash held in operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits. The invested cash is invested in interest-bearing funds invested in bank deposits. While we monitor cash and cash equivalent balances in our operating accounts on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash and cash equivalents; however, we can provide no assurances that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

For our Concerts segment, we generally receive cash related to ticket revenue at our owned and/or operated venues in advance of the event, which is recorded in deferred revenue until the event occurs. With the exception of some upfront costs and artist deposits, which are recorded in prepaid expenses until the event occurs, we pay the majority of event-related expenses at or after the event.

We view our available cash as cash and cash equivalents, less ticketing-related client funds, less event-related deferred revenue, less accrued expenses due to artists and for cash collected on behalf of others for ticket sales, plus event-related prepaids. This is essentially our cash available to, among other things, repay debt balances, make acquisitions and finance capital expenditures.

Our intra-year cash fluctuations are impacted by the seasonality of our various businesses. Examples of seasonal effects include our Concerts and Artist Nation segments, which report the majority of their revenue in the second and third quarters. Cash inflows and outflows depend on the timing of event-related payments but the majority of the inflows generally occur prior to the event. See “—Seasonality” below. We believe that we have sufficient financial flexibility to fund these fluctuations and to access the global capital markets on satisfactory terms and in adequate amounts, although there can be no assurance that this will be the case, and capital could be less accessible and/or more costly given current economic conditions. We expect cash flow from operations and borrowings under our senior secured credit facility, along with other financing alternatives, to satisfy working capital, capital expenditures and debt service requirements for at least the succeeding year.

We may need to incur additional debt or issue equity to make other strategic acquisitions or investments. There can be no assurance that such financing will be available to us on acceptable terms or at all. We may make significant acquisitions in the near term, subject to limitations imposed by our financing documents and market conditions.

The lenders under our revolving loans and counterparties to our interest rate hedge agreements consist of banks and other third-party financial institutions. While we currently have no indications or expectations that such lenders and counterparties will be unable to fund their commitments as required, we can provide no assurances that future funding availability will not be impacted by adverse conditions in the financial markets. Should an individual lender default on its obligations, the remaining lenders would not be required to fund the shortfall, resulting in a reduction in the total amount available to us for future borrowings, but would remain obligated to fund their own commitments. Should any counterparty to our interest rate hedge agreements default on its obligations, we could experience higher interest rate volatility during the period of any such default.

Sources of Cash

Liberty Media Subscription Agreement

In February 2011, we entered into a subscription agreement with Liberty Media. Pursuant to the subscription agreement, in February and June 2011, we sold to Liberty Media 1.8 million and 5.5 million shares, respectively, of our common stock for cash consideration of $18.8 million and $57.7 million, respectively.

May 2010 Senior Secured Credit Facility

In May 2010, we replaced our existing senior secured credit facilities, including the Ticketmaster senior secured credit facility, by entering into a credit agreement dated as of May 6, 2010 that provides for $1.2 billion in credit facilities. This senior secured credit facility consists of (i) a $100 million term loan A with a maturity of five and one-half years, (ii) an $800 million term loan B with a maturity of six and one-half years and (iii) a $300 million revolving credit facility with a maturity of five years. In addition, subject to certain conditions, we have the right to increase such term loan facilities by up to $300 million in the aggregate. The five-year revolving credit facility provides for borrowings up to the amount of the facility with sublimits of up to (i) $150 million to be available for the issuance of letters of credit, (ii) $50 million to be available for swingline loans and (iii) $100 million to be available for borrowings in foreign currencies. The senior secured credit facility is secured by a first priority lien on substantially all of our domestic wholly-owned subsidiaries and on 65% of the capital stock of our wholly-owned foreign subsidiaries.

The interest rates per annum applicable to loans under the senior secured credit facility are, at our option, equal to either LIBOR plus 3.0% or a base rate plus 2.0%, subject to stepdowns based on our leverage ratio. The interest rate for the term loan B is subject to a LIBOR floor of 1.5% and a base rate floor of 2.5%. We are required to pay a commitment fee of 0.5% per year on the undrawn portion available under the revolving credit facility and variable fees on outstanding letters of credit.

During the first five and one-quarter years after the closing date, we are required to make quarterly payments on the term loan A at a rate ranging from 5% of the original principal amount in the first year of the facility to 40% in the last half-year of the facility. During the first six and one-quarter years after the closing date, we are required to make quarterly amortization payments on the term loan B at a rate of 0.25% of the original principal amount thereof. We are also required to make mandatory prepayments of the loans under the credit agreement, subject to specified exceptions, from excess cash flow, and with the proceeds of asset sales, debt issuances and specified other events.

