LN/TM Merger Enters Spin Cycle

As shareholders prepared to vote on the proposed merger of Live Nation and Ticketmaster Jan. 8, a flurry of news reports hit the wires first suggesting the U.S. Department of Justice was about to announce approval of the deal – quickly followed by denials.

The denials were in turn followed by reports that DOJ has a team of litigators ready to take the merger to court, if necessary. Regardless of the veracity of any of the reports, one thing was certain: They coincided with a rollercoaster day for both companies’ stock prices.

While the industry waits for the end game to play out, it’s not surprising the rumor mill cranks up. It would be surprising if Justice was doing anything but holding its cards close to the vest.

The kerfuffle began when mergers and acquisitions tip sheet TheDeal.com reported Jan. 5 that three different but unnamed DOJ sources said the deal was close to being approved, with conditions, by the end of January.

Further, the sources said “staff lawyers in the DOJ antitrust division, which has been conducting a year-long review of the deal, were ‘unenthused’ about pursuing the potential vertical competition threats critics said were posed” by the merger.

But the report was quickly refuted by opponents of the deal. The coalition of independent promoters, consumer advocates and ticket brokers who underwrite TicketDisaster.org issued a statement challenging The Deal’s reporting.

“The reports that the merger will be approved, like the premature reports of Mark Twain’s death, are inaccurate and flawed, and are clearly timed to impact the shareholder vote [Jan. 8],” former Federal Trade Commission policy director David Balto said in the statement.

“It is not unusual for merging firms to try to rescue a stranded deal with some type of last minute remedy, but history has shown that consumers are better off when the antitrust cops reject those desperate pleas and protect the interests of a fair and competitive market,” Balto concluded.

After an initial spike in share prices – LYV peaked early at $10.26, while TKTM topped at $14.98 – both dropped somewhat after the initial reports were denied, capped by a Reuters story claiming the DOJ had assembled a team of litigators ready to “go to court” over the merger.

“The DOJ has had a litigation team preparing the case … for months,” another anonymous antitrust source told Reuters. “From the best we can tell, no decision has been made,” a second, unnamed source said. “We have the impression that efforts to settle have fallen through.”

It appears to be anyone’s guess what the DOJ is going to do, which is probably how it should be. In the meantime, opponents are hedging their bets as late-game organizing continues in an attempt to line up big names willing to go on the record opposing the merger.

As Pollstar went to press, additional independent promoters, including Gregg Perloff, John Scher and Sue McLean, and venues were reported to have signed on to the TicketDisaster initiative, joining I.M.P.’s Seth Hurwitz and Jam Productions’ Jerry Mickelson, who were early and vocal opponents of the proposal. Other dissidents include Rams Head Live! in Baltimore, Frank Productions in Wisconsin, the First Avenue nightclub in Minneapolis, and The Black Cat in Washington, D.C.