Good day and welcome to the Fourth Quarter and Full Year 2018 Live Nation Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to today's speakers. Please go ahead..

Good afternoon and welcome to our fourth quarter and full year 2018 conference call. I will make my comments today excluding the 2017 impacts of the $110 million legal settlement to keep our year-over-year comparable. Live Nation delivered its eighth consecutive year of record results. Revenue was up 11%, AOI up 13% and free cash flow up 8%.

All our divisions concert sponsors and ticketing delivered their strongest AOI results in the history of the Company. Turning with our concert units. Fans more than ever find the large experience from club shows arenas to, a top entertainment choice and the best way to celebrate their favorite artist and show the experience with fans. In the U.S.

alone, over the past 10 years, consumer spend on live experiences has grown by $5 billion per year, and we believe this ongoing trend will structurally continue to drive increased demand for concerts globally.

As a result to the strong demand growth in 2018 we delivered double digit attendance growth across our arenas, amphitheaters and theaters and clubs. Continuing to grow our global market share, adding nearly 7 million fans globally for total 93 million fans, driving concert revenue up 11% and AOI up 22%.

Across all of the artists we work with, we invested over $6 billion to promote 35,000 shows in 40 countries with Live Nation by far the largest financial supporter of artist and music. In addition to growing our show count and attendance, our pricing and onsite initiatives also continue to grow our AOI.

Average ticket prices for our amphitheaters and arena shows increased by 13% in 2018 as part of the house pricing was up over 20%. Overall, across all our shows, price increases delivered over $350 million to artist who effectively captured more the value from shows.

Once at the show average per fan spend grew as well, our amphitheaters spent grew by $3 to $27 per head as we added more high-end products, improve the quality of our food and beverage, and increase the revenue we earned from parking and service fees.

The strength of our business is continuing to 2019 with ticket sales for shows this year up double-digits through mid-February, along with similar increases and confirmed amphitheater, arena and stadium show count.

With this growth and our plans to further monetize our fan relationship, I expect this to translate to continued strong growth at concerts with AOI in 2019. In our high-end sponsorship business, we grew both revenue and AOI by 13% in 2018.

Our top strategic sponsors have been a key driver of this growth with 75 sponsors collectively spending over 350 million to reach our fans up 11% over 2017. Sponsorship at our festivals grew 13%. This growth was driven by new deals with brands including Heineken, Barclays, State Farm and Frito-Lay.

All of this reinforces the power of our platform of 93 million fans, and the continued shift by brands to invest in reaching fans during the live experience.

Research from our Power of Live white paper indicates that over 90% of fans believe that brands can enhance the live experience and over 60% of fans believe they are more likely to connect with brands at concerts. This reinforces that our shows offer brands a truly unique opportunity to connect with fans.

With over 70% of our budgeted sponsorship net revenue for the year already committed, pacing double-digits ahead of this time last year, we are confident we will again deliver double-digit AOI growth in 2019. Ticketmaster continued growing its leadership position in ticketing in 2018, with fee-bearing GTV up 14% and total platform GTV up 33 billion.

This drove a 14% increase in ticketing revenue and AOI of 7%. Our top priority at Ticketmaster in 2018 was deploying our TM presence product, which we see as our key for effectively unlocking the value of our customer relationships across our ticketing, concerts and sponsorship businesses.

By the end of 2018, we deployed presence in over 200 venues, operating 20,000 events for 40 million fans, approximately half of whom used digital tickets. We see our deployment in 2019 further accelerating, and we are expecting to have presence in over 500 venues by the end of the year, with over 125 million fans attending events at these buildings.

At that point, we will cover over 75% of major sports and Live Nation buildings, making Ticketmaster by far the global leader in digital ticketing.

At the same time, we continue build our marketplace, with the fourth quarter being our highest fee-bearing GTV quarter ever, selling over 60 million fee-bearing tickets in a quarter for the first time, and delivering over $5 billion in fee-bearing GTV.

