Rapino And Desmond Hit Monopoly Snag

Michael Rapino and Denis Desmond’s effort to buy into Academy Music Group suffered a setback when the U.K.’s monopolies authority provisionally ruled that the deal would lead to them having too much control of London’s live music venues.

It’s not the end of the matter, as they still have time to convince the Competition Commission (CC) that it’s a made a bad call. But it’s looking less likely the deal will go ahead unless Hamsard 2786 Ltd., which now trades as LN-Gaiety Holdings Limited, agrees to hive off at least a couple of major flagship London venues.

What’s bothering the CC most is that the venue rents may rise once LN-Gaiety has its hands on the city’s Brixton Academy, Shepherds Bush Empire, Apollo Hammersmith, The Forum and The Astoria.

Paul Latham, Live Nation – UK president for music and venues, who has been liaising with the CC and the Office of Fair Trading, said he’s already given assurances – and will now reiterate them – that rent rises were never part of the LN-Gaiety business plan.

“The disappointment in these findings is that the factual evidence provided to the CC has largely been ignored in favor of the myth and innuendo supplied by some parties, many of whom have axes to grind,” he told Pollstar.

He also said LN-Gaiety will focus on the few outstanding issues and redoubling its efforts to dispel any misconceptions the CC seems to have about the possibility of there being a reduction in service if the deal goes through.

Clearly angry at the CC’s concerns on that front, he said such an insinuation borders on being defamatory, given the company’s track record in venue ops.

“We’re proud of the service we give to all our customers, be they agents, promoters or ticket buyers. We will continue to strive to deliver the same to a larger audience,” he added.

The CC still looks unlikely to approve the deal unless Latham and his team can come up with a divestiture package where they let go of either Shepherds Bush Empire or The Forum and either the Academy or the Apollo.

“The extent to which different live music venues provide alternatives for artists, agents and promoters depends on a number of factors, including capacity, ambience and the type of events generally held there,” explained Diana Guy, chairman of the CC group dealing with the Academy enquiry.

“On this basis, we found that the Brixton Academy and the Hammersmith Apollo are the closest alternatives to each other, and similarly for the SBE and the Astoria, with the Forum also acting as a significant substitute for the SBE.”

It’s also not likely to accept a divestiture package that includes The Astoria, given that the proposed London rail link means its future as a venue is uncertain, or Apollo Victoria, the Dominion Theatre or the Lyceum Theatre on the grounds that they’re not routinely used as music venues.

Even if LN-Gaiety does come up with a package that appeases the CC, the monopoly authority is still going to want to see contractual evidence that it also has a buyer in place before giving the nod to the Academy deal.

Before the CC either blocks the Academy deal, allows it on the proviso that LN-Gaiety hives off at least a couple of major venues or – if Latham’s team can come up with fresh arguments and more persuasive reasoning – does a total U-turn and allows the deal, it will listen to more opinions from the interested parties. These need to be put in writing and lodged with CC inquiry secretary Tom Muir by December 21st.

The deadline for the CC’s final ruling is February 2nd.

— John Gammon