Saudi Arabia buys $500 million stake in Live Nation, and it’s all part of a plan

Saudi Arabia has just bought a $500 million chunk of Live Nation, the world’s leading concert promoter and parent company of Ticketmaster.

The Public Investment Fund of Saudi Arabia, a wealth fund which invests on behalf of the oil-rich nation’s government, acquired a 5.7 percent stake in LN, which was made on the open market and announced Monday in a filing with the Securities and Exchange Commission.

The sovereign state has been quietly assembling the pieces for a power move into live entertainment.

While the purchase of a piece of LN is ostensibly a deep-pocketed buyer scooping up stock that’s been thumped by coronavirus pandemic, this is part of a much bigger plan.

Saudi Arabia had stepped up investment in its tourism sector before the coronavirus grounded international travel, and concerts are a cornerstone of its strategy.

According to a Billboard report published last December, government-subsidized events are paying artists two to three times their normal fees, and up to twice what neighbouring countries are putting on the table.

Several years ago, the kingdom pulled the trigger on its Vision 2030 strategy to diversify its economy, and spread the risk. Those plans would see $2.7 billion set aside for entertainment projects.

The result of that splurge saw the likes of Martin Garrix, Tiësto and David Guetta performed at the December 2019 MDL Beast, a three-day electronic music festival in the capital Riyadh, said to be the kingdom’s largest-ever music event.

And last October, BTS became the first foreign band to perform a solo stadium show in the country, an appearance that wasn’t without controversy.

Nicki Minaj scrapped her appearance at a festival in Jeddah last July following pressure from the Human Rights Foundation, which has denounced the country’s leadership on human rights violations and its treatment of women.

According to The Hollywood Reporter, many firms won’t link up with investment from the fund following the 2018 murder of journalist Jamal Khashoggi. Last year, the Endeavor talent agency terminated a $400 million investment it received from the fund in protest.

LN’s stock is an easy target. The company’s shareprice has been in the doldrums, falling by more than 40 percent since January 1 with the cornerstone of its business – live entertainment and selling tickets to shows – on ice during the health crisis.

In an effort to calm spooked markets, Live Nation recently pledged to cut costs by up to $500 million in 2020, with LN’s CEO Michael Rapino forgoing his $3 million salary and other top executives taking pay cuts up to 50 percent.

Stock lifted by more than 2 percent immediately after the latest announcement.

It’s not the first shrewd Saudi purchase of late. Earlier this month, the Saudi Public Investment Fund snagged a $775 million stake in the world’s largest cruise line Carnival, another business hammered by coronavirus.

MBW has more.

This article originally appeared on The Industry Observer, which is now part of The Music Network.