Overall in 2018, Ticketmaster managed over 400,000 events, delivering almost 500 million tickets in 28 countries. We continue adding new clients to our marketplace, who collectively added over 10 million new tickets in 2018.

I believe we have tremendous opportunity for growth on a global basis, particularly in the 13 markets where we promote concerts but do not yet have a substantial ticketing operation.

In 2018, we furthered our international expansion, establishing ticketing operations in Italy, ramping up our German operations and laying the groundwork for expansion in Latin America.

Ticketmaster continues to exceed expectations, both operationally and in its leadership position in digital ticketing, along with its ability to expand that leadership position globally and deliver continued profitable growth.

In summary, 2018 was another strong year for Live Nation, building our global concert business and thereby driving growth in our high margin venues, sponsorship and ticketing businesses.

We continue to see the tremendous power of live events with strong consumer demand, the robust supply of new and established artists hitting the road and clubs, and stadium. Live is truly a unique entertainment firm, it cannot be duplicated and create lifetime memories, the fans are creating more than ever this experience economy.

We believe the live business will continue to have strong growth for years to come as fans globally drive demand artists of touring more and more an onsite spending sponsors and ticketing all benefit from the concerts flywheel.

In 2019, I expect it to further grow our global concert position while enhancing onsite hospitality and capturing more pricing opportunities. In sponsorship, we will continue to drive double digit growth is more brands look for that direct connection with music fans.

And ticketing continue to transform to a truly digital ecosystem, it will benefit from continued growth in concert ticket sales and further expansion of our global footprint.

We believe that the combination of macro trends and our demonstrated ability to execute are strong indicators of our ability to continue to grow the business for many years to come. With that, I will turn the call over to Joe to take you through additional details..

Thanks, Michael. Looking at our business segments, first concerts as Michael said, in 2018, we grew attendance by 8% to a record 93 million fans promoting 19 of the top 25 global tours.

As we have talked about over the past year, 2018 was a very strong year for arenas and theaters in theaters and clubs with all three building types of double digits in attendance. Globally, we also continue growing our festival portfolio, adding seven festivals to give us a global portfolio of 104 festivals in 14 countries.

As a result we increase festival attendees by 6% to nearly 9 million fans and now have 29 festivals that each attracted over 100,000 fans last year.

Looking geographically, North America was the primary driver of our fan growth while internationally to stick with lower stadium attendance offset much of their strong arena and festival attendance growth.

Looking specifically at the fourth quarter attendance and show count were up our AOI was lower, heavily driven by a $15 million a year on year increase in advertising expense related to 2019 shows.

This increased advertising spend representative of a continued shift earlier on sales and is also one of the reasons we are optimistic about 2019 concert activity. For 2019, as Michael said we are already seen strong growth and ticket sales for shows this year.

Sales are particularly strong in our international markets, which we expect to continue through the year with North America also expected to keep growing. We see growth across all buildings types in 2019 with arenas globally amphitheaters and North American and stadiums internationally, all contributing to the increase.

Along with our fan growth, we will also be continuing our focus on pricing optimization and onsite monetization in 2019. On pricing, with over 2000 arena and amphitheater shows already on sale, we are seeing high single digit increases in front of house pricing, which I expect to continue to expand throughout the year.

While on site monetization won't start until the summer season, it remains a priority to continue our growth of the past few years with teams already working on specific amphitheater by amphitheater plans. Turning to our sponsorship and advertising business. In 2018, we again delivered double digit AOI growth, up 13% this year.

This performance was reflective of strength across the board. North America and international sponsorship businesses were both up double-digits, and both sponsorship and online advertising also grew double-digits. For the fourth quarter, revenue was a 20% and AOI was at 16%.

We saw particularly strong growth in our festivals in the fourth quarter including Austin City Limits and Voodoo while also launching a number of major programs for sponsors including Google, Sony, Pepsi Uber and T Mobile. As we get into 2019, we expect to again deliver double-digit AOI growth of the year.

