LiveNation and Ticketmaster: Summing the Parts, Making a Dangerous Whole
Early in February, Live Nation and Ticketmaster decided to merge into one company instead of renewing their previous commitments to working with one another. This decision was made after a $123 million dollar investment by Ticketmaster to hire Irving Azoff as their new CEO back in December of 2008. Neither Live Nation nor Ticketmaster have commented on when or how they plan to merge, but it is known that the name of the combined company will be “Live Nation Entertainment” and include executive chairmen Barry Diller and Michael Rapino, both of Live Nation, and Irving Azoff, of Ticketmaster [Editor’ note: The merger has since been announced on February 10]. Minor details of the merger have been leaked to the media, including a no cash exchange between the two monster companies as well as a “tax-free and all stock” merge, totaling approximately 2.5 billion dollars.
The potential for antitrust violations is a serious concern, so the merger will most likely invite intense scrutiny by public authorities. From the government’s point of view, merging two of the biggest companies in the music business and entertainment industry is like creating a juggernaut, which if left free to roam without restrictions, could potentially crush competitors and smaller vendors. With Live Nation owning hundreds of large venues around the United States, as well as being the largest company for concert promotions and merchandising, combining with Ticketmaster would therefore mean that Live Nation Entertainment could control most aspects of promotion, primary and secondary ticket sales, marketing, booking, merchandising and in some cases album sales. Ticketmaster is no stranger when it comes to antitrust laws and regulations, as in the 90’s they caught the attention of the Federal Trade Commission (FTC) and Justice Department for a detailed monopoly investigation. The investigation was dismissed in 1999 for reasons including insufficient evidence of monopolization.
So what would this merger mean for consumers and competitors? First of all, it would make entering the ticket sales market harder for new vendors. These new vendors would be forced to change the way they market and sell their products to match the new ways of doing business presented by Live Nation Entertainment, meaning they would either be forced to drop ticket prices dramatically to penetrate the market, or create package deals for their customers. During a phone conference between Azoff and investors earlier this year, Azoff claimed the merger would not monopolize the industry nor would it cause trouble for new and existing ticket vendors. Though Azoff stands by his opinions strongly, a detailed investigation by the Obama administration and Justice Department is sure to follow post merger.
On the brighter side of things, after Live Nation Entertainment has been established, convenience fees notoriously synonymous with Ticketmaster will be abolished. Instead of paying a charge when purchasing tickets, Live Nation Entertainment will push the consumption of other products on the customer, meaning when a person goes to buy a ticket, instead of paying a fee they will be presented with an array of other products to buy, such as CD’s and merchandise of the artists they’re going to see live. The logic behind this new way of marketing is that a customer will be more likely to buy a cheaper CD through Live Nation Entertainment at the time of their ticket purchase, as opposed to pirating music or buying a higher priced album inside a retail store. For CEO’s, employees, and stockholders of Live Nation and Ticketmaster, the merger between companies would boost profit for all parties and set new standards for the ticket selling and entertainment industries. We can expect to see a thorough investigation and plenty of debate until that point.