Features
Change Live Nation Can Believe In
Live Nation and Ticketmaster ended the nearly year-long wait to finalize merger plans and unveiled Live Nation Entertainment Jan. 25, just hours after the U.S. Department of Justice gave its blessing to the union that many believe is a game-changer for the concert industry.
The announcement itself was anticlimactic, considering the months of speculation, argument, organizing in support and against the deal, and ink spilled dissecting the possible marriage of the two most powerful companies in the concert industry.
Ticketmaster and Live Nation “announced they have completed their merger following the receipt of regulatory clearances and approvals from all government authorities,” the statement said. And with that, TM shares ceased trading the next day.
Stockholders will receive approximately 1.474 shares of Live Nation common stock for each share of TM common stock they own under the new entity of Live Nation Entertainment, under the stock ticker LYV.
The merger did not receive the DOJ’s blessing without conditions – some of which were telegraphed in the weeks leading up to the regulators’ report accompanying its approval resolution.
Comcast-Spectacor, it was learned, signed a letter of intent to purchase the Paciolan ticketing platform from Ticketmaster within 60 days of the merger. And in somewhat of a surprise, Ticketmaster must license its primary ticketing software to Live Nation’s largest competitor, Anschutz Entertainment Group. Previous reports that venues would be sold to AEG proved to be erroneous.
The DOJ also barred “retaliation” by the new company against any venue owner that uses another company’s ticketing or promotional service.
“The Department of Justice’s proposed remedy promotes robust competition for primary ticketing services and preserves incentives for competitors to innovate and discount, which will benefit consumers,” said Christine Varney, Assistant Attorney General in charge of the DOJ’s antitrust division.
“The proposed settlement allows for strong competitors to Ticketmaster, allowing concert venues to have more and better choices for their ticketing needs, and provides for anti-retaliation provisions, which will keep the merged company in check.”
The joint announcement by Live Nation and Ticketmaster included statements from LN CEO Michael Rapino, who retains the title, and TM CEO Irving Azoff, who becomes executive chairman of Live Nation Entertainment and retains the CEO mantle of Front Line Management. Barry Diller becomes chairman of the board of directors.
“This is a good and exciting day for the music business, and we are close to finalizing the creation of a new company that will seek to transform the way artists distribute their content and fans can access that content,” Rapino said of the approval. “The Department of Justice was thorough and aggressive in their analysis and their remedies, and we are confident that with this resolution the playing field is competitive and broader as a result of this transaction.
“We believe that this merger will now create a more diversified company with a great selling platform for artists and a stronger financial profile that will drive improved shareholder value over the long term.”
Azoff called the DOJ resolution “a great win for fans,” adding, “The entertainment industry needs innovation and we are ready to deliver. I’m truly excited that as this new company goes forward, we will be able to create more choices for family entertainment, sports, artists, teams and other rights-holders.”
In addition to the anti-retaliatory provisions, DOJ resolved that “the merged firm must also allow any client that leaves and chooses to use another primary ticketing service to take a copy of the ticketing data related to that client’s sales. The settlement also sets up firewalls that protect confidential and valuable competitor data by preventing the merged firm from using information gleaned from its ticketing business in its day-to-day operations of its promotions or artist management business.”
The resolution did not address other concerns that opponents cited, including other features of the vertical integration beyond ticketing such as artist and facility management or venue ownership. And many of those opponents scoffed at the “firewall” and no-retaliation language.
“I had been assured by the DOJ that the plan they came up with is actually better for everyone than blocking the merger,” I.M.P. chairman Seth Hurwitz told Pollstar. “And then I woke up Tuesday morning to find out that my tickets are now, in fact, being sold by Live Nation, my competitor.
“In the meantime, we have asked for clarification from the DOJ on perhaps the most immediate and obvious concern: Are promoters free to choose who they want to do ticketing, or are they bound by long-term, exclusive venue agreements they had no say in? …
“Unless people are free to do business how they please, with the variety of competitive ticketing that the DOJ claims this now provides, then I can call my lawyer and tell him he doesn’t need to bother reading the rest of that document. It doesn’t concern people like me. Or, for that matter, the public.
“Creating competition is worthless if there is no means to use it,” Hurwitz concluded.
Jam Productions’ Jerry Mickelson who, like Hurwitz, testified on Capitol Hill last February against the just-proposed merger, told Pollstar, “It’s like the president said,” referring to the previous night’s State of the Union address, “We don’t quit, and I don’t quit.”