As Michael indicated, we are pacing double-digits ahead of this time last year, and based on our current discussions with brands, we are expecting strong growth in our basis strategic sponsors as well as our on-site sponsorship particularly at festivals. Finally, Ticketmaster.

Global GTV was up 7% for the quarter and up 8% for the full year, driven by Fee-Bearing GTV, which was up 12% and 14% for the quarter and year respectively. Primary GTV, which accounts for almost 90% of overall Fee-Bearing GTV was up 12% for the quarter and 14% for the full year. Secondary GTV was up 6% for the quarter and up 16% for the full year.

As we continue to take share in the North America secondary market. Throughout 2018, we continue to improve our mobile and app experiences, which is critical for our digital strategy. We grow our app install base by 40% year-over-year give me this much greater reach for direct can relationships.

In sales of tickets via mobile devices continue to grow rapidly, up 35% for the year and accounting for over 40% of overall ticket sales. For the fourth quarter, Ticketmaster AOI was down slightly impacted by one-time costs associated with the third-party vendor data breach that affected our marketplace in certain international markets.

Much of these costs were in the fourth quarter and for the full year these one-time cost totaled approximately $15 million. To preempt the question on margins, obviously, these data breach costs at a material impact on our 2018 margins. The majority of the remaining margin impact comes from two other factors.

First, as Michael indicated, we're continuing to invest and expanding Ticketmaster's global footprint and we expect in any start-up market will have below average margins for a period of time as it scales.

These markets are generally rapidly AOI positive given our ability to get an allocation applied nation concert tickets, but initially at below average margins. Secondly, as we continue to get more effective a data driven marketing, we're spending more to grow our GTV. To be clear, the GTV from free visits continued growing in 2018.

The paid marketing driven GTV grew even faster. As a result, margins were impacted despite the attractive profitability of the incremental GTV generated via this paid marketing. So in summary, 2018 was a great year across all of our businesses; and in 2019, we expect to continue growing all the businesses.

From a stadium standpoint, we see our growth continuing to be delivered primarily in the second, third quarters, as most of our concert investments will be playing out in those quarters.

The first and fourth quarters each account for less than 10% of our annual AOI, meaning that they will also have to absorb increase fixed costs associated with our overall growth against seasonally lower activity. On FX, we ended up with a negligible impact on AOI and revenue for 2018 and at this point we see very little impact on 2019.

I will now turn the call over to Kathy to go through more on our financial results..

Thanks, Joe, and good afternoon everyone. I will start with our key highlights for the fourth quarter. Revenue increased by 12% to $2.6 billion, AOI was $69 million compared to $87 million in 2017, after adding back in $110 million legal accrual recorded in 2017.

As of December 31, our deferred revenue related to future shows was $1.1 billion, up 35% from the $816 million last year. Concerts with a 12% increase contributed the majority of the revenue growth in the quarter from increased arena and theater and club activity.

Sponsorship and advertising revenue was up 20% from higher sponsor and online activity in North America, and ticketing revenue increase 15% from higher primary ticket volume. Fourth quarter AOI was lower in concerts due to the $15 million increase in advertising expense for 2019 shows that Joe mentioned.

Sponsorship and advertising delivered 16% growth in an AOI with higher online advertising in North America and growth in sponsorships internationally. Our operating loss was $90 million in the quarter, essentially flat to last year after adjusting for the legal accrual.

The net loss for the quarter was $148 million compared to a loss of $137 million in the prior year, before the legal accrual and $56 million tax benefits related to tax reform changes in 2017.

For the 2018 school year revenue was $10.8 billion an 11% increase over 2017.AOI was $829 million for the full year, and up 13% over our 2017 AOI $735 million before the legal accrual. Free cash flow Jessica was $481 million up 8% over last year without the legal accrual, or 58% of AOI for the year.

Other segments delivered double digit growth in revenue for 2018. The majority of the increase was driven by concerts up, 11% from increase show account and attendance across arenas, amphitheaters in theaters and clubs. Sponsorship and advertising revenue was up 13% from growth in online advertising and sponsorship programs globally.