Borrowings on the May 2010 senior secured credit facility were primarily used to repay the borrowings under ours and Ticketmaster’s then existing credit facilities, convert existing preferred stock of one of our subsidiaries into the right to receive a cash payment and settle this obligation, pay related fees and expenses and for general corporate purposes. During the nine months ended September 30, 2011, we made principal payments totaling $12.3 million on these term loans. At September 30, 2011, the outstanding balances on the term loans, net of discount, was $874.9 million. There were no borrowings under the revolving credit facility as of September 30, 2011. Based on our letters of credit of $49.0 million, $251.0 million was available for future borrowings.

8.125% Senior Notes

In May 2010, we issued $250 million of 8.125% senior notes due 2018. Interest on the notes is payable semi-annually in cash in arrears on May 15 and November 15 of each year, beginning on November 15, 2010, and the notes will mature on May 15, 2018. We may redeem some or all of the notes at any time prior to May 15, 2014 at a price equal to 100% of the principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium using a discount rate equal to the Treasury Rate plus 50 basis points. We may also redeem up to 35% of the notes from the proceeds of certain equity offerings prior to May 15, 2013, at a price equal to 108.125% of the principal amount, plus any accrued and unpaid interest. In addition, on or after May 15, 2014, we may redeem some or all of the notes at any time at redemption prices that start at 104.063% of the principal amount. We must also offer to redeem the notes at 101% of the aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if we experience certain kinds of changes of control. Borrowings on the 8.125% senior notes were primarily used to partially repay the borrowings under ours and Ticketmaster’s then existing credit facilities.

Debt Covenants

Our senior secured credit facility, which was entered into in May 2010, contains a number of covenants and restrictions that, among other things, requires us to satisfy certain financial covenants and restricts our and our subsidiaries’ ability to incur additional debt, make certain investments and acquisitions, repurchase our stock and prepay certain indebtedness, create

liens, enter into agreements with affiliates, modify the nature of our business, enter into sale-leaseback transactions, transfer and sell material assets, merge or consolidate, and pay dividends and make distributions (with the exception of subsidiary dividends or distributions to the parent company or other subsidiaries on at least a pro-rata basis with any noncontrolling interest partners). Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the credit facility becoming immediately due and payable. The senior secured credit facility agreement has two covenants measured quarterly that relate to total leverage and interest coverage. The consolidated total leverage covenant requires us to maintain a ratio of consolidated total debt to consolidated EBITDA (both as defined in the credit agreement) which was less than 4.9x over the trailing four consecutive quarters initially and has been reduced to 4.5x over the trailing four consecutive quarters on September 30, 2011. The total leverage ratio will further reduce to 4.0x on September 30, 2012, 3.75x on September 30, 2013 and 3.5x on March 31, 2015. The consolidated interest coverage covenant requires us to maintain a minimum ratio of consolidated EBITDA to consolidated interest expense (both as defined in the credit agreement) which was 2.5x over the trailing four consecutive quarters initially and has been increased to 2.75x over the trailing four consecutive quarters on September 30, 2011. The interest coverage will further increase to 3.0x on September 30, 2012.

The indentures governing our 10.75% senior notes and the 8.125% senior notes contain covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and issue preferred stock; make certain distributions, investments and other restricted payments; sell certain assets; agree to any restrictions on the ability of restricted subsidiaries to make payments to us; merge, consolidate or sell all of our assets; create certain liens; and engage in transactions with affiliates on terms that are not arm’s length. Certain covenants, including those pertaining to incurrence of indebtedness, restricted payments, asset sales, mergers and transactions with affiliates will be suspended during any period in which the notes are rated investment grade by both rating agencies and no default or event of default under the indentures has occurred and is continuing. The 10.75% senior notes and the 8.125% senior notes each contain two incurrence-based financial covenants, as defined, requiring a minimum fixed charge coverage ratio of 2.0 to 1.0 and a maximum secured indebtedness leverage ratio of 2.75 to 1.0.

Some of our other subsidiary indebtedness includes restrictions on acquisitions and prohibits payment of ordinary dividends. They also have financial covenants including minimum consolidated EBITDA to consolidated net interest payable, minimum consolidated cash flow to consolidated debt service and maximum consolidated debt to consolidated EBITDA, all as defined in the applicable debt agreements.

As of September 30, 2011, we believe we were in compliance with all of our debt covenants. We expect to remain in compliance with all of our debt covenants throughout 2011.

Guarantees of Third-Party Obligations

As of September 30, 2011 and December 31, 2010, we guaranteed the debt of third parties of approximately $2.9 million and $3.2 million, respectively, primarily related to maximum credit limits on employee and tour-related credit cards and guarantees of bank lines of credit of a nonconsolidated affiliate and a third-party promoter.

