Breaking Down Live Nation’s Early Response To DOJ Lawsuit

DOJ Files Antitrust Lawsuit Against Live Nation
(Photo by Mario Tama/Getty Images)

Live Nation President and CFO Joe Berchtold admitted the company was a little taken aback when they learned the Department of Justice and the attorneys general of 30 states and the District of Columbia would file a lawsuit Thursday seeking the break-up of the live giant and Ticketmaster.

After all, he’d told a J.P. Morgan investors’ conference just two days earlier that antitrust division attorneys had an “open mind” about finding “common ground” as the DOJ’s nearly two-and-a-half-year investigation wound to its conclusion.

So, yes, Berchtold said, there was a little shock when reporters started calling Wednesday night asking about early reports of a pending lawsuit.

Live Nation was stunned. maybe, but certainly not wrong-footed. The company’s first statement on the case hit inboxes as U.S. Attorney General Merrick Garland was still speaking at a press conference in New York City.

It was comprehensive — there were charts aplenty detailing profits, market share, fee take rates and so on — and offered the earliest indications of LN’s theory of the case.

WIthin hours, an even more substantial response hit the streets (or at least the web).

While Berchtold has long been the point man for Live Nation on regulatory matters. He was, after all, the one sent to endure the made-for-soundbite Senate hearing in January 2023 and he joins CEO Michael Rapino on quarterly earnings calls, as CFOs do.

But the man in the arena for the antitrust suit is Dan Wall, Live Nation’s Executive Vice President, Corporate and Regulatory Affairs. Wall joined the company in February 2023 after 24 years at powerful law firm Latham & Watkins (Latham will represent Live Nation in the antitrust suit along with New York-based white-shoe firm Cravath, Swaine & Moore, Berchtold said on LN’s “regulatory update” call Thursday evening).

Wall is the perfect man for his role: he was widely regarded as the country’s leading antitrust lawyer in his nearly quarter-century at Latham and prior to that had been an attorney in the DOJ’s antitrust division. In short: he can see things from both sides.

His thorough and often blistering response made it clear Live Nation intended to proactively blunt the feds’ argument and the significant first-mover advantage of a plaintiff.

A complaint is just that: a place to lay out allegations. There’s often limited proof offered; that’s what a trial is for. Still, the Justice Department’s filing establishes the ground on which the battle will be joined and Wall was born for a storm.

Wall’s treatise begins with broad skewering of the DOJ’s arguments, not unlike an opening statement. He simply refutes the accusations of monopoly power (which requires the ability to price to achieve monopoly profits), given that Live Nation’s net profit margin last year of 1.4% ranked near the bottom of its S&P 500 peers. He unfavorably contrasts the Biden Administration’s position on antitrust matters with the Obama Administration’s, which, he reminds everyone, approved the Live Nation-Ticketmaster merger in the first place.

“We are another casualty of this Administration’s decision to turn over antitrust enforcement to a populist urge that simply rejects how antitrust law works.  Some call this ‘Anti-Monopoly,’ but in reality it is just anti-business,” he wrote. “A central tenet of this worldview is that antitrust should target companies that have grown large enough that in some nebulous way they ‘dominate’ markets—even if they attained their size through success in the marketplace, not practices that harm consumers, which is the actual focus of antitrust laws.”

At root, Wall writes, is an opposition to vertical integration, the keystone principle of Live Nation’s business strategy, and one he casts as pro-competitive, citing both the dense treatise “Antitrust Law: An Analysis of Antitrust Principles and Their Application” by Phillip E. Areeda and Herbert Hovenkamp and the words of Obama Administration antitrust division attorneys to do so.

Most people aren’t terribly familiar with 14-volume legal studies nor an obscure 14-year-old legal filing — nor do they really want to be — but Wall’s sharp references to both show he’s willing to fight the DOJ on elevated ground, bringing the dispute out of the pained-Taylor-Swift-lyric-pun morass LN’s fight for public opinion has had to endure since November 2022.

From the opening salvo, Wall pivots to the particulars, jabbing at the parade of horribles the DOJ offered up in its complaint.

First, Wall says, Oak View Group (Pollstar‘s parent company) was never going to compete with Live Nation as a concert promoter, as it’s a venue owner and manager (and, well, magazine owner), which was the point being made in the numerous cited e-mail exchanges, and of course, it sought a contract from Ticketmaster and advocated for same.

There’s no truth, Wall argues, in the DOJ’s claim that Live Nation tried to force Silver Lake to sell its stake in Australian promoter TEG. Instead, Wall argues Rapino was just pointing out the dangers of Silver Lake owning a stake in both TEG and OVG, which had developed the aforementioned relationship with LN. There is a broad concern — including from DOJ officials — about private equity firms like Silver Lake “rolling up” interests in competing companies.

Ticketing contract exclusivity, he says, is the industry standard and the result of competition rather than anti-competitive. Because ticketing systems are complex, venues prefer to use a single product rather than maintaining multiple redundant systems. It also provides venues with upfront cash, no matter the ticketing company.

Wall denies that Live Nation has engaged in “serial promoter acquisition” over the last decade, as the DOJ alleges. Instead, he says, the focus has been on sectors of the market where they’d prior had no meaningful presence, such as their increased festival business.

Nor is Live Nation’s practice of routing tours to its own amphitheaters unlawful, as the Supreme Court has repeatedly ruled that no business has a duty to deal with competitors. Even monopolists are permitted to refuse to do so.

Perhaps the most damning allegation in the DOJ’s complaint regards New York’s Barclays Center. When that building opened and signed a ticketing deal with SeatGeek, it threatned Live Nation with a lawsuit, alleging retaliatory routing. But, Wall says, under the terms of the consent decree, LN was “scrupulously careful about documenting the business reasons why literally every show in the NY area over the relevant period went to the venue it wound up at,” records it turned over to the Justice Department-appointed monitor. In any event, Barclays did eventually become a Ticketmaster venue, because “SeatGeek’s technology and service were not up to the task of servicing major onsales, resulting in Barclays firing SeatGeek, essentially for cause.”

The thorough countercharge Wall unleashed is a savvy PR move. Live Nation is, frankly, not widely beloved by the public at-large and political grenades tossed its way comes with the territory. With the debunking effort, it makes the case easy to cast as just another instance of political point-scoring.

Eventually, the dispute will move from the roil of the court of public opinion — where Live Nation is unlikely to win — to the more serious confines of the U.S. District Court, where Wall certainly believes they’ve a chance (for what it’s worth, there’s a credible argument the case needs to be moved the District Court in Washington, D.C., which has the jurisdiction over the consent decree, rather than the Southern District of New York where it was filed).

There the feds will have to lay all their evidentiary cards on the table and Wall is already making the case they’re drawing to an inside straight.