February 10, 2010 By Alfred Branch Jr.
A little over two weeks has passed since the merger of Ticketmaster and Live Nation was cleared by the U.S. Justice Department (DOJ), but the criticism continues to trickle in.
In an editorial published this week in the New York Times titled “Music Inc. Gets Bigger,” the two companies are taken to task for the merger because of the vertically integrated power the combined company will have. The Times calls out the federal regulators for approving the deal, but also believes they were virtually unable to stop it.
Vertical integration occurs when a single company owns/controls several links along a supply chain, which in this case means the new Live Nation Entertainment manages the artists, promotes their concerts, owns/operates several venues the artists will perform in and sells the tickets to the shows. In approving the deal, the DOJ imposed conditions on the merger that require Ticketmaster to license its ticketing software to one of its clients, Anschutz Entertainment Group (AEG), to allow AEG to compete. In addition, Ticketmaster must sell its Paciolan primary ticketing subsidiary to Comcast-Spectacor, again, to create a viable competitor.
“But the kind of consolidation embodied by Live Nation Entertainment is tremendously worrisome,” the piece states. “Live Nation could easily shut out independent promoters — who don’t have their own venues and ticket services. This could reduce diversity in the music market. The cost savings that are supposed to flow from these mergers never seem to accrue to consumers because the mergers leave so little competition in their wake.”
Independent concert promoters and others made similar claims. DOJ said it would monitor Live Nation Entertainment to make sure the company did not retaliate against venues and competitors that seek to do business with other firms.
Live Nation Entertainment, in arguing for the merger, stressed that fans will benefit from the deal because they will see more favorable ticket prices, in part because the combined company will be able to save millions of dollars by consolidating operations.