Uses of Cash

Acquisitions

When we make acquisitions, the acquired entity may have cash on its balance sheet at the time of acquisition. All amounts discussed in this section are presented net of any cash acquired. During the nine months ended September 30, 2011, we used $25.5 million in cash primarily for the January 2011 acquisition in our Ticketing segment of TGLP, the 2011 acquisitions in our Artist Nation segment of interests in four artist management companies in the United Kingdom and the United States, the April 2011 acquisition in our Ticketing segment of Serviticket and the August 2011 acquisition in our Concerts segment of Full Circle Live Limited.

Capital Expenditures

Venue and ticketing operations are capital intensive businesses, requiring continual investment in our existing venues and ticketing system in order to address audience and artist expectations, technological industry advances and various federal, state and/or local regulations.

We categorize capital outlays between maintenance capital expenditures and revenue generating capital expenditures. Maintenance capital expenditures are associated with the renewal and improvement of existing venues and information systems, web development and administrative offices. Revenue generating capital expenditures generally relate to the construction of new venues or major renovations to existing buildings or buildings that are being added to our venue network

or the development of new online or ticketing tools or technology enhancements. Revenue generating capital expenditures can also include smaller projects whose purpose is to add revenue and/or improve operating income. Capital expenditures typically increase during periods when venues are not in operation since that is the time that such improvements can be completed.

Our capital expenditures, including accruals but excluding expenditures funded by outside parties such as landlords or replacements funded by insurance companies, consisted of the following:


	Nine Months Ended September 30,
	2011		2010
	(in thousands)
Maintenance capital expenditures	$	41,643	$	29,987
Revenue generating capital expenditures		27,587		18,600

Total capital expenditures	$	69,230	$	48,587

Maintenance capital expenditures during the first nine months of 2011 increased from the same period of the prior year primarily due to expenditures relating to the integration of our financial systems and offices as a result of the Merger along with timing of maintenance expenditures related to venues, ticketing technology and client ticketing equipment.

Revenue generating capital expenditures during the first nine months of 2011 increased from the same period of the prior year primarily related to the re-platforming of our ticketing system and website enhancements.

We currently expect capital expenditures to be approximately $115 million for the full year 2011.

Cash Flows


	Nine Months Ended September 30,
	2011			2010
	(in thousands)
Cash provided by (used in):
Operating activities	$	(27,541	)	$	13,706
Investing activities	$	(87,395	)	$	537,798
Financing activities	$	(19,208	)	$	67,389

Operating Activities

Cash used in operations was $27.5 million for the nine months ended September 30, 2011, compared to cash provided by operations of $13.7 million for the nine months ended September 30, 2010. The $41.2 million increase in cash used resulted primarily from the net changes in the event-related operating accounts which are dependent on the timing of ticket sales along with the size and number of events for upcoming periods partially offset by the increase in the cash-related portion of net income. During the first nine months of 2011, we received less deferred revenue and paid higher accrued event-related expenses partially offset by lower payments of prepaid event-related expenses as compared to the same period in the prior year. Also contributing to the increase in cash used in operations was $22.2 million in payments related to the 2011 acquisition of certain of the remaining equity interests in Front Line that were classified as liabilities.

Investing Activities

Cash used in investing activities was $87.4 million for the nine months ended September 30, 2011, compared to cash provided by investing activities of $537.8 million for the nine months ended September 30, 2010. The $625.2 million increase in cash used is primarily due to $576.5 million of cash acquired in the Merger in 2010, fewer disposals of assets and an increase in purchases of property, plant and equipment.

Financing Activities

Cash used in financing activities was $19.2 million for the nine months ended September 30, 2011, compared to cash provided by financing activities of $67.4 million for the nine months ended September 30, 2010. The $86.6 million increase in cash used was primarily a result of net proceeds received in 2010 from the issuance of $250 million of 8.125% senior notes and our new senior secured credit facility, after repayment of the borrowings under the Live Nation and Ticketmaster credit facilities, payment of debt issuance costs and the redemption of preferred stock, as compared to only a net paydown in 2011 on the new term loans. The increase was also a result of cash used for purchases of noncontrolling interests, primarily related to the 2011 acquisition of the remaining equity interests in Front Line. These increases were partially offset by proceeds received in 2011 from the sale of common stock in connection with the subscription agreement with Liberty Media.

Seasonality

Our Concerts and Artist Nation segments typically experience higher operating income in the second and third quarters as our outdoor venues and international festivals are primarily used or occur during May through September, and our artists touring activity is higher. In addition, the timing of the on-sale of tickets and the tours of top-grossing acts can impact comparability of quarterly results year over year, although annual results may not be impacted. Our Ticketing segment sales are impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by our clients.

Cash flows from our Concerts segment typically have a slightly different seasonality as payments are often made for artist performance fees and production costs in advance of the date the related event tickets go on sale. These artist fees and production costs are expensed when the event occurs. Once tickets for an event go on sale, we generally begin to receive payments from ticket sales in advance of when the event occurs. We record these ticket sales as revenue when the event occurs.

