CTS Eventim Makes Its LN Move

CTS Eventim has filed a claim against Live Nation alleging it breached an agreement to license the German ticketer’s platform when it merged with Ticketmaster Entertainment.

CTS has requested the matter be arbitrated – a move that could speed up the process and favor the ticketer.

In an April 20 Securities and Exchange Commission filing by Live Nation, the company claims that a resolution in CTS’s favor could prevent the merged Live Nation Entertainment from realizing “the full operational efficiencies that the combined company might otherwise obtain through the merger.”

The arbitration request was filed April 5 with the International Court of Arbitration of the International Chamber of Commerce, or ICC, according to the SEC filing.

Generally, arbitration filings are resolved far more quickly than court cases and the procedural rules are somewhat more liberal and tend to favor the plaintiff, in this case CTS, than would be the case in a typical lawsuit. It’s also possible the company waited until after the merger was completed to bolster its claim that the contractual agreement was conclusively breached.

CTS alleges that the terms of the agreement, including the North America per ticket license fee, European exclusivity obligations and United Kingdom distribution obligations apply to tickets sold and distributed by Ticketmaster; that Ticketmaster’s sales and ticket distributions following the merger breached the agreement between Live Nation and CTS and that LN failed to allocate the proper number of tickets to CTS’s system in the U.K.

It also claims the merger and subsequent actions of LNE “have breached the implied covenant of good faith and fair dealing.”
CTS seeks a declaration that Live Nation is in breach of the agreement and the implied covenant of good faith and fair dealing, unspecified damages resulting from the breaches and “specific performance of the Live Nation … obligations” under the agreement.

Live Nation has not yet responded to the claim, but in its SEC filing said it believes the CTS claims are “without merit and inconsistent with the terms of the … agreement.” The company added that it believes CTS is itself in breach of its agreement “by failing to provide a ticketing platform that meets the minimum contractual standards.”

No date has been set for a hearing on the CTS claim or arbitration.

Live Nation and CTS agreed to partner on a ticketing system prior to the merger that would compete with Ticketmaster. A couple of epic onsale failures later, word leaked that LN was in talks to merge with Ticketmaster. The tie-up was approved earlier this year.

But under the earlier agreement with CTS, Live Nation was to license the company’s software and pay a fee on every ticket sold in North America. In the U.K. and parts of Europe, CTS was to be the exclusive contractor.

CTS, according to the filing, believes it is entitled to the fees even if Ticketmaster is selling the tickets. Live Nation, in turn, believes CTS failed to deliver an acceptable product.

Although CTS does not specify a dollar amount in its damage claim, it could end up with a hefty chunk of change should the arbitration be in its favor. Sales of LN tickets in 2006 accounted for $150 million of Ticketmaster’s $1 billion revenue, according to the Wall Street Journal, and last year LN sold more than 38.6 million tickets worldwide.