DOJ ‘Looking Into’ Accusations of Live Nation’s Anti-Competitive Business Practices (Report)

(Photo By Tom Williams/Roll Call/Getty Images) – Merger Opposition
Reps. Michael Capuano, D-Mass., speaks at a news conference along with Reps. Bill Pascrell, D-N.J., right, and Peter Welch, D-Vt., to oppose the Ticketmaster and Live Nation merger saying it would lead to higher ticket prices, Dec. 16, 2009.

The ongoing rivalry between concert promotion giants Live Nation and AEG continues with a lengthy New York Times expose published on Sunday, April 1 claiming the U.S. Department of Justice is “looking into serious accusations” concerning the former’s business practices following complaints from AEG. 

In short, the piece alleges Live Nation retaliated against venues that chose not to contract with Ticketmaster, the promoter’s ticketing service it merged with in 2010, by routing the tours they promote away from those buildings. Live Nation vehemently denies the charges.

According to the report entitled “Live Nation Rules Music Ticketing, Some Say With Threats,” DOJ officials have been “reviewing complaints that Live Nation, which manages 500 artists, including U2 and Miley Cyrus, has used its control over concert tours to pressure venues into contracting with its subsidiary, Ticketmaster.”

“The company’s chief competitor, AEG, told officials that venues it manages that serve Atlanta, Salt Lake City, Oakland, Minneapolis, Louisville and Las Vegas, were told they would lose valuable shows if Ticketmaster was not used as a vendor, a possible violation of antitrust law,” the report stated.

These actions would violate a DOJ consent decree from eight years ago upon which the Live Nation-Ticketmaster merger were predicated. However, the conditions get murky because while the consent decree agreed upon with the 2010 Live Nation-Ticketmaster merger forbids forcing a client to purchase both talent and ticketing, Live Nation is allowed to “bundle” services “in any combination.”

This effectively means the promoter can redirect a show to a venue it owns or that uses Ticketmaster if it can defend the decision as sound business.

A Department of Justice representative told Pollstar:  “As a matter of policy, the Department of Justice does not confirm, deny, or acknowledge the existence of an investigation.”

The Times report cited specific allegations such as Matchbox Twenty routing its 2013 tour away from the Gwinnett Center near Atlanta allegedly because the venue contracted a ticketing service controlled by AEG.

The Times reported emails between Gwinnett Center booking director Dan Markham, trying to address concerns of Live Nation avoiding the venue and “a Live Nation talent coordinator, who reportedly wrote back: “Issue? “Three letters. Can you guess what they are?” Presumably, the implication is the letters are either AEG or its AXS ticketing company.

“What happened in Atlanta is just one example of what has been occurring much more broadly,” AEG’s chief legal officer Ted Fikre told the NYT, while Live Nation’s antitrust lawyer dismissed the complaints as deliberate miscalculations. “You have a disgruntled competitor that is trying to explain their loss around the boogeyman that there were threats made that nobody can document,” Live Nation’s Daniel Wall told the paper.

When reached for comment on Times report, a Live Nation representative directed inquiries to a rebuttal written by Ticketmaster President Jared Smith on its Ticketmaster Insider blog.

That post essentially boiled down to two things: One, venues want Ticketmaster because of the quality of the service it provides and which it has invested heavily in; and two, vertical integration between Live Nation and Ticketmaster, or bundling, is not inherently bad — or illegal — which Smith said antitrust officials stated during the merger.

“The DOJ studied this issue very closely and determined that vertical integration between content suppliers (i.e. concert promoters) and ticketing companies was generally a good thing as long as it did not stifle competition,” Smith wrote.” In fact, the DOJ decided it actually wanted more vertically integrated competition, so it required the creation of a second company that could offer both content and ticketing.

“To achieve this, the DOJ required Live Nation to spin off some of its ticketing assets (namely a copy of one of its ticketing systems) to the second-largest concert promoter in the United States, AEG, so that AEG would become ‘a new, independent, economically viable, and vertically integrated competitor in the market for primary ticketing services to major concert venues.”