Market Risk

We are exposed to market risks arising from changes in market rates and prices, including movements in foreign currency exchange rates and interest rates.

Foreign Currency Risk

We have operations in countries throughout the world. The financial results of our foreign operations are measured in their local currencies. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we operate. Currently, we do not operate in any hyper-inflationary countries. Our foreign operations reported operating income of $99.4 million for the nine months ended September 30, 2011. We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating income for the nine months ended September 30, 2011 by $9.9 million. As of September 30, 2011, our primary foreign exchange exposure included the Euro, British Pound and Canadian Dollar. This analysis does not consider the implication such currency fluctuations could have on the overall economic conditions of the United States or other foreign countries in which we operate or on the results of operations of our foreign entities.

We primarily use forward currency contracts in addition to options to reduce our exposure to foreign currency risk associated with short-term artist fee commitments. We also enter into forward currency contracts to minimize the risks and/or costs associated with changes in foreign currency rates on forecasted operating income. At September 30, 2011, we had forward currency contracts outstanding with a notional amount of $40.8 million.

Interest Rate Risk

Our market risk is also affected by changes in interest rates. We had $1.725 billion total debt, net of unamortized discounts and premiums, outstanding as of September 30, 2011. Of the total amount, taking into consideration existing interest rate hedges, we have $931.5 million of fixed-rate debt and $793.0 million of floating-rate debt.

Based on the amount of our floating-rate debt as of September 30, 2011, each 25 basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $2.0 million when the floor rate is not applicable. This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of September 30, 2011 with no subsequent change in rates for the remainder of the period.

At September 30, 2011, we have one interest rate cap agreement that is designated as a cash flow hedge for accounting purposes. The interest rate cap had a notional amount of $90.0 million at September 30, 2011 and limits our cash flow exposure to an interest rate of 4% per annum. This agreement expires on June 30, 2013. The fair value of this agreement at

September 30, 2011 was a de minimis asset. This agreement was put in place to reduce the variability of a portion of the cash flows from the interest payments related to the May 2010 senior secured credit facility. The terms of the May 2010 senior secured credit facility require one or more interest rate protection agreements, with an effect of fixing or limiting the interest costs, for at least 50% of the consolidated total funded debt at the closing date for at least three years. Upon the execution of this interest rate cap agreement, the existing interest rate protection agreements fully met this requirement.

Through our AMG subsidiary, we have two interest rate swap agreements with a $34.4 million aggregate notional amount that effectively convert a portion of our floating-rate debt to a fixed-rate basis. Both agreements expire in December 2015. Also, in connection with the financing of the redevelopment of the O₂Dublin, we have an interest rate swap agreement with a notional amount of $12.8 million that expires in December 2013, effectively converting a portion of our floating-rate debt to a fixed-rate basis. These interest rate swap agreements have not been designated as hedging instruments. Therefore, any change in fair value is recorded in earnings during the period of the change.

We currently have 2.875% convertible senior notes due 2027 with a principal amount of $220.0 million. Beginning with the period commencing on July 20, 2014 and ending on January 14, 2015, and for each of the interest periods commencing thereafter, we will pay contingent interest on the notes if the average trading price of the notes during the five consecutive trading days ending on the second trading day immediately preceding the first day of the applicable interest period equals or exceeds 120% of the principal amount of the notes. The contingent interest payable per note will equal 0.25% per year of the average trading price of such note during the applicable five trading-day reference period, payable in arrears.

Ratio of Earnings to Fixed Charges

The ratio of earnings to fixed charges is as follows:


Nine Months Ended September 30,		Year Ended December 31,
2011	2010	2010	2009	2008	2007
*	*	*	*	*	*

For the nine months ended September 30, 2011 and 2010, fixed charges exceeded earnings from continuing operations before income taxes and fixed charges by $9.8 million and $80.6 million, respectively. For the years ended December 31, 2010, 2009, 2008 and 2007, fixed charges exceeded earnings from continuing operations before income taxes and fixed charges by $193.6 million, $116.5 million, $358.6 million and $45.8 million, respectively.

The ratio of earnings to fixed charges was computed on a total company basis. Earnings represent income from continuing operations before income taxes less equity in undistributed net income (loss) of nonconsolidated affiliates plus fixed charges. Fixed charges represent interest, amortization of debt discount and expense and the estimated interest portion of rental charges. Rental charges exclude variable rent expense for events in third-party venues. Prior period calculations have been revised to conform to the current period presentation.