And ticketing revenue increased by 14% from higher primary ticket volume driven by concerts along with increased secondary sales.

Concerts AOI was up 22% as a result of more events and fans, across arenas, amphitheaters festivals in theaters and clubs and higher ancillary revenue per fan and or amphitheaters, Sponsorship and advertising AOI grew by 13% in line with this higher revenue and ticketing AOI grew 7% without the 2017 legal accrual, delivering growth in both primary and secondary ticket sales.

Although impacted by the cyber investigation costs incurred this year that Joe noted. Operating income was $273 million, up 35% over last year before the legal accrual driven by our strong AOI growth. Our net income for the year was $60 million as compared to $48 million in 2017 before the legal accrual and the 2017 tax reform related tax benefit.

We recorded $78 million of accretion of redeemable non-controlling interest in 2018. We currently expect this accretion to be approximately $45 million for 2019 which will be consistently spread across the quarters. We expected amortization of non-repeatable ticketing contract advances in 2019 will be in line with the last few years of expense.

Turning to our balance sheet. As of December, we had total cash of $2.4 billion, including 859 million and ticketing client cash, and 903 million in net concert event related cash. Leading free cash balances $610 million.

Net cash provided by operating activities was 942 million as compared to 624 million last year with the increased driven by our higher event related deferred revenue. For the full year, total capital expenditures were $251 million, roughly half of which were spent on revenue generating items.

For 2019, we currently expect our total capital expenditures to be approximately $300 million, with a similar split to this year for revenue generating expenditures. Our total net debt as of December 2018 was $2.8 billion with a weighted average cost of 4.2%. Thank you for joining us today and we will now open the call for questions..

[Operator Instructions] We'll go first to Amy Yong with Macquarie..

So I guess two questions. One, one for Joe first, when you talk about ticketing and expanding into international markets. How quickly do you think the margins on those fronts can match that on the U.S. side? And I guess, Michael, a lot of us remember from the Liberty Analysts Day, hitting -- the Live Nation hitting a 125 million attendees.

What does that assume in terms of M&A and organic growth? Thanks..

Amy thanks. So here with regard to the international market. So the first thing remember on the international market is currently the fee structure is fairly different on average in the U.S. Your typical service fee in the U.S. is around 20%. Your typical service fee internationally is around 10%.

So we talked in the past that one of the factors that we have going on as we reviewing thought our international markets. Again profitable market adding to our AOI and cash generation, they’re structurally today at a lower margin on average than the U.S. market. And while we see some level of convergence overtime, don't expect that to shift quickly.

Each of the markets in terms of its maturation all has, hard to give you a one size fits all. But as I said, they do become AOI positive pretty quickly with our concert allocations and then we grow it from there..

Amy, it's Michael, I'll jumping on TM. The one thing to think about also on ticketing outside of North America, it's probably, let's call it 15 years behind the U.S. model was so advanced on a closed platform and just increasing service fees every dollar for 20 years.

International, we see great growth in that, some of those markets may only have $2 service fees today, but they all have great pricing potential for the next 10 years. So a lot of these markets today are lower so to speak, there they literally are still distributing over the local bank and we have a retail strategy converting to online.

But we also see international has a great opportunity to that is where we actually have great pricing power. And every year we're seeing the service fee going up to reflect kind of closer to the U.S. model overtime. So great profit pool to grow internationally outside the U.S. Canada. And Amy starting second question and Michael can chip in.

The question that has grown 125 million fans from our 93 million fans M&A versus organic. The complexity here again with us is we will often use M&A to enter a market buying local to be relatively small, promoter one who's well established that market. And then we can on our engine of 80 tours that we're buying on to that area.

So whether we're talking about a local market here in North America or promoter down in Argentina, we rapidly grow organically off of that initial platform that we're purchasing. So we end up with 70% 80% organic growth as a result, but we but we do use absolute M&A for that initial entry point. Yes actually let me took the words out.

