Wednesday, January 27, 2010

DOJ Approves Ticketmaster and Live Nation Merger, With Conditions

By Kathleen Richards
Wed, Jan 27, 2010 at 11:45 AM

The Department of Justice announced Monday the approval of a merger of Ticketmaster Entertainment and Live Nation, reports The New York Times. The joining together of the ticket-selling behemoth and the world’s largest concert promoter will result in a new company, Live Nation Entertainment, which will control aspects of booking, promotion, primary and secondary ticket sales, merchandising, direct marketing, and other artist and venue relationships. The new company is likely to dominate the live entertainment market and have other implications for the music industry as well (Live Nation also acts as a record label for musicians like U2 and Madonna, and owns and operates more than 100 theaters worldwide).

The two companies first announced their decision to merge last February, which prompted smaller competitors, consumers groups, and artists like Bruce Springsteen to protest (the Smashing Pumpkins’ Billy Corgan endorsed it), arguing that the merger would create a monopoly and result in a higher ticket prices.

As we previously reported, rival concert promoters like Goldenvoice and Another Planet Entertainment use Ticketmaster, and were concerned that a merger with Live Nation would give their competitor a leg up by giving the company access to all of their user data. Yet Noise Pop’s Jordan Kurland said the merger could also provide an opportunity, forcing smaller concert promoters to seek other avenues for ticket sales beside Ticketmaster, and thereby benefit indie clubs and promoters. Another Planet Entertainment CEO Gregg Perloff didn’t respond to a call in time for publication.

Initially, the Department of Justice agreed with the merger’s critics. So the DOJ has outlined several conditions for the $889 million deal: Ticketmaster must license its ticketing software to rival Anschutz Entertainment Group (aka AEG, the nation’s second-biggest concert promotion company, which owns Goldenvoice), and to sell one of its ticketing divisions, Paciolan, to Comcast Spectator, a sporting events subsidiary of Comcast — in effect, creating two competitors that could vie for ticketing contracts, according to the DOJ’s official statement. The merged company will also be subject to anticompetitive provisions, “prohibiting it from retaliating against venues that choose to sign ticket-selling contracts with competitors” under a ten-year court order.

Live Nation and Ticketmaster say that their unified business will streamline their operations, thereby reviving the music industry and benefiting consumers. In a released statement, Live Nation CEO Michael Rapino said, “we are confident that with this resolution the playing field is competitive and broader as a result of this transaction.” The merger, the statement continued, will give the combined company “the tools to develop new products, expand access, improve transparency and deliver artists and fans more choice. This will drive greater attendance at live events and bringing more value to all major constituents in the industry.”

Its critics, meanwhile, are expressing cautious optimism about the provisions of the deal. In a statement by the coalition, Sally Greenberg, executive director of the National Consumers League, said, “While we appreciate the efforts of the DOJ to extract meaningful concessions from the parties, we remain concerned that these two companies, with a history of anti-consumer behavior, will abide only by the letter, and not the spirit of the settlement agreement. It is therefore critically important that the DOJ hold the merged company’s feet to the fire to ensure that the settlement will have its intended effect. The consumer groups, venue owners, promoters, and ticket broker members of our coalition will remain vigilant to ensure that DOJ fulfills this watchdog function.” Greenberg also questioned Ticketmaster’s intention to use paperless ticketing in the secondary ticket market, thereby increasing its hold, which she believes may constitute an unfair and deceptive trade practice. Added Gary Adler, counsel to the National Association of Ticket Brokers: “The fight is not over. Our efforts to protect the rights of the consumer by exposing Ticketmaster’s anti-consumer activities, including the use of paperless ticketing and excessive fees, are still priority number one.”

The proposed settlement still has to be approved by a federal judge after a 60-day comment period. To submit comments concerning the proposed settlement, write to John R. Read, Chief, Litigation III Section, 450 Fifth Street, N.W., Suite 4000, Washington, D.C. 20530.

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