Recent Accounting Pronouncements

Recently Adopted Pronouncements

In October 2009, the FASB issued guidance on multiple-deliverable revenue arrangements which requires an entity to allocate consideration at the inception of an arrangement to all of its deliverables based on their relative selling prices. This guidance eliminates the use of the residual method of allocation and requires allocation using the relative-selling-price method in all circumstances in which an entity recognizes revenue for an arrangement with multiple deliverables. We adopted this guidance on January 1, 2011 and are applying it prospectively. The adoption of this guidance did not have a material effect on our financial position or results of operations.

In December 2010, the FASB issued guidance on disclosure of supplementary pro forma information for business combinations which amends and requires additional pro forma disclosure requirements for material business combinations on an individual or aggregate basis including pro forma revenue and earnings of the combined entity as if the acquisition date(s) had occurred as of the beginning of the comparable prior annual reporting period. This guidance also expands the supplemental pro forma disclosure requirements to include a description of the nature and amount of any material non-recurring adjustments that are directly attributable to the business combination. We adopted this guidance and are applying it prospectively to business combinations with an acquisition date on or after January 1, 2011.

Recently Issued Pronouncements

In May 2011, the FASB issued guidance that improves comparability of fair value measurements presented and disclosed in financial statements. This guidance clarifies the application of existing fair value measurement requirements including (1) the application of the highest and best use and valuation premise concepts, (2) measuring the fair value of an instrument classified in a reporting entity’s stockholders’ equity, and (3) quantitative information required for fair value measurements categorized within Level 3. It also requires additional disclosure for Level 3 measurements regarding the sensitivity of the fair value to changes in unobservable inputs and any interrelationships between those inputs. The amendments in this guidance are to be applied prospectively, and are effective for interim and annual periods beginning after December 15, 2011. We will adopt this guidance on January 1, 2012 and do not expect the adoption of this standard to have a material effect on our financial position or results of operations.

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of revenue and expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material.

Management believes that the accounting estimates involved in the allowance for doubtful accounts, impairment of long-lived assets and goodwill, revenue recognition, litigation accruals, stock-based compensation and accounting for income taxes are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. These critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions are described in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K filed with the SEC on February 28, 2011.

There have been no changes to our critical accounting policies during the nine months ended September 30, 2011.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Required information is within Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Risk.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to our company, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of senior management and our board of directors.

Based on their evaluation as of September 30, 2011, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective to ensure that (1) the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (2) the information we are required to disclose in such reports is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal controls will prevent all possible errors and fraud. Our disclosure controls and procedures are, however, designed to provide reasonable assurance of achieving their objectives, and our Chief Executive Officer and Chief Financial Officer have concluded that our financial controls and procedures are effective at that reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

CTS Arbitration

Live Nation Worldwide, Inc., or Live Nation Worldwide, and CTS were parties to an agreement, or the CTS Agreement, pursuant to which CTS was to develop and Live Nation Worldwide licensed or agreed to use ticketing software or ticketing platforms. Under the agreement, CTS was to develop software to be licensed to Live Nation Worldwide to provide ticketing services in the United States and Canada. The CTS Agreement also generally required Live Nation Worldwide to use CTS’s ticketing platforms in certain European countries so long as CTS’s existing platforms were appropriately modified to meet local market conditions. As of June 13, 2010, Live Nation Worldwide terminated the CTS Agreement because CTS materially breached the agreement by failing to deliver a North American ticketing system that met the contractual requirements of being a “world class ticketing system . . . that fits the needs of the North American market,” and by failing to deliver a ticketing system for the United Kingdom and other European countries that fit the needs of those markets as required by the CTS Agreement.

For North America, had CTS performed on the CTS Agreement, it would have been generally entitled to receive, during the then 10-year term of the CTS Agreement, a per ticket license fee upon the sale of certain tickets that Live Nation Worldwide or any of certain of its subsidiaries, which are collectively referred to as the Live Nation Worldwide entities, controlled and had the right to distribute by virtue of certain promotion and venue management relations. This per ticket fee for events in North America was payable to CTS regardless of whether the Live Nation Worldwide entities chose to use the CTS ticketing platform, Ticketmaster’s ticketing platform or another ticketing platform for the sale of such controlled tickets. For events in certain European countries, not including the United Kingdom, Live Nation Worldwide generally was required, during a 10-year term, to exclusively book on the CTS ticketing platform all tickets that the Live Nation Worldwide entities had the right to distribute (or, to the extent other ticketing platforms were used, Live Nation Worldwide was generally required to pay to CTS the same fee that would have been payable had the CTS platform been used). For events in the United Kingdom, Live Nation Worldwide was required, for a 10-year term, to (i) book on the CTS ticketing platform all tickets controlled by Live Nation Worldwide entities that are not allocated by Live Nation Worldwide for sale through other sales channels and (ii) to offer for sale on the CTS UK website a portion of the tickets controlled by the Live Nation Worldwide entities. Finally, the CTS Agreement obligated Live Nation Worldwide and CTS to negotiate a set of noncompete agreements that, subject to legal restrictions, could have precluded Live Nation Worldwide from offering primary market ticketing services to third parties in certain European countries during the term of the CTS Agreement.

