Merger Plan Draws More Fire

The proposed merger of Live Nation and Ticketmaster Entertainment continues to draw heat from legislators as regulatory bodies look into the deal.

Sen. Herb Kohl, the chair of the Senate Judiciary Committee’s antitrust subcommittee and a group including 50 other representatives sent separate letters July 27 to Assistant Attorney General Christine Varney asking for careful scrutiny of the proposal citing concerns it may harm competition and lead to higher ticket prices.

Live Nation and TM have been seeking to allay those concerns among lawmakers and federal regulators since the plan to merge was announced in February. Both companies say they expect the merger to close by the end of the year.

In his letter, Kohl warned that the merger will create “an enormous, vertically integrated entertainment giant” that controls everything from artist management, concert promotion, concert venues and merch sales to primary and secondary market ticket sales, making it difficult for competition to even enter the market.

A letter written by Rep. William Pascrell (D-NJ) echoed those concerns and was signed by 50 of his colleagues.

“There are few artists, promoters, venue owners, or concertgoers that would not feel the impact of this merger,” the letter stated. “In our view, the merger should be prohibited,” Pascrell wrote.

Kohl did not call for outright prohibition of the deal, but wrote, “I believe this proposed merger presents serious competition concerns which should be reviewed carefully by the Antitrust Division, and that the Justice Department should approve this deal only if it finds that it likely will not substantially reduce competition in the concert ticketing and promotion markets.”

Both letters took aim at the vertical integration component of the merger. Ticketmaster last year acquired Irving Azoff’s powerhouse Front Line Management, making Azoff chairman of the renamed Ticketmaster Entertainment.

Live Nation in recent years acquired merchandising firms including Signatures Network and has a deal in place with European ticketer CTS Eventim that competes with Ticketmaster, which no longer has exclusive deals with Live Nation venues.

Pascrell called for the investigation of Ticketmaster after Bruce Springsteen fans who attempted to buy tickets for his New Jersey concert were provided a link from the company’s Web site to secondary site, where they were offered highly marked-up ducats even though the show was not yet sold out. TM blamed the problem on a software glitch and a complaint against the company over the incident has since been settled.

How the Justice Department concludes its investigation is anyone’s guess, with some observers saying they expect the merger to be completed and others noting that Varney, appointed by President Barack Obama, has promised to clamp down on anti-competitive practices arising from “vertical” mergers.

In the meantime, a U.S. District judge in Baltimore on July 17 denied a motion by Live Nation to dismiss an antitrust suit filed in March by Seth Hurwitz companies It’s My Party and It’s My Amphitheatre.

Hurwitz filed an 11-count antitrust suit claiming that Live Nation engages in anti-competitive behavior and uses its influence to “entice and coerce artists to appear only at amphitheatres and other venues it owns, operates or at which it controls the booking.”