Hurwitz Sues Live Nation

When Live Nation and Ticketmaster announced in February their intention to merge, I.M.P.’s Seth Hurwitz told Pollstar, “If I am forced to use Live Nation Ticketmaster in any situation, I can tell you who will make the most money from this deal: my lawyers.”

Hurwitz didn’t wait that long to start working on those billable hours.

His companies, It’s My Party and It’s My Amphitheatre, are plaintiffs in a federal antitrust suit quietly filed against Live Nation in Baltimore’s U.S. District Court March 5.

It’s My Amphitheatre is the company formed to manage the Merriweather Post Pavilion in Columbia, Md. It’s My Party promotes the shed and the 9:30 Club in Washington, D.C., and other events in the region. Both companies, and the 9:30 Club, are co-owned by Hurwitz. Live Nation predecessor Clear Channel Entertainment had the management contract at Merriweather Post before Hurwitz acquired it in 2003.

The suit alleges 11 counts ranging from violations of the Sherman Antitrust Act to Maryland antitrust statutes, including charges that Live Nation engages in “tying” the use of its promotional services to the use of its venues and purchase of its venue operations; engages in monopolistic behavior and restraint of trade and, in locking up artists’ full tours, requires non-Live Nation venue operators to pay a percentage of profits to it from shows the company is largely uninvolved with.

The suit seeks undetermined compensatory, treble and punitive damages, reimbursement of attorneys’ fees and costs, and injunctive relief “to prohibit Live Nation, the world’s largest promoter of live popular music concerts, from continuing its unlawful anticompetitive, predatory and exclusory practices.”

The complaint alleges that Live Nation has acquired monopoly power in 19 of the top 25 regional markets in the U.S. and is “seeking to expand its empire into the management of artists, the remote sale of concert tickets, the licensing and sale of concert merchandise and other ancillary businesses.

“The ultimate object of Live Nation’s scheme is to eliminate and prevent further competition, control all aspects of the music business, lower performance fees paid to artists and to charge super-competitive prices for concert tickets, remote ticket sales, concessions, parking, merchandise and other services,” the complaint continues.

Hurwitz, along with Jam Productions’ Jerry Mickelson, appeared before the U.S. Senate Judiciary’s antitrust subcommittee in February to testify in opposition to the proposed Live Nation/Ticketmaster merger.

The suit, filed less than two weeks after the Feb. 24 Capitol Hill appearance, could be considered a preemptive strike against the merger even as the U.S. Department of Justice takes a closer look at the proposal.

It differs somewhat from antitrust cases filed earlier in the decade against Live Nation’s predecessor, Clear Channel Entertainment, by Jam Productions of Chicago and Nobody In Particular Presents of Denver.

Both of those cases alleged anticompetitive behavior on the part of CCE. JamSports, a Jam-affiliated company, won a $90 million court judgement before CCE agreed to settle, while NIPP settled out of court under confidential terms. Jam’s case differed in that it involved a motor sports contract, whereas NIPP alleged CCE’s collusion with Clear Channel radio stations in the area discouraged artists from performing non-CCE shows.

Court documents allege that Live Nation has used its market power to discourage artists from performing at non-Live Nation venues, and cited a sharp decline in bookings at Merriweather Post Pavilion in 2008.

The suit also cited a specific instance involving the Jonas Brothers.

Using Merriweather Post Pavilion’s competition with Nissan Pavilion in Bristow, Va., as an example, the suit alleges that Live Nation requires artists it promotes to decline bookings at non-LN venues.

“In at least one instance in 2008 (the Jonas Brothers), where an artist appeared at Nissan and made a Baltimore appearance, Live Nation demanded that the Baltimore appearance be at a venue other than Merriweather,” the complaint says. “In compliance with this demand, the artist appeared at 1st Mariner Arena,” depriving Merriweather of a lucrative concert date.

In cities where there is not a suitable Live Nation venue to accommodate an artist’s appropriate play, Hurwitz accuses the company of forcing the artist to require non-LN venues to “pay a minimum of 25 percent of their profits … to Live Nation, even though Live Nation had minimal, at best, involvement in the concert.”

Hurwitz declined to discuss specifics of the suit with Pollstar and a spokesman for Live Nation had not yet seen the suit but added the company generally doesn’t comment on litigation.

However, Live Nation did respond to the filing with a detailed document of its own, citing 56 separate examples of case law in its defense and in support of a motion to dismiss the I.M.P./I.M.A. suit.

In referring to Hurwitz’s allegations as “fatally insufficient in multiple respects,” Live Nation denied it withheld access to artists to promote, or that I.M.P. failed to book any artist at Merriweather “because of anything Live Nation is alleged to have done.”

In the case of the Jonas Brothers gig, Live Nation responded that the band did perform at a non-Live Nation venue – 1st Mariner Arena – in Baltimore.

“Plaintiffs’ Complaint defies economic sense,” according to the document, filed April 27. “They offer no coherent reason why Live Nation would want to prevent an artist from playing in a market in which, according to Plaintiffs, Live Nation has no venue. If there is a demand for an artist in Baltimore, Live Nation would have no reason to withhold that artist from playing there at the city’s best venue.”

In response to the suit’s claim that only three “major” artists performed at Merriweather in 2008, Live Nation notes that the 2009 schedule at the venue includes Chicago, Fall Out Boy, Taylor Swift, The Fray, John Legend, O.A.R., Seal and Phish.

Live Nation also counters that I.M.P does not compete in the national market, and Live Nation does not compete in the Baltimore market.

“In the end, plaintiff’s complaint is the same as that of the small town that travelers no longer visit after a new interstate highway takes traffic away from the local road that passes through town. While we may lament how times have changed, the policies underlying the antitrust laws do not justify a remedy. The complaint should be dismissed accordingly.”

The ball is now in the court of Hurwitz and his attorneys, who are preparing a response to Live Nation.