Orbin Blasts Merger In Court Filing

Stone City Attractions President Jack Orbin, via attorney David Balto, filed Tunney Act comments with the U.S. District Court in Washington, D.C., May 3 objecting to the consent decree proposed for the Live Nation / Ticketmaster merger that was published Jan. 25.

The comments document Orbin’s argument that the DOJ’s proposed settlement “fails to adequately protect competition in the live entertainment industry, specifically in the primary ticketing market for major concert venues” and suggests additional “significant” remedies to strengthen the settlement.

Balto, a former Federal Trade Commission attorney, filed the comments with the DOJ on Orbin’s behalf. The Texas promoter asks the DOJ to reconsider its position, amend the proposed settlement and reopen the matter “to fully address the competitive concerns raised by this merger,” if not ultimately to block it.

Orbin’s key points echo concerns raised by other independent promoters, consumer groups and more than 25,000 consumer complaints in the nearly year-long runup to the DOJ decision.

He charges that the proposed final judgment (PFJ) eliminates competition from independent promoters, further driving up ticket prices; fails to ensure competition and actually raises barriers to market entry; and fails to provide an adequate firewall preventing Live Nation from acquiring competitor data via Ticketmaster’s service.

Orbin says the theory that the merger would restore competition in the primary ticket market is “nonsensical” and “further enforces the monopolistic hold of Ticketmaster on the live entertainment industry” while continuing to drive up prices and independent promoters out of business.

“The consumer has been taken advantage of by these two conglomerates,” Orbin says.

“To believe for a moment that the combination of the two huge corporations will benefit consumers in better services or lower prices is fantasy, at best.”

He also addresses the $40 million in “efficiencies” Live Nation Entertainment President/CEO Michael Rapino told a Senate committee would be created by the merger, thus lowering costs.

“It is safe to assume any savings from the actual integration will be swiftly swallowed by the drive for profit by these mega-conglomerates, leaving the consumer helpless. … In fact, [assistant attorney general] Christine Varney has said that the hope of the DOJ here is to provide competitive choice for venues, but ‘whether that’ll mean lower prices for fans, we’ll see.’”

The PFJ is also “wholly inadequate” in ensuring competition in the primary ticketing market, Orbin says.

“The divestment of Paciolan to Comcast fails to secure any relief in the primary ticket sales market. Paciolan now is only sub-licensed by Ticketmaster to roughly 4 percent of the market for primary tickets,” Orbin says. “Assuming that the 4 percent benchmark is maintained under Comcast ownership, Paciolan will only be used in another 2 percent of concert venues which Comcast provides ticketing to.”

Orbin also argues the DOJ is inconsistent in its findings by rejecting vertical integration as an efficient means of market participation, yet effectively requiring it from any potential competitor.

“Although the parties may assert that vertical integration is efficient, the DOJ appropriately rejected those claims,” Orbin said. “Yet the DOJ then relied on AEG to attempt to restore competition, significantly increasing the level of vertical integration in the market. … AEG, with 30 concert venues, trails far behind with the control of LNE’s 127 venues. Moreover, the licensing of the ticketing platform still provides LNE with royalties based on each ticket sold by AEG, meaning Ticketmaster will have its hand in AEG’s pot.”

He adds that post-merger LNE will continue to control more than 80 percent of primary ticketing and most major concert venues in the U.S. and, coupled with TM’s ownership of Front Line Management, means “the barriers to entry … will become more significant” and “dooms any real diversity in the live concert industry.”

The filing blasts the DOJ’s consumer data “firewall” provision as being “bare-bones” and “two-paragraph.”

“Customer data is the lifeblood of the concert promotion business,” Orbin says, and the filing suggests the merging companies are questionable stewards.

“Ticketmaster, after all, is no model corporate citizen,” it says. And “Live Nation has used such information in the past” to “dampen competition” in both promotion and ticketing.

“This PFJ provision still permits a broad sharing of information among higher-level employees, including ‘any senior corporate officer, director or manager,’” the filing warns, adding that it provides inadequate enforcement. The comments cite as a better model FTC conditions placed on a vertical merger of PepsiCo and its two largest bottlers, preventing retaliation against competitors whose products were distributed by the bottlers.

Short of blocking the merger, Orbin and Balto suggest the DOJ adopt the FTC’s stronger approach to firewall provisions, such as appointing a neutral third-party monitor trustee with full audit rights to ensure compliance, and narrowly defining the type of information that the non-ticketing LNE businesses can have access to and its use. They also suggest DOJ require the merged company to develop internal procedures to comply with the order.

However, their preferred remedy would be that the PJF be scrapped because of its “insufficient remedies to protect consumers and independent concert promoters” from the “predatory practices of Ticketmaster and Live Nation.”

“It is a favorite phrasing of Live Nation and Ticketmaster executives to say the music industry is ‘broke,’” they conclude. “There is no doubt about that; however, it is these companies that have broken it. To solidify their market power makes no sense.”