In April 2010, CTS filed a request for arbitration with the International Court of Arbitration of the International Chamber of Commerce, or ICC, pursuant to the CTS Agreement. In its request for arbitration, CTS asserts, among other things, that (i) the terms of the CTS Agreement, including the North America per ticket license fee, European exclusivity obligations and United Kingdom distribution obligations described above, apply to tickets sold and distributed by Ticketmaster, (ii) Ticketmaster’s sales and distribution of tickets following the completion of the Merger have resulted in various breaches of Live Nation Worldwide’s obligations under the CTS Agreement, (iii) Live Nation has failed to allocate the proper number of tickets to CTS’s system in the United Kingdom and (iv) the Merger and our subsequent actions have breached the implied covenant of good faith and fair dealing. In its request for arbitration, CTS seeks relief in the form of a declaration that Live Nation and Live Nation Worldwide are in breach of the CTS Agreement and the implied covenant of good faith and fair dealing, specific performance of Live Nation Worldwide’s obligations under the CTS Agreement, and unspecified damages resulting from such breaches. In March 2011, CTS provided further specifications on its claims and purported damages, including a claim for royalties that would have been paid over the contemplated 10-year term of the CTS Agreement and on Ticketmaster-controlled tickets (as well as tickets controlled by Live Nation Worldwide or any of certain of its subsidiaries).

In May 2010, we responded to CTS’s request for arbitration and filed counterclaims asserting that CTS breached the CTS Agreement by failing to provide ticketing platforms that met the standard required by the CTS Agreement for the North American and European markets. We are seeking relief primarily in the form of damages and a declaration that we validly terminated the CTS Agreement based on CTS’s material breaches. We deny that CTS is entitled to collect damages for royalties that would have been paid over the full 10-year term of the CTS Agreement or on Ticketmaster-controlled tickets. The matter has been assigned to an arbitrator and a hearing was conducted in late July and early August 2011, with post-hearing proceedings underway and continuing for the coming months. While it is reasonably possible that a loss related to this matter could be incurred by us in a future period, we do not believe that a loss is probable of occurring at this time. Considerable uncertainty remains regarding the validity of the claims and damages asserted against us. As a result, we are currently unable to estimate the possible loss or range of loss for this matter. We intend to vigorously defend the action.

Live Concert Antitrust Litigation

We were a defendant in a lawsuit filed by Malinda Heerwagen in June 2002 in United States District Court. The plaintiff, on behalf of a putative class consisting of certain concert ticket purchasers, alleged that anti-competitive practices for concert promotion services by us nationwide caused artificially high ticket prices. In August 2003, the District Court ruled in our favor, denying the plaintiff’s class certification motion. The plaintiff appealed to the United States Court of Appeals. In January 2006, the Court of Appeals affirmed, and the plaintiff then dismissed her action that same month. Subsequently, twenty-two putative class actions were filed by different named plaintiffs in various United States District Courts throughout the country, making claims substantially similar to those made in the Heerwagen action, except that the geographic markets alleged are regional, statewide or more local in nature, and the members of the putative classes are limited to individuals who purchased tickets to concerts in the relevant geographic markets alleged. The plaintiffs seek unspecified compensatory, punitive and treble damages, declaratory and injunctive relief and costs of suit, including attorneys’ fees. We have filed our answers in some of these actions and have denied liability. In April 2006, granting our motion, the Judicial Panel on Multidistrict Litigation transferred these actions to the United States District Court for the Central District of California for coordinated pre-trial proceedings. In June 2007, the District Court conducted a hearing on the plaintiffs’ motion for class certification, and also that month the Court entered an order to stay all proceedings pending the Court’s ruling on class certification. In October 2007, the Court granted the plaintiffs’ motion and certified classes in the Chicago, New England, New York/New Jersey, Colorado and Southern California regional markets. In November 2007, the Court extended its stay of all proceedings pending further developments in the United States Court of Appeals for the Ninth Circuit. In February 2008, we filed with the District Court a Motion for Reconsideration of its October 2007 class certification order. In October 2010, the District Court denied our Motion for Reconsideration and lifted the stay of all proceedings. In February 2011, we filed with the District Court a Motion for Partial Summary Judgment Regarding Statute of Limitations. In April 2011, the District Court granted our Motion for Partial Summary Judgment. A hearing is set for January 2012 on our forthcoming Motion for Summary Judgment and trial of the action involving the Southern California regional market is scheduled for April 2012. While it is reasonably possible that a loss related to this matter could be incurred by us in a future period, we do not believe that a loss is probable of occurring at this time. Considerable uncertainty remains regarding the validity of the claims and damages asserted against us. As a result, we are currently unable to estimate the possible loss or range of loss for this matter. We intend to vigorously defend all claims in all of the actions.

