LN’s Diller Dilemma

It looks like the power plays over the Live Nation / Ticketmaster tie-up have begun in earnest, with Bloomberg News and the New York Times reporting that Live Nation’s largest shareholder has a beef with Ticketmaster chairman Barry Diller having a leadership role in the proposed merger.

Sam Shapiro, chairman of Los Angeles-based Shapiro Capital Management told Bloomberg that “I’m very much against going into business with Mr. Diller” because of poor returns from the companies he leads.

Diller is chairman and CEO of IAC/InterActiveCorp, which spun Ticketmaster off last year – although he remains its chairman. Prior to that, he launched Fox and USA networks, and spent 10 years at the helm of Paramount Pictures.

Shapiro owns a 15.15 percent stake in Live Nation with just shy of 12 million shares, according to a Feb. 3 filing with the Securities and Exchange Commission. He told Bloomberg in an interview that he may support the deal if Diller accepts a diminished role with Live Nation Entertainment.

Live Nation CEO Michael Rapino defended the deal on a conference call, saying, “We will be able to deal with all of Sam’s concerns,” in response to a statement by Louis Shapiro saying his father “worried about value creation.”

Rapino called Shapiro’s objections “minor to whether he’ll vote yes or no in the big picture,” Bloomberg reported.

While the Shapiros appeared initially to send a very mixed message, Sam Shapiro moderated his stance in a later interview with Reuters.

“There’s never been a question whether I think the combination of the two companies is a big positive,” Shapiro told Reuters, adding that he believes Rapino has done “everything and more” to create value for shareholders.

“As investment managers, we’re interested in creation of shareholder value for our clients,” he said. “I was worried about Barry Diller because shareholder return of value to his companies have not been that great.”

Shapiro also said he would eventually be interesting in increasing his firm’s stake in Live Nation.