I mean, we historically have had a fairly balanced model, well over 30 of our business to be acquiring more tourists globally and three markets on our own and growing the overall business by showing more tickets to the current tour, and then we selectively on bolt-on still look at the global opportunity of a fragmented industry.

I think we use that 30% global market share. So we'll continue to bolt on, there's a few chunk here ones we would look to acquire to Excel that and organic. And those three combinations are how we grew over the last five, six years and we think will continue to execute both runway on bolt on and an organic..

And we'll go next to Jason Bazinet with Citi..

A quick question on the secondary ticketing market. You mentioned you're gaining share.

Do you mind just giving us a quick snapshot of sort of how big that market is and major players are? And how your how you think you're being successful taking share so far?.

Yes. So, we're getting some pretty specific numbers that are last Liberty presentation. So I'll try to remember all of those numbers. So, I think what we did say is the secondary industry over the past several years has been growing at a pretty good clip, frankly, faster than we have been growing our ticket prices.

And so we think there continues to be over $1 billion price arbitrage that exists in our concert tickets alone. And if you look at the marketplace, we obviously have a two headed strategy. One strategy is to create a compelling product on Ticketmaster that offers but the primary.

And secondary tickets, the other strategy which is at least as important is to continue to get more effective at that initial primary ticket pricing and transfer as much of the economics as possible into the artists pocket which can use to track down to tour more and be out there generating more sales more bands for our overall flywheel strategies.

So going forward, I think it would be our expectation that we would see rest growth certainly in the secondary market as we continue to focus on that primary prices, I think that the competitors in the space are pretty well known, obviously stuff in the United States.

But, for us it's really a matter of how do we continue to best serve dollars and the fans for the right products..

And we'll go next to Brandon Ross with BTIG..

Maybe following up on, Amy, a little bit, you did a number of international acquisition since Q4 started, I think 9. And you mentioned strengths next year being driven by international.

Are we now at a point where you see international becoming the real growth engine of the Company? And maybe you could talk about what markets you're investing in internationally and why? And then I have a follow up..

I'll start and Joe can fill in some pieces. I don't think we've done anything that we haven't been actually done for a while. We still believe that the U.S. Canadian market, let's put those two together. still have growth ahead. We are still under servicing in markets as we've talked before about.

We serve a lot of opportunities to build one of our businesses and a lot of in the A market. We have low market share in a lot of big market. So U.S. still has great potential, we still think sponsorship is a double-digit growth business in America.

And we see, I think the concert business continues to be on-site hospitality, real estate expansion and incredible frothy opportunity in the U.S. So it's not an easier either. We continue to execute with great confidence that it's you can invest in America.

But we absolutely have always said that it's a global business and as we build out the pipe in 40 countries, and we look at all the other cities around the world where we have no market share or learn.

As we put in the best promoter in a ticketing platform and our global concert which then follow usually sponsorship in ticketing, we have that model down in major cities and when we got those 3 to 4 legs of that still in Milan and Cape Town and real, we know we can build $10 million to $20 million business.

So we think our whole bunch of opportunities international where we don't have the four legs we might have one leg, that's why you see us by a festival in a major market and major promoter in a different market. As we fill up the legs, great opportunity organically will happen to our scale. So we'll be doing that for the next 5 to 10 years.

We'll be talking about 30% market share and lots of opportunity to build International Business platform. It's behind America and a lot of the ways I just mentioned on ticketing. So, we see it probably as a higher growth potential from unsophisticated in both sponsorship ticketing and venue development.

So all 3 of those, you'll see our opportunities over the years called about the apparatus we want to get built to consistent demand that we know is we had a console anywhere and that's the part to makes our model unique.

So continue to grow international that'll be a great start for us, for many years to come with diverse enough now, but the certain market is having a good or bad day will be okay and have enough risk aversion. And the U.S. will continue to have a deeper bench to grow on ourselves..

And then I was wondering if you can take us through your current real estate strategy. You have per cap of significantly over the past few years and the Company is gotten bigger with more balance sheet capacity.

