The combined Ticketmaster and Live Nation have reportedly begun laying off a significant number of employees, a move that appears to directly contradict what...

The combined Ticketmaster and Live Nation have reportedly begun laying off a significant number of employees, a move that appears to directly contradict what Live Nation Entertainment President and CEO Michael Rapino and Executive Chairman Irving Azoff said they would do when they testified last year before Congress.

The two executives have long argued that the merger was necessary not only for the survival of their individual companies, but also because the pairing would help the two achieve millions in operational savings.

Pollstar reports that about 20 percent of Live Nation Entertainment’s workforce is being laid off, and Rapino hinted at the possibility of such a move in a statement he made last month at the time of the company’s fourth quarter and year-end financial announcement.

“In the months ahead, we will concentrate our efforts on integrating our operations, building efficiencies and driving innovation across the products and services we provide to artists, fans and sponsors. As we seek to maximize the performance of our combined operations, we are focused on eliminating redundancies and capturing at least $40 million in synergies this year,” Rapino said.

The layoffs are reportedly occurring in the accounting, marketing and talent buying departments in the company’s Atlanta and San Francisco offices, but there also may be layoffs within the Los Angeles headquarters. In addition, some of the company’s primary and secondary ticketing staff may also face unemployment as Live Nation sheds its former ticketing partner CTS Eventim and switches back to using Ticketmaster. The exact number of staffers being let go is unknown, but the figure could well exceed 500.

The layoffs are also coming after Rapino, Azoff and other executives received hefty bonuses, which were contractually promised to the officials upon the successful completion of the merger.

Despite the announced plan to improve efficiencies, the layoffs appear to fly in the face of statements both Rapino and Azoff made before Congress in February last year when the federal government began its investigation into the merger.

During a line of questioning from Rep. Brad Sherman, a Democrat from California, both Rapino and Azoff seemed to try to assure the congressman that layoffs would not be necessary if the merger was approved. Instead, they stressed the company would likely add employees:

Mr. SHERMAN. So I will pick one here. It is for Mr. Rapino and Azoff. Mr. Rapino has testified that if the merger is not completed, both companies would be required to lay off employees. You have also claimed that a merger would lead to $40 million in savings. Do those savings involve laying off employees either from your operation or from the Ticketmaster operation? We are in a strange economy where savings are good. But when savings lead to layoffs, that concerns some of us. Tell us about how employment is going the be affected by this merger.

Mr. RAPINO. On the Live Nation front I actually haven’t said that if we didn’t do the merger, we would lay off employees. I have said that we have been a very progressive company for the last 3 years and in hiring employees and creating jobs. I do believe though, with these economic times, my 5-year vision certainly needs to be adjusted, and we currently do have a hiring freeze on. And we are just going to have to get through this year and see how the business turns out. We do believe that the efficiencies of the merger created—will actually create jobs. This merger will create jobs because we will have to staff up on the technology side to better equip ourselves to handle the scalping and the needs of today. So, no layoffs. Jobs created.

Mr. SHERMAN. Mr. Azoff, if this merger doesn’t go through, what is the effect on jobs in your operation. And, if it does go through, what is the effect on jobs?

Mr. AZOFF. Right before I started with the company, Ticketmaster laid off 10 percent of its workforce. And the recent studies that we have done are we can’t get the job done with less people, regardless of whether the merger goes through or not. So we don’t anticipate being able to reduce the workforce at this time, nor are we looking to. However, we are a public company and we have a board. We currently lose money on about, we think, 2,600 of our accounts, many of which are nonprofits and museums and municipal-owned buildings. So, down the road, if we were forced to cut back, it would probably be both in the area of accounts and employees. But, for sure—I agree with Michael—if the merger is approved, we would be adding people.

Mr. SHERMAN. And you would be adding people because there would just be more music?

Mr. RAPINO. No. We believe that right now we are both really understaffed on the technology, research, development, and consumer side of the business. So we believe that the answer for the future is creating a more accessible storefront. And technology has just taken off, as you know. On the recording side, they have lost a lot of their business to the pirates of the Internet. That is happening right now with these professional scalpers and professional technology that are just way more advanced than we are. So, we would assume we would have to build a much more sophisticated consumer storefront. We like to think it as the Ticketmaster.com of today needs become the Amazon of tomorrow for the consumer and fan. A much more convenient and accessible place to buy music. With that, we would like to staff up in the technology side.

A Live Nation spokesperson did not return a message seeking comment.