Ticketing Fees Consumer Class Action Litigation

charged by Ticketmaster in connection with online ticket sales during the applicable period, and (ii) the amount that Ticketmaster actually paid to the shipper for delivery of those tickets. In August 2005, the plaintiff filed a first amended complaint, then pleading the case as a putative class action and adding the claim that Ticketmaster’s website disclosures in respect of its ticket order-processing fees constitute false advertising in violation of California’s False Advertising Law. On this new claim, the amended complaint seeks restitution or disgorgement of the entire amount of order-processing fees charged by Ticketmaster during the applicable period. In April 2009, the Court granted the plaintiff’s motion for leave to file a second amended complaint adding new claims that (a) Ticketmaster’s order processing fees are unconscionable under the UCL, and (b) Ticketmaster’s alleged business practices further violate the California Consumer Legal Remedies Act. Plaintiff later filed a third amended complaint, to which Ticketmaster filed a demurrer in July 2009. The Court overruled Ticketmaster’s demurrer in October 2009.

The plaintiff filed a class certification motion in August 2009, which Ticketmaster opposed. In February 2010, the Court granted certification of a class on the first and second causes of action, which allege that Ticketmaster misrepresents/omits the fact of a profit component in our shipping and order processing fees. The class would consist of California consumers who purchased tickets through Ticketmaster’s website from 1999 to present. The Court denied certification of a class on the third and fourth causes of action, which allege that Ticketmaster’s shipping and order processing fees are unconscionably high. In March 2010, Ticketmaster filed a Petition for Writ of Mandate with the California Court of Appeal, and plaintiffs also filed a motion for reconsideration of the Superior Court’s class certification order. In April 2010, the Superior Court denied plaintiffs’ Motion for Reconsideration of the Court’s class certification order, and the Court of Appeal denied Ticketmaster’s Petition for Writ of Mandate. In June 2010, the Court of Appeal granted the plaintiffs’ Petition for Writ of Mandate and ordered the Superior Court to vacate its February 2010 order denying plaintiffs’ motion to certify a national class and enter a new order granting plaintiffs’ motion to certify a nationwide class on the first and second claims. In September 2010, Ticketmaster filed its Motion for Summary Judgment on all causes of action in the Superior Court, and that same month plaintiffs filed their Motion for Summary Adjudication of various affirmative defenses asserted by Ticketmaster. In November 2010, Ticketmaster filed their Motion to Decertify Class.

As of September 30, 2011, we have accrued $35.8 million, our best estimate of the probable costs associated with this settlement referred to above.

Canadian Consumer Class Action Litigation Relating to TicketsNow

As of September 30, 2011, we have accrued $6.2 million, our best estimate of the probable costs associated with the resale market claims of this matter, the full amount of which is anticipated to be funded by an escrow established in connection with Ticketmaster’s 2008 acquisition of TicketsNow.

While it is reasonably possible that a loss related to the primary market claims of this matter could be incurred by us in a future period, we do not believe that a loss is probable of occurring at this time. Considerable uncertainty remains regarding the validity of the claims and damages asserted against us. As a result, we are currently unable to estimate the possible loss or range of loss for the primary market claims of this matter. We intend to vigorously defend all claims in all of the actions.

United States Consumer Class Action Litigation Relating to TicketsNow

New Jersey, Minnesota, Pennsylvania and North Carolina. The lawsuits allege that Ticketmaster and TicketsNow unlawfully deceived consumers by, among other things, selling large quantities of tickets to TicketsNow’s ticket brokers, either prior to or at the time that tickets for an event go on sale, thereby forcing consumers to purchase tickets at significantly marked-up prices on TicketsNow.com instead of Ticketmaster.com. The plaintiffs further claim violation of the consumer protection laws by Ticketmaster’s alleged “redirecting” of consumers from Ticketmaster.com to TicketsNow.com, thereby engaging in false advertising and an unfair business practice by deceiving consumers into inadvertently purchasing tickets from TicketsNow for amounts greater than face value. The plaintiffs claim that Ticketmaster has been unjustly enriched by this conduct and seek compensatory damages, a refund to every class member of the difference between tickets’ face value and the amount paid to TicketsNow, an injunction preventing Ticketmaster from engaging in further unfair business practices with TicketsNow and attorneys’ fees and costs. In July 2009, all of the cases were consolidated and transferred to the United States District Court for the Central District of California. The plaintiffs filed their consolidated class action complaint in September 2009, to which Ticketmaster filed its answer the following month. In July 2010, Ticketmaster filed its Motion for Summary Judgment. In April 2011, the parties filed a Stipulation wherein they stated that they have agreed on all material terms of a proposed settlement. On October 17, 2011, the plaintiffs filed a Motion for Preliminary Approval of Settlement in accordance with the terms to which the parties had previously agreed. As of September 30, 2011, we have accrued $2.1 million, our best estimate of the probable costs associated with this settlement. This liability includes an estimated redemption rate. Any difference between our estimated redemption rate and the actual redemption rate we experience will impact the final settlement amount; however, we do not expect this difference to be material.