With that in mind, do you expect to accelerate the growth of over no venues over the coming years?.

Yes. I think I would frame it slightly different than -- I really don't recall all five of your questions Brandon is that the --.

You only get 2 out of 6..

Some housekeeping if you like..

No that's fine. No, it's a valid point. We absolutely see a huge opportunity. If you look at our core business model, I'm sure people are sick of the phrase and I do appreciate the book you enrich of let me patent from flywheel long before any other businesses nailed that one.

So, yes, we have a big flywheel of concerts and we're going to wake up every year, finding new adjacent businesses that we can monetize because of the flywheel. And no one in the world has 30,000 shows and 100 million people walking in the door. So that's why we believe in the U.S. and onward with its endless growth opportunities.

One of them happens to be the venue, the real estate. For many years, we were happy to putting our content in someone else's venue and getting a ticket free and inserting ticket to the door.

A lot of the times as we've said in our in our different analysts meetings, when the content ends up in my amphitheater or my festival, or my theater and club, we even make more money because we're now counting more revenue streams.

And we look now at the real estate market in America, the advantage we have is there's way more real estate to their artists.

And if you are a developer right now, with a shopping mall to a development site, you no longer are probably asking the movie theater to be your tenant you probably come in a Live Nation saying, I'd love to build a 2,000 seat or 4,000seat to 6,000 seat.

I'd love to be part of our development because that's the vibrant part of the experience we're creating.

So what we're doing now is when those meetings happen and say we're not happy just to ticket until you're building, we want to have equity value in that position and operate and run it to maximize all of the value that can be created from our $6 million a year.

So instead of maybe paying somebody millions a year to reach their building to run it while we fill it, there are times we're going to look at hero strategies and real estate where our content is the entire reason the building is being financed for the building is growing in value.

We should capture not just the content, not just the food and beverage, but the equity value of the real estate holdings overtime too.

So, we're seeing more and more opportunities where our flywheel is putting us in a position to do have some equity ownership and control and some great assets that are completely down the middle completely down the line of a concert live venue. And you'll see us explore more of being more leverage in our content..

Okay, just for you. I'm going have to ask a quick short term one.

As far as more date quite well at the box, should we expect this to contribute in 2019 is as you recognized downstream revenues from that sale?.

Well, it will be our first time with movie accounting. So, we’ll see what audits look like, but I would say in just in general, we are thrilled with this division. It's another I just mentioned it earlier, we have scale, we have artist relationships, great stories to be told. So, we started a new division organically.

I think we've done five now we've probably got 10 to 15 projects in the pipeline of artists are telling great live stories or movies or documentaries or festival stories or et cetera. So we think that's division is obviously a much higher margin business from the conscious space.

It's a low capital intensive business but ultimately is a great marketing platform for artists our shows and Artist Nation division. So we think, we're not really working 2019, it will be a small overall contribution to our agenda in AOI.

Overtime, I think it's a like Artist Nation, we think it's a nice high margin ancillary business to our core mission that will be a positive impact. But ultimately, we’ll make AOI to be positive much like we learned with Artist Nation and others, they also end up feeding mother ships.

So, Artist Nation, star is born is probably the single greatest marketing exercise we could have did for our sponsorship division. If you are in that division, those kind of things just really setting the flywheel very high and get you in the CMO meeting and other conversations that you hadn't been before.

So, we're looking at the pieces always in the end of ancillary business, get us one more tour, one more sponsor or one more ticketing contract and make high margins AOI, it’s a triple win..

We'll go next to David Karnovsky with JP Morgan..

Just on ticketing, in the release you’ve mentioned growth drivers is concert sales and expansion of a global footprint.

I was wondering, if you can provide any commentary on the sport side and how you do that contributing in 2019?.

Sure, I mean, the sport side is obviously key historical foundation to the ticketing business. As we talk sports is also on friendly more static level. There aren't -- there's not a lot of growth in terms of the number of teams or number of games played in the season for the major sports.

So, it's really been the concerts business that is driven great growth over the past several years of ticketing. Again, we've given this statistic several times around 80 percentage of fee-bearing GTV growth coming from the concert business. So, it's critical on the support side as they built incredible arenas or stadiums.

They're looking to continue to sell those buildings every night, just not just when the games are playing. Those provide platforms for the tours, the artists that we work with, they continue to put on more shows. And it's putting on those more shows that we've been able to grow the business.

So, it's not the sports directly, it's the sports indirectly, that's been unlock have a lot of Ticketmaster's growth..

And then just on the leading indicators, I think in event deferred revenues up 35%, though you did mention early on sales this year.

Just wondering, how to think about that number maybe on a like-for-like basis assuming more consistent on sale periods?.

I mean, that's the challenge. You can't assume consistent on sale because there's no exactness to that. We said that we're up double-digits in terms of concert events and tickets sold through mid-February. So that to us is the key leading indicator that we're off to a good start for this year..

We'll go next to Drew Borst with Goldman Sachs..

I want to ask about Ticketmaster presence and see, if you'd be willing to put some parameters around.

What type of contribution to AOI could come from presence over 2019? Or maybe even, what kind of contribution it provided in the fourth quarter as you scale that business?.

The economics for us of presence versus other systems, digital tickets versus paper tickets is the same economics for us. So, it's not going to be a direct impact on the AOI.

Ultimately, what it is by increasing the volume of data, the quality of data that we have on every fan and then on their behavior, the increased ability to reach out on target, interact with those fans while they're on site because of that digital connection will unlock our sponsorship and the value of those 93 million fans that we have for the brands.

And we will unlock our ability to better market, create products, and ultimately convert those fans into additional purchases. So, it's not directly the presence rollout itself..

Okay. And then as a follow up, yes, I noticed that a recent announcement of SMG, which is a big venue operator their form a joint venture with AEG.

I was wondering if you could just talk about whether that was sort of impact that may or may not have on your business> I think if I'm not mistaken, SMG is it to the Ticketmaster customer right now, but maybe you can just talk about it, if it has any impact and then maybe broader strategically what it means?.

Yes, it has no impact on our day-to-day business. We're not facing in the conference center management business it's a scale venue management business, that's not what we do. But between the two of them the building that they do have, we have an existing Ticketmaster contract with SMG. We feel they’re buildings the ones that are Manchester et cetera.

And we received a call the minute that was a public announcement from them to reassure us to fill the buildings and ticketing their businesses a huge strategic imperative of theirs. And we've always looked at AEG facilities, our SMG as partners. They all need us to put more shows and fill those venues that they're managing.

And they have all probably experiment elsewhere and ended up realizing Ticketmaster also happens to sell them the most tickets. They're managing those buildings for someone else generally. That someone else doesn't care about competition they care about results.

So the reason we're the largest supplier the AEG's facility business or SMG or others just because it's good business for both of us. So they're not a business to run will continue to be a good supplier to them. And in return I would assume a ticketing partner forward. So no effect from us, continue to think that we'll grow our business equally well.

And we've been growing it in both of those companies over the last five years..

We'll go next to David Joyce with Evercore..

A question on the venue types and the volume of shows, there was an impact on the fourth quarter and having fewer stadium events.

How should think about it this year in terms of size of venues and what that should do for margins on the concert side, and if you could have any visibility on that impact quarterly? And then secondarily on Rock and Rio, just wanted to think about how that will impact you financially this year.

I now it bridges two quarters later in the year and what are your thoughts on expanding that again, as that festival has done in the past?.

So, I'll take the three or four part venue question, David. So one of the things we said is that growth this year is expected, and amphitheaters in North America and the arenas globally and stadiums internationally.

Last year, we grew our amphitheaters in North America and you saw, if you want to talk about margin benefiting concert simply because you have all of those food and beverage and other ancillary per fan revenue streams directly associated with our amphitheater business as we talked about that's the most profitable and when we can monetize them, and all those rates in our own buildings.

So that helps the overall margin if you will, I don't, because as we told you many times in the past, but we don't obsess on margin. We obsess on growing the AOI, I couldn't tell you the exact margin ramifications certainly not by quarter.

But I can tell you that I do expect us to benefit and continue to grow in AOI ff the amphitheaters and their continued growth. And that's largely in Q2 and Q3 period. And then you'll see the same with festivals as we continue to grow our festival business.

Again, benefiting from those attractive on side standing against Q2, Q3, so a lot of the benefits from the concert growth will continue to see all primarily in the second, third quarters..

And then on the Rock in Rio, how that should impact you this year and do you have plans yet for how you would be alternating and other markets like Las Vegas or Portugal residents been done before?.

So on Rock in Rio, I think it was outlined in the 8-K pretty clearly. But we do not consolidate that at this point. So it's equity earnings when the event happens..

And there aren't, again the plans that are out there have been announced, they're the events in Brisbane. No other event has been announced at this point..

We'll go next to Ryan Sundby with William Blair..

Michael, you talk about adding more stores to international markets. I guess in the 13 markets where you promote shows that don't have ticking operations yet.

Is there a common kind of barrier that exists that that keeps you out of those?.

No, no. It's just been in our resources time execution. We have a prioritized list and the first 3 or 4 years that we bought Ticketmaster, we had 14 platforms. So, a lot of what, we’re just getting all of our backend enterprise platform rebuilt. So, we could move into new markets was a common platform just adjusted for currency and taxes and retail.

So, we have a robust platform now and we're just rolling out market-by-market in our prioritize list. It's just people, energy and time to get it done no companies exists with the, we have a big enough market share on a global basis that would inhibit it.

They’re usually local operators or local ticketing companies, they may have a leadership position, but our content usually lets us come in with a strong position. So, what is they’ll able to see us adding market-by-market and are building within the markets were in brick by brick over the next few years..

And then on presence, how micro can you go with that? Is the 500 venues and 75% major sports in 5 buildings? Is that a big chunk of it or are you pushing this down to the club level over that couple of years? So just curious how far you can go with that?.

Absolutely, we foresee this becoming the standard of our access control entry and how it is we distribute and manage tickets.

So, the focus is getting the large ones first which stand drives Paul, the Ticketmaster for the adoption as opposed to be out there trying to push it everywhere, but starting with Live Nation from amphitheaters to clubs and theaters. And they're major sports team and then going in wildest possible from there.

It's a same thing as Michael just saying, it's just matter of prioritization execution to get done all of them..

And we'll go next to Doug Arthur with Huber Research..

Just understand the fourth quarter a little bit better. Kathy, you had 15 million step up in marketing which you've highlighted in the third quarter. And the bulk of the 15 million on the data breach was in the fourth quarter.

So is that a fair way to look at it? And then, are we done on these? Or is the marketing going to continue for a while?.

So, yes, it’s a fair way to look at on the fourth quarter, but I mean we market every show, right. So, the normal accounting for show accounting is that the advertising expense is the expense when the show happens expect at year-end, that we have to expense anything that's on the balance sheet for future shows.

So, you're always going to have that effect every fourth quarter just like we have..

And, Doug, that's a good think. Like you want that number to be high, which we don't spend marketing unless we have the show. So, the good news is that you look at that number and say than they have a lot of show went on sale that will monetize in '19. So which is an accounting we have to actually true it up at the end of the year..

And then on the investigation, cost investigation continues, that we would expect to have some level of expenses in 2019. We just haven’t given you specifics on that..

Okay..

Don’t expect it to be somewhat less than the $15 million at this point in the millions, but it will still continue and won't be material on the similar things. End of Q&A.

[Operator Instructions] And we have no further questions at this time. So I'm turning the call back over to our speakers, for additional or closing remarks..

Thank you everybody. We'll talk to you soon..

That does conclude today's conference. We thank you for your participation..