With a merger of Live Nation and Ticketmaster seemingly no more than a press release away, some commentators and business rivals in the U.K. are expressing their reservations.
The Financial Times says the deal could provide “one of the earliest tests of competition policy under the Obama administration,” while British companies from all sectors of the music business are questioning whether an LN-Ticketmaster tie-up is good for the industry.
Association of Independent Music (AIM) chairman Alison Wenham told The Independent that such consolidation of large companies isn’t helpful to the creative industries.
“It’s not serving the economy very well or the kids of this country very well. It’s ultimately a big business agenda,” she said. “As a merged company, they will be looking for exclusives and will use their power in a way that’s detrimental to smaller operators.”
The Live Nation-Ticketmaster formation would create a vast roster of globally recognised artists, following Ticketmaster’s acquisition last year of Front Line Management.
Front Line handles the affairs of more than 200 acts, including the Eagles, Neil Diamond, Van Halen, Fleetwood Mac, Christina Aguilera, Aerosmith, Steely Dan, Chicago and Guns N’ Roses.
Wenham said the LN-Ticketmaster development mirrors the consolidation in the recorded music industry where two companies – Universal and Sony – now dominate the weekly album charts. She believes the proposed merger is likely to attract close attention from the competition authorities.
The European competition authorities may not need to intervene if the deal falls foul of the American anti-trust authorities.
While financial analysts pointed out the boards of the two American stock-listed companies have yet to confirm what’s being described as a $700 million-plus, all-paper deal and the new company’s management structure has yet to be finalised, the Wall Street Journal story about the talks was enough to see shares in German entertainment and ticketing company CTS Eventim plunge a further 11.3 percent to euro 21.60.
“Overall, a merger of those two world market leaders in the area of concert events, including the ticketing business, would significantly shift the competitive relation in the world market, with negative effects on CTS as a tendency,” DZ Bank said in a note to investors.
Eventim’s 2008 financial statement will be published in March.
The ticketing deal it struck with Live Nation at the beginning of 2008, a 10-year agreement designed to allow the U.S. company to launch its own ticketing business in January, was expected to generate up to 60 million extra tickets and additional annual revenues of more than euro 100 million a year. Since the deal was struck, Eventim’s stock has dropped 30 percent to a little more than euro 21 ($27.01). It wasn’t possible to get comment from Eventim at press time.
Wenham’s concerns are echoed by an AIF representative, who said the organisation is concerned that the biggest promoter and ticket agency in the world are attempting to merge, and would expect the matter to be reviewed fully by the relevant authorities to see how this may or may not impact on the independent festival sector.
Dave Newton, business development director for WeGotTickets, an Oxford-based ticket seller that works with more than 2,000 venues and promoters, also expects that the merger would come under some scrutiny on this side of the Atlantic. But he doesn’t believe smaller venues and promoters will be affected.
“Live Nation would now be in a position to control all the pricing on certain large events such as the stadium shows from the acts that they now own,” he explained. “If Live Nation is the promoter (and venue owner in many cases), the ticketing agent and the controller of the talent, then there really isn’t much room for competitive pricing within that chain.
“In recent years the U.S. hasn’t seemed to be so concerned with such anti-competitive issues, but with the shift in both the economic situation and the administration, then this may well change.
“With regards to the grass-roots end of the market, then I could only see it being affected in a trickle-down way. But I think that this trickle will dry up before it gets much below the larger halls, leaving smaller promoters and the WeGotTickets core market largely unaffected.”
Bill Lord, chief exec of Blink TV, which supplies screens and content for stadium and arena shows worldwide, said the merger may marginalise certain companies but says that’s the direction in which the global live music industry is heading.
“I expect there will be a lot of opposition to it founded on fear that it will create a monopolistic and overly powerful beast, but it’s a pretty logical move for both parties – both of them have well defined, vertically integrated propositions which sit well together,” Lord explained.
“The live industry is always reinventing itself and, as it becomes more and more important in the overall context of the music market, it’s inevitable that such business alliances will come to the fore.
“In this case, you’ve got two CEOs who have shown themselves to be very strategically adept and it’s not surprising they have a similar vision. Yes, it will probably marginalize certain people but there’s nothing particularly new about that.”
Viagogo chief and StubHub founder Eric Baker, who has just raised a further $15 million for his company from headline investors including Stefanie Graf and Andre Agassi, declined to comment because the stories are “not official yet.”
Viagogo has also announced it has re-signed to be Madonna’s official ticket reseller for the second leg of her Sticky & Sweet tour, which is promoted worldwide by Live Nation.
The news of the proposed deal has mushroomed from the original rumor story in the WSJ and has also attracted the attention of investors.
Ticketmaster shares rose 82 cents, or 13 percent, to $6.96, while Live Nation rose 23 cents (5 percent) to $5.22. Both stocks are well down on their 52-week highs, but so is the rest of the market.