The rating on entertainment producer and promoter SFX Entertainment Inc. reflects financial risk from a high lease-adjusted debt to EBITDA ratio, a low EBITDA margin with the potential for only modest expansion, and business volatility stemming from content availability, talent costs, the general economic environment, and soft attendance trends. These factors are partially offset by the company's good competitive position in the live entertainment industry, its significant geographic and format diversity, and historical discretionary cash flow. Business risk is a key rating concern. The company's live music segment, including the promotion and production of music concerts, generates approximately 80% of total revenues. Profitability is determined by sellout levels, per capita spending, artist payments, and production costs. Venue sellout rates are
