Comcast Joins Merger Mania?

The endgame may be near in the proposed merger between Ticketmaster and Live Nation, as Comcast – parent of Comcast-Spectacor – is said to be making a deal to help the merging companies shed assets and placate federal regulators.

Bloomberg News reported Nov. 17 that Comcast is working with TM and Live Nation to help salvage the merger as the U.S. Department of Justice weighs antitrust concerns. Sources told Bloomberg that Comcast has met with DOJ officials about the proposal.

Nobody’s talking for the record, but speculation revolves around the possibility of Comcast receiving spinoffs of ticketing software and client contracts, according to Bloomberg.

So let’s deconstruct some of the speculation and come up with some scenarios.

The reference to “ticketing software” points to Paciolan, a former competitor to Ticketmaster that was absorbed by TM in 2007. Three years before Paciolan became a TM subsidiary, Comcast-Spectacor partnered with Paciolan to be the backend support of its own ticketing portal, New Era Tickets.

That ticketing company, which can go by many names in many markets (including ComcastTIX), is one of the services offered by Comcast-Spectacor’s facility management company, Global Spectrum, when it vies for new contracts.

Ticketmaster took over Paciolan’s ticketing license agreements, including that for New Era. But last summer, licensees were told that TM would stop supporting Paciolan software by 2012, a source told Pollstar.

Comcast, obviously wishing to be free and independent of Ticketmaster, since issued an RFP and reportedly solicited proposals from Veritix, and others to replace Paciolan on the backend. So the likelihood of New Era staying in the Ticketmaster fold via the licensing agreement with Paciolan, but without support beyond 2012, is dubious at best.

Comcast-Spectacor manages roughly 20 venues that sell tickets using New Era/Paciolan software now, and could add some 70 more if it successfully acquires the Paciolan unit. However, it’s anyone’s guess if Ticketmaster would be willing to give up Paciolan’s lucrative collegiate sports ticketing component without some major concessions.

But let’s backtrack a bit and untangle some threads.

With the formation of New Era, Comcast-Spectacor became a minority investor in Paciolan and CS president Peter Luukko joined Paciolan’s board of directors. Fast forward five years, and Luukko was the most prominent concert industry figure to testify in favor of the Live Nation / Ticketmaster tie-up before a House subcommittee hearing on the merger.

Not that Luukko didn’t know the territory: Ticketmaster’s acquisition of Paciolan also triggered a federal review in 2007.

At that same hearing, Ticketmaster Entertainment CEO Irving Azoff testified that had he been in his current position a year earlier, he would not have made the 2008 deal to acquire TicketsNow. It’s believed Ticketmaster is seeking to shed that asset now, either as an IPO or spinoff.

Then there’s Live Nation’s own ticketing unit – and its agreement with Germany’s CTS Eventim to provide a ticketing platform. LN President/CEO Michael Rapino has stated LN will honor its contract with the company, but currently it appears most ticket purchases are facilitated by Ticketmaster.

A major “get” for Live Nation Ticketing, SMG, agreed in September 2008 to a five-year deal with LN for its ticketing services. Mike Evans, SMG’s VP of sports and entertainment, wasn’t available to confirm the switch is on track.

But SMG and Global Spectrum have fought bitterly for venue management contracts for years. Any divestment of LN ticket services and/or client contracts to Comcast could theoretically create a potentially sticky wicket for SMG.

Bloomberg’s sources also said that part of the deal would include Comcast receiving client contracts in addition to the ticketing software. The obvious candidate for Ticketmaster to consider shedding is AEG Live, which has already publicly said it would seek its own ticketing solutions if the TM / LN merger goes through.

Some have speculated MSG Entertainment, another large client whose divestiture could ease DOJ concerns, could be a contract up for grabs. However, James Dolan is well-known as a FOI – Friend of Irving (Azoff) – and has a stake in Front Line Management, so it seems dubious he would take his company to even a friendly competitor.

There’s plenty of possible paths the three companies could take in their efforts to facilitate DOJ approval of the merger. But, as one observer told the Wall Street Journal in October, if too many properties had to be sold off, it could “undermine the whole basis for the deal.” Still, it’s always fun to speculate.