He unequivocally denied Chicago media reports suggesting he may be considering getting out of the business. “That has never been a consideration. I have no idea why they would say that.”
Mickelson, who confirmed he’d been interviewed again by the DOJ in recent weeks, was dismayed investigators appeared to have not considered the 1945 Supreme Court case of U.S. v. Paramount, in which the Court ruled that movie studios must not own theatres or distribution companies. He also cited the 1970s-era attempt by MCA to own a talent agency, also rejected as anti-competitive.
“That’s the case that should apply here,” Mickelson said. “You shouldn’t have artist management firms and content providers that buy tours or have 360 deals owning ticket companies, promoters and venues. … That case is still here, still alive, still precedent and should be the guiding force. What it did, if you read the [U.S. v. Paramount] decision, is it protected the consumers and competitors so both are better off.
“It’s the same issues as what we should have for the concert business. I brought it up [to DOJ]; I can’t see that [U.S. v. Paramount] is any different than what we have here.”
A question left unanswered in the hiving off of ticketing subsidiaries and software licensing is what becomes of Live Nation’s agreement with CTS Eventim. The German firm recently asked the United Kingdom’s Competition Commission to reconsider its approval of the Live Nation / Ticketmaster merger and has apparently seen its relationship with its American partner wither.
Comcast-Spectacor CEO Peter Luukko, who earlier testified in favor of the merger, remains unswayed by the merger’s detractors and points to his company’s new ability to compete with Live Nation Entertainment for ticketing clients.
“This is a very exciting opportunity for Comcast-Spectacor to extend our ability to be the ultimate sports and entertainment provider, managing public assembly facilities (through Global Spectrum), catering and providing food and beverage sales (through Ovations Food Services), selling naming rights and sponsorships (through Front Row Marketing Services), and now, the further ability to sell millions of tickets to events worldwide,” Luukko said in a statement.
“When Comcast-Spectacor adds the Paciolan business to its existing ticketing business, clients will have the option to select the ticketing solution that best meets their specific goals. Through Comcast-Spectacor, these teams or arenas will be able to either license the technology and operate it themselves through Paciolan or contract with New Era Tickets for complete ticketing services.”
And the divestment of ticketing operations ordered by the DOJ seems to have allayed prior fears once expressed by AEG chief Tim Leiweke, who previously referred to the proposed tie-up as “troubling.”
The company seems satisfied that DOJ ensured a more level playing field by approving the merger with conditions that addressed its concerns about not only ticketing but data management.
“Together with other provisions of the Department of Justice’s proposed final judgment, including required divestitures and significant behavioral remedies, we are confident that the arrangements we have reached with the parties will serve to increase competition and further the interests of consumers and other participants in the live entertainment industry, not only in the United States, but in a number of key international markets (including Canada and the United Kingdom, among others),” Leiweke said.
“AEG has received definitive assurances from Ticketmaster regarding its rights to own and use customer and other data for any tickets that it has sold, or will sell in the future, through Ticketmaster.
“The agreements we have entered into will provide necessary assurances to allow the continued success and growth of our existing venue and promotion interests, as well as the further expansion of our venue management portfolio.”
With the ability to purchase Ticketmaster software within five years, the company is also positioned to go into the ticketing business, providing yet another alternative to Live Nation Entertainment, according to Leiweke.
“AEG is committed to competing in the ticketing business,” Leiweke said. “Our access to an interim ‘white label’ solution on Ticketmaster, coupled with the complete flexibility to explore other systems on our own timetable, nicely positions us to identify, develop and implement the best ticketing model for ourselves and for others in the sports and entertainment business looking for alternatives to the status quo.”
However, Live Nation’s inability to compete with Ticketmaster at its own game was a major factor in the companies’ decision to merge in the first place. How much better AEG will do in the ticketing market than Live Nation will surely be watched closely.
As for Ticketmaster, the TKTM ticker is history. A source in a position to know told Pollstar a decision has yet to be made on whether the Ticketmaster brand will be retired as well and if not, how it might be utilized going forward. Nor had a logo for the newly launched Live Nation Entertainment been unveiled at press time.
Those decisions, along with the inevitable “examination of efficiencies” – i.e., layoffs of redundant staff positions – are likely next on Live Nation Entertainment’s plate.
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Earlier coverage of the merger: