S&P Global downgrades Live Nation amid Justice Department lawsuit

S&P Global Ratings downgraded Live Nation’s outlook to negative after parent company Ticketmaster grapples with a Justice Department antitrust probe.

The S&P Global subsidiary recently updated its Live Nation forecast, days after the official filing of the long-awaited antitrust complaint filed by the Department of Justice. We have already discussed this 120+ page lawsuit and Live Nation’s rejoinder in detail.

As for excuses, however, the federal government is seeking to force Live Nation to divest Ticketmaster over the combined company’s alleged abuses of market power and resulting harm to consumers.

Of course, only time will tell how the situation will develop – something S&P was happy to acknowledge, which particularly noted the “uncertain” impact of this action “on the company and the live events industry.” Nevertheless, according to the text, “the lawsuit could harm Live Nation’s operating results.”

For this reason, the rating agency changed the outlook on Live Nation from stable to negative, and the entity’s Live Nation’s management and governance performance was revised from neutral to moderately negative.

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

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

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

Regardless of agency concerns and other hurdles facing Live Nation — chief among them the reported Ticketmaster hack and related class action lawsuit — the broader market appears unfazed by the Justice Department lawsuit.

At the time of writing, the Live Nation (NYSE: LYV) stock price was hovering around $93.50 per share – down only slightly during the week, up slightly from early 2024 and up 17% from its value at the end of May 2023 .

On the ratings front, Roth MKM analyst Eric Handler recently reiterated a Buy rating on LYV with a $120 price target. Contrary to S&P Global Ratings’ assessment of the Justice Department’s actions, former Goldman stock research analyst Handler expressed confidence that the Live Nation-Ticketmaster split “will have difficulty being successful.”

“The company intends to vigorously fight this lawsuit and believes it has acted in accordance with its consent decree. “She is willing to discuss certain remedies that we do not expect will have a positive impact on the business,” Handler said, also pointing out that the allegations “concerning monopolistic and anti-competitive behavior appear difficult to prove.”