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Ticketmaster / Live Nation merger: Promoters angry about their data being compromised
As details of the Department of Justice's (DOJ) approval of the Ticketmaster/Live Nation merger continue to sink in, questions remain about how the deal will affect the ticketing and live entertainment landscape. And, two prominent independent concert promoters are already voicing grave concerns.
"I had been assured by the DOJ that the plan they came up with is actually better for everyone than blocking the merger," said Seth Hurwitz, the influential Washington DC promoter. "And then I woke up Tuesday morning to find out that my tickets are now, in fact, being sold by Live Nation, my competitor. They rushed that merger through Monday night like an NFL team snaps the next play before anyone has a chance to throw that red flag."
Hurwitz is the chairman of I.M.P., which owns the 9:30 Club and operates Merriweather Post Pavilion, and also produces the Virgin Mobile Festival. He has been slugging it out with Live Nation for years, and one of his biggest concerns about the merger was that his competitive ticketing and marketing data could fall into the hands of Live Nation, a fact he testified about before Congress last year after the deal was announced.
The issue of competitive data falling into the wrong hands is particularly sticky for Hurwitz because he's in the midst of suing Live Nation on antitrust grounds separate from the merger with Ticketmaster.
Under the DOJ's consent decree with Live Nation Entertainment – the name of the combined Ticketmaster and Live Nation – Ticketmaster must license its ticketing software to Anschutz Entertainment Group (AEG) and sell its Paciolan primary ticketing division to Comcast, which owns Philadelphia-based venues and sports ventures and New Era Tickets under its Comcast-Spectacor arm. The divestitures are designed to create two supposedly viable competitors in the primary ticketing space, and to enforce it the DOJ is forbidding Live Nation Entertainment from retaliating against venues or others which opt out of the company's services.
Critics like Hurwitz point to problems with the agreement because Live Nation still owns or operates dozens of venues, and an artist management division – Irving Azoff's Front Line Management – and can still exert huge amounts of influence over where artists perform and how tickets are sold.
"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 venue agreements they had no say in? What if, after these supposed 'choices', one or the other companies have locked these venues into exclusive long term agreements? How do we implement this wonderful new world now, with those deals already in place? We have to wait until they expire, and then live with the next long-term deal that someone else chooses? What if everyone decides to re-up with Live Nation?" Hurwitz said.
"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," he added. "Creating competition is worthless if there is no means to use it."
In an interview with the Chicago Tribune, Jerry Mickelson, the legendary co-founder of Chicago-based promotions company Jam Productions, said some of his concerns about the merger were ultimately ignored by DOJ after they interviewed him.
Specifically, Mickelson is referring to a landmark Supreme Court case from the 1940s where Paramont Pictures was forced to divest movie theaters it owned. Mickelson believes the DOJ's merger approval virtually reverses that decision because Live Nation Entertainment still owns Front Line Management and dozens of venues and amphitheaters where the acts can perform.
"In asking for concessions, the Justice Department focused on ticketing, which is only one component of vertical integration. They didn’t focus on artists, promoters, buildings, merchandise, food and beverage, the managers that will be affected because the new company controls all of it," Mickelson told the Chicago Tribune. "They should have looked at the entire chain of what is going to be affected. There was a precedent set in the U.S. vs. Paramount Pictures court case that held that one movie company couldn’t be a content provider, a distributor and a theater owner all rolled into one. Even today you don’t have movie studios owning movie theaters or distributors."
And, then there's the deal with AEG. The DOJ's consent decree hinges in large part on AEG and Comcast-Spectacor mounting viable competing ticketing operations to Live Nation Entertainment, but while Comcast-Spectacor has some experience in that realm through its New Era Tickets division, AEG does not.
Part of the reason Live Nation pursued the merger with Ticketmaster is because after Live Nation spent more than a year and millions of dollars creating its own competing ticketing operation, it realized that truly challenging Ticketmaster would likely be too big of a hurdle to overcome.
In his statement following the DOJ decision, AEG President and CEO Timothy Leiweke gave no specific indication when AEG might launch its ticketing operation, or whether it will at all.
"AEG will have the ability to operate a private label ticketing site using the Ticketmaster system on favorable terms, with commitments from Ticketmaster to host our private label site and provide a high level of ticketing service to our venues and events, including both AEG-affiliated properties and other clients," Leiweke said.
"While AEG will have the ability to operate under the private label site for up to five years, AEG has obtained complete flexibility to migrate some or all of its ticketing business to one or more alternative ticketing platforms at any time following the merger. AEG intends to aggressively explore such alternatives, including ticketing companies both in the U.S. and in other markets with whom AEG is already engaged in on-going discussions.
"AEG has an option to license and install the software comprising the Ticketmaster host to power a competing ticketing system should AEG elect not to pursue an alternative technology.
"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," he added.