He also noted that Live Nation ultimately answers to the artists it works with in various fashions: “Live Nation is the most artist-focused company in the world, and misusing our relationship with artists to ‘settle scores’ with venues would be both bad business and counter to our core beliefs.”

In addition to chronicling other alleged incidents at the KFC Yum! Center in Louisville, the H-E-B Center near Austin and Boston’s TD Garden, The Times goes at length, with handy graphics even, to explain the multiple ways Live Nation is involved in a concert: from paying the artist and taking on the risk as a promoter to managing artists, owning the venue, working as an agent and its ancillary income streams as well as collecting ticketing fees through Ticketmaster, which is a large bulk of its business and allows the company to offer artists so much of a show’s gross.

AEG, which declined comment for this story, has ramped-up the rivalry since last summer when it adopted a “block booking” policy between O2 London and Staples Center in Los Angeles that required those interested in booking its U.K. venue to play its L.A. counterpart if the tour went through Los Angeles. The company asserted it was only doing so because “our hand has been forced by MSG’s actions,” alleging competitor Azoff/MSG Entertainment (run by former Live Nation President and artist manager Irving Azoff who is also co-founder of Pollstar parent company Oak View Group) was doing the same in tying artists to Madison Square Garden in New York with the Forum in the LA market – which Azoff has denied.

(Photo by Kevin Winter/Getty Images for Live Nation) – Ozzy Osbourne No More Tours 2
With his wife and family, Ozzy Osbourne Announces

This came to a head recently when Ozzy Osbourne filed a class action antitrust suit March 21 against Anschutz Entertainment Group and associated companies alleging Sherman Act violations in tying bookings at London’s O2 arena to performances at LA’s Staples Center.

“Artists touring in Los Angeles have therefore been able to enjoy the benefits of competition between Staples and the Forum,” according to the complaint. “Ozzy would have been such an artist if AEG had not insisted, through the Staples Center Commitment, that he performs at Staples – the venue that AEG owns.”

Before the suit was filed but after Sharon Osbourne had publicly threatened to sue AEG over the alleged block-booking, Pollstar talked to legal experts on whether she had a case.

See: Legal Eagles On AEG’s ‘Statement of Commitment’ For Ozzy’s Last Tour

Live Nation’s holdings include its Maverick/Artist Nation management division; hundreds of venues of all sizes it owns and operates; a sponsorship division; and a core concert touring promotion business along with its Ticketmaster operations.

AEG, the clear second-largest promoter, has remained mostly in the promotions and venue business, with its flagship O2 London and Staples Center in Los Angeles, although it launched AXS ticketing as a direct competitor to Ticketmaster following the Live Nation merger.

Some of AEG’s core partner promoters include Concerts West (Rolling Stones, Roger Waters, Katy Perry, among others), Messina Touring Group (Taylor Swift, George Strait) and The Bowery Presents, which books talent for and operates venues including Terminal 5 and the Music Hall of Williamsburg in New York.

Both AEG and Live Nation have extensive festival holdings, including major stakes in Lollapalooza, Electric Daisy Carnival and Bonnaroo for Live Nation; while AEG’s Goldenvoice runs Coachella and Stagecoach among others. And this is just scratching the surface of the two major multi-faceted music companies’ holdings. 

Jason Squires/WireImage – Axs Launch Party
A general view of atmosphere is seen at the AXS.com launch party at Sprint Center on January 13, 2012 in Kansas City, Missouri.

Smith, in his blog post, said his company’s practices are not anti-competitive and the proof is in the marketplace’s increased competition.

“It is very well known that the business is far more competitive than ever,” he wrote. “Some of our competitors, including SeatGeek, are companies that didn’t sell primary tickets until very recently. Others, like AXS and Eventbrite, have been around for years but have greatly built up their businesses with acquisitions. And new entrants are on the horizon, including resale ticketing companies and e-commerce giants.”

It likely will not be a matter of whether Ticketmaster or Live Nation is too big — with more than 3,600 Ticketmaster employees spanning 29 countries, for example — but whether the companies are doing anything against the law or against the consent decree. And, even then, if it can be proven or even enforced.