Other Litigation

From time to time, we are involved in other legal proceedings arising in the ordinary course of our business, including proceedings and claims based upon violations of antitrust laws and tortious interference, which could cause us to incur significant expenses. We have also been the subject of personal injury and wrongful death claims relating to accidents at our venues in connection with our operations. As required, we have accrued our estimate of the probable settlement or other losses for the resolution of any outstanding claims. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, including, in some cases, estimated redemption rates for the settlement offered, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings. In addition, under our agreements with Clear Channel, we have assumed and will indemnify Clear Channel for liabilities related to our business for which they are a party in the defense.

Item 1A.

Risk Factors

While we attempt to identify, manage and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Item 1A of our 2010 Annual Report on Form 10-K filed with the SEC on February 28, 2011, describes some of the risks and uncertainties associated with our business which have the potential to materially affect our business, financial condition or results of operations. We do not believe that there have been any material changes to the risk factors previously disclosed in our 2010 Annual Report on Form 10-K.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 5.

Other Information

None.

Item 6.

Exhibits

Exhibit Description

Incorporated by Reference

Filed
Here
with

Exhibit
No.

Form

File No.

Exhibit No.

Filing Date

Filed By

2.1

Agreement and Plan of Merger, dated February 10, 2009, between Ticketmaster Entertainment, Inc. and Live Nation, Inc.

8-K

001-32601

2.1

2/13/2009

Live Nation
Entertainment,
Inc.

4.1

Second Amendment to Rights Agreement, effective as of September 23, 2011, entered into by and between Live Nation Entertainment, Inc. and The Bank of New York Mellon, as rights agent.

8-K

001-32601

4.1

9/28/2011

Live Nation
Entertainment,
Inc.

10.1

Second Supplemental Indenture, entered into as of August 4, 2011, among Live Nation Entertainment, Inc., the guarantors listed in Appendix I attached thereto, Vector Management LLC, Vector West, LLC, and The Bank of New York Mellon Trust Company, N.A., as trustee.

10.2

Eighth Supplemental Indenture, entered into as of August 4, 2011, among Live Nation Entertainment, Inc., the guarantors listed in Appendix I attached thereto, Vector Management LLC, Vector West, LLC and The Bank of New York Mellon Trust Company, N.A., as trustee.

31.1

Certification of Chief Executive Officer.

31.2

Certification of Chief Financial Officer.

32.1

Section 1350 Certification of Chief Executive Officer.

32.2

Section 1350 Certification of Chief Financial Officer.

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Schema Document

101.CAL

XBRL Taxonomy Calculation Linkbase Document

101.DEF

XBRL Taxonomy Definition Linkbase Document

101.LAB

XBRL Taxonomy Label Linkbase Document

101.PRE

XBRL Taxonomy Presentation Linkbase Document

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 3, 2011.


LIVE NATION ENTERTAINMENT, INC.

By:		/s/ BRIAN CAPO
		Brian Capo
		Chief Accounting Officer

EXHIBIT INDEX

Exhibit Description

Incorporated by Reference

Filed
Here
with

Exhibit
No.

Form

File No.

Exhibit No.

Filing Date

Filed By

2.1

Agreement and Plan of Merger, dated February 10, 2009, between Ticketmaster Entertainment, Inc. and Live Nation, Inc.

8-K

001-32601

2.1

2/13/2009

Live Nation
Entertainment,
Inc.

4.1

Second Amendment to Rights Agreement, effective as of September 23, 2011, entered into by and between Live Nation Entertainment, Inc. and The Bank of New York Mellon, as rights agent.

8-K

001-32601

4.1

9/28/2011

Live Nation
Entertainment,
Inc.

10.1

10.2

31.1

Certification of Chief Executive Officer.

31.2

Certification of Chief Financial Officer.

32.1

Section 1350 Certification of Chief Executive Officer.

32.2

Section 1350 Certification of Chief Financial Officer.

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Schema Document

101.CAL

XBRL Taxonomy Calculation Linkbase Document

101.DEF

XBRL Taxonomy Definition Linkbase Document

101.LAB

XBRL Taxonomy Label Linkbase Document

101.PRE

XBRL Taxonomy Presentation Linkbase Document