More concert promoters have filed documents with the U.S. Department of Justice (DOJ) opposing the consent decree the federal agency negotiated with Ticketmaster and Live Nation that allowed the two to merge.
A group of promoters, led by Seth Hurwitz of I.M.P. and 9:30 Club fame, believe the merger will hurt their business because the merged company will be too big to compete against, and concessions DOJ wrangled out of the newly formed Live Nation Entertainment will not adequately protect the industry from being cannibalized. The other promotion companies involved in the complaint are Frank Productions, Sue McLean and Associates and Metropolitan Talent. In addition, the National Consumers League, which spearheaded the TicketDisaster.org effort against the merger, also signed onto the complaint.
Similar concerns were lodged with the DOJ by Jack Orbin, president and founder of Stone City Attractions, who believes that the DOJ consent decree essentially made the barrier to entry into the market to compete against Live Nation Entertainment too great of an obstacle.
To approve the merger, the DOJ required the two to sell Ticketmaster’s Paciolan primary ticketing division to Comcast-Spectacor, and license Ticketmaster’s ticketing software to Anschutz Entertainment Group (AEG), a rival promoter, so that AEG could create its own ticketing operation. The DOJ also required that Live Nation Entertainment promise it would not retaliate against anyone who dropped the company as its ticket provider.
All the promoters, however, believe the DOJ merger agreement addresses the ticketing aspects of the deal more than their concerns, including Ticketmaster and Live Nation having access to competitive data from promoters and venues that have worked with either company in the past.
“The problem is that people don’t really understand our business if they’re not in it. Hopefully, the DOJ & authorities will listen to what everyone is telling them, and figure out how to keep Live Nation from defeating their well-intended proposed decree,” Hurwitz told TicketNews.
“The fact is that it is easily defeated by tying up every other facet of the business. If this were not the case, then they should readily accept any limits proposed on them to do that. But they won’t, because they know better than anyone how to beat this. Having competition in the ticketing sector is meaningless if those newly created competitors have no shows to sell tickets to,” he added.
In the complaint, the promoters propose several new remedies to help protect their industry from Live Nation Entertainment.
“If the Government remains unwilling to challenge the merger, additional remedial measures are necessary,” the documents states. “To create meaningful competition in the market for remote, primary sales of tickets to popular music concerts, [Live Nation Entertainment] should be precluded from: (i) promoting more than seventy-five percent (75%) of major popular music artists’ tours; (ii) tying or bundling its promotional services and venue services; (iii) tying or bundling the appearance of major popular music artists at one [Live Nation Entertainment] controlled venues to the artist’s appearance in [Live Nation Entertainment] controlled venues in different geographic markets; and (iv) retaliating against or penalizing any artist who elects to utilize a rival promoter or venue during the course of a [Live Nation Entertainment] sponsored national or multi-appearance tour.”
It continued, “[Live Nation Entertainment] should also be required to return at the request of any promoter or venue any customer or other competitive information Ticketmaster maintained from concerts for which it provided ticketing services for the promoter or venue. These remedial measures will facilitate the ability of independently owned and operated venues, which will likely utilize rival ticketing companies, to compete for artists who drive the live music industry.”
A Live Nation spokesperson did not immediately return a message seeking comment.
Hurwitz said that at the core of the merger is a desire for Live Nation to improve its cash flow, in part because the company has hundreds of millions of dollars in debt. Ticketmaster is a cash business, while Live Nation often fronts millions of dollars to mount tours.
“They need the cash flow to cover the losses…Jack Orbin was completely correct on this. They can ill afford to give up one penny of that cash flow, as that would bring the gap from the losses yet closer. Therefore, they need every tour, and every gross they can buy.
Since the merger, almost every show that was pending on our calendar became part of a tour deal, no matter what the cost,” Hurwitz said.
“And now, to add to their misery, sales are absolutely off the charts horrible…it’s the talk of the industry. While one might say that, therefore, the free market will take care of itself, the collateral damage while they unwind is not fair to what’s left of the rest of the industry. We believe the government needs to protect an industry from this, and not allow it to implode in order to correct itself.”
The DOJ is reviewing the public comments it received and will present its opinion to the court some time in the near future. Whether the DOJ will seek to keep the merger agreement unchanged, alter it, or file a lawsuit against the two to block the deal is unknown; the agency does not comment on pending matters.
