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Business News (more headlines) 05-16-2014

SFX Entertainment Reports First Quarter Results And Provides Update On Marketing Partnerships And Recent Developments

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SFX Entertainment, Inc. reported financial results for the three months ended March 31, 2014.

"Throughout the first quarter we made continued progress toward creating what is now the largest global producer of world-class live events and leading digital entertainment content focused exclusively on EMC"

Revenue for the three months ended March 31, 2014 totaled $33.3 million. Direct costs for the three months ended March 31, 2014 totaled $22.8 million. Net loss for the three month period was $63.6 million, or $(0.73) per share.

Pro Forma Revenue (a non-GAAP measure, see definition and reconciliation below) for the three months ended March 31, 2014 was $38.1 million, while Pro Forma Adjusted EBITDA (a non-GAAP measure, see definition and reconciliation below) was a loss of $(11.9) million. The Pro Forma Revenue and Pro Forma Adjusted EBITDA loss reflect a combination of factors including: 1) costs related to the addition of infrastructure and personnel to support our growing live business segment, the development of our marketing partnerships, and the establishment of the integrated marketing platform which were expensed during the 2014 first quarter; 2) the first quarter is typically the year's seasonally slowest period for live events; and 3) certain events which occurred in the 2013 first quarter did not recur in the 2014 first quarter as they were rescheduled to later periods in 2014 or were discontinued as the Company executes its strategy to focus on larger events and festivals.

First quarter pro forma festival attendance rose over 100% to approximately 175,000, as the Company held 9 festivals versus 4 in the comparable year-ago period. Attendance at events other than festivals declined 28% to approximately 260,000, reflecting the Company's strategy to focus on larger events and to host a fewer number of smaller events.

"Throughout the first quarter we made continued progress toward creating what is now the largest global producer of world-class live events and leading digital entertainment content focused exclusively on EMC," commented Robert FX Sillerman, Chairman and CEO of SFX. "While it is the seasonally slowest period of the year, the first quarter served as a microcosm of our approach. Total festival attendance more than doubled year over year, on a pro forma basis, with half of the growth coming from new festivals, while repeat festivals saw attendance growth of 9% year over year and revenue growth of approximately 10%. Our festivals will grow by approximately 30% in 2014 to more than 70, compared to the 54 held in 2013. Much of this growth will be in North America, as we bring highly popular festivals like Mysteryland to the U.S. for the first time and bring Electric Zoo to Mexico. We are also introducing entirely new festivals, such as Don't Let Daddy Know in the Netherlands and the Hudson Project in Saugerties, New York. Additionally, we see opportunities for further festival schedule expansion in North America, South America and Asia in 2015 and beyond.

"While we work to revolutionize EMC-focused live events, we are equally focused on advancing our role as a marketing solutions channel for our talent and artist pool and our brand partners. Our FX-1 platform is already making considerable inroads towards becoming an integrated artist management, social media positioning and digital technology platform. Establishing creative and groundbreaking marketing and content partnerships that reach and resonate with millennials is fundamental to our strategy to bring the EMC community together with the world's leading brands in a manner that drives unrivalled experiences and outcomes for both. Last quarter, we announced that SFX had established marketing partnership agreements with four world class brands, including Anheuser Busch-InBev and Clear Channel. More recently, we added the Ultimate DJ project with Simon Cowell's Syco Entertainment, which includes a major marketing relationship with T Mobile, the fastest growing U.S. wireless company. The unique collaboration between T Mobile, Syco and SFX will bring to life Ultimate DJ, an exciting new television program concept.

"Since the Syco/T Mobile announcement last month, we have significantly expanded our relationship with T Mobile. We now have five major marketing partners in place and are look forward to bringing, beginning in the second quarter, a wide range of exciting experiences related to these partnerships to fans all over the world. Our slate of completely new festival experiences include the five Corona Sunset events created and curated by FX-1, and the Don't Let Daddy Know event created by us and our partners. In addition, SFX's Beatport -- the principal online resource for EMC DJs and a trusted destination for the growing EMC community to discover and stream music, follow DJs and keep abreast of news, information and events -- has partnered with Clear Channel to launch a national DJ/Producer contest and a weekly Beatport Countdown show and will also introduce an original live event series in the fourth quarter.

"Together, these alliances highlight the value that sponsors and marketing partners recognize in our brands, the growing momentum of the worldwide EMC movement and the unique ways SFX can add value on behalf of our partners as they seek to connect with our attractive millennial audience. We believe the financial results for our first two quarters as a public company are not the most relevant measures of our long-term prospects. Instead, the combination of our growing festival and events schedule as well as the strong initial success we are achieving with our marketing partnerships gives us confidence that by managing the business for the long-term we will deliver enhanced value to our shareholders."

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