Live Nation Faces Class Action

A federal judge in Los Angeles has cleared the way for a class-action suit alleging that Clear Channel Communications and Live Nation used their market dominance to illegally inflate concert ticket prices. Sound familiar? It might.

The granting of class action status is the latest in an all-but-forgotten suit filed in 2006 against Clear Channel after a nearly identical previous case was dismissed because of a jurisdictional error. It must be noted that Live Nation was spun off from the one-time radio and concert behemoth after the accusations were made.

However, the current legal proceeding was filed after the spinoff and includes Live Nation as a defendant.

To refresh memories: Attorneys in New York and several other regions filed near-identical claims in June 2006 to those made in a previous suit, Heerwagen v. Clear Channel Communications, which was denied class certification in August 2003.

In that suit, filed in New York only, Clear Channel was accused of "bullying" artists into playing its venues by threatening a loss of radio airplay, thereby monopolizing concert promotion and driving up ticket prices. However, a federal judge denied class action status because the "market" was improperly defined as a national one, rather than regional.

New suits were filed, starting in June 2006, until 23 cases were on the dockets. They were eventually consolidated in a Los Angeles court to include five major regions – L.A., Chicago, Boston, New York and Denver.

The October 22nd ruling by U.S. District Court Judge Stephen Wilson grants class status to those remaining five suits, and concertgoers in those regions.

They claim Clear Channel used predatory practices to keep potential competitors from entering regional markets and, in some cases, bid up the fees paid to artists to squelch competition.

"Clear Channel is a multibillion-dollar international media conglomerate and we intend to argue that it is leveraging its size and industry clout to exploit consumers and artists by eliminating the choices available to them and keeping ticket prices and concert promotion rates unreasonably high," said attorney Beth Fegan of the law firm of Hagens Berman Sobol Shapiro in a statement.

"We intend to show that Clear Channel bullies groups into using Clear Channel’s facilities for concerts through its market dominance of the airwaves," Fegan added. "The upshot is that if bands don’t use Clear Channel venues, they will be playing to empty houses."

A spokesman for Live Nation declined to comment on the granting of class action status to the suit. Despite having spun off from Clear Channel nearly two full years ago, Live Nation’s annual reports show that related antitrust litigation that originated during its Clear Channel Entertainment incarnation was not assumed by the former parent company.

The complainants, according to the HBSS statement, cite a 2002 New York Times article that detailed Clear Channel’s purchase of the entire Backstreet Boys 2001 tour for $100 million.

"The article explains that Clear Channel set extremely high ticket prices to recoup the promotion costs it spent in competing with other local promoters," HBSS said in the statement. "As a result, those who attended the Backstreet Boys concert paid far more than those who attended concerts promoted by another company in the same area, the article said."

Obviously, conditions that were present for the 2001 tour cited are drastically different today.

Clear Channel Communications spun off its live entertainment unit, which became Live Nation, in late 2005. Whereas Clear Channel owned more than 1,200 radio stations nationwide at its peak, it has sold hundreds of those in recent years and all of its television stations. Clear Channel stockholders also agreed in September to be bought by a consortium of private equity groups, with the sale expected to close in December.

However, attorneys likely will point to the boards of directors of both Live Nation and Clear Channel Communications and their common members – who, like Mays family founders Lowry, Mark and Randall, were top execs of Clear Channel when the allegations were to have taken place. – Deborah Speer