A year after the deal was completed, a new report by the American Antitrust Institute (AAI) questions how adequately the U.S. Department of Justice is monitoring the Ticketmaster/Live Nation merger.
Entitled “Live aid? Assessing the Ability of the Ticketmaster-Live Nation Consent Decree to Restore Competition Levels in the Primary Ticketing Market,” the report states that the combined company has seen its ticket contract renewal rate escalate from 85 percent to 95 percent since the merger, which could help to put a squeeze on rivals Comcast-Spectacor and AEG, among others, who are angling for contracts.
In approving the merger, the DOJ sought to boost the two competitors by requiring that Live Nation Entertainment (LNE) divest its Paciolan ticketing company to Comcast-Spectacor, and also license its ticketing software to Anschutz Entertainment Group (AEG) so that it could handle its own ticketing. AEG, which was a Ticketmaster client, chose to form an alliance with Outbox Technology for its ticketing efforts.
“By securing for LNE any of the few remaining venues for which AEG and Comcast can reasonably compete with LNE for ticketing contracts, Live Nation Arenas presents yet another obstacle that AEG and other LNE rivals must overcome in order to emerge as viable competitors within the primary ticketing services market,” the report states. “When coupled with Ticketmaster’s 95% venue renewal rate, Live Nation Arenas threatens to significantly weaken the ability of the entrants to successfully restore pre-merger competition levels. Therefore, observers should carefully monitor any venues that Live Nation Arenas is able to secure, as such developments may serve to frustrate the efforts of the new entrants to effectively compete with the merged firm.”
While the merger has given rise to AEG’s massive initiative — the company will handle ticketing services for more than 100 venues it operates worldwide — and several smaller entities, it has undoubtedly made Live Nation stronger, too, due to the increased financial resources at its disposal.
The report praises AEG and others for taking a more modern approach to ticketing, with “white label” offerings that give venues more control, and through increased social media ticketing efforts. But, the report believes that with more competitors the DOJ needs to be even more vigilant in its monitoring.
“Although this is certainly a creative attempt to replace the competition lost from the merger, more than creativity will be required if the remedy is to successfully operate in practice,” the report states. “If, and until, AEG can convince venues that it can both reliably manage and improve a ticketing platform on its own and provide service comparable to LNE’s, it is doubtful that AEG will be able to attract venues from LNE and become a significant rival. In the meantime, absent meaningful new competition from Paciolan, LNE is likely to continue enjoying any monopoly rents it currently is receiving as a consequence of its market dominance.”
The problem for the DOJ, which has used the same technique when approving other mergers, does not really have the staff to truly monitor all these different companies, so it largely relies on competing companies to give provide information on potential problems.
In the Ticketmaster/Live Nation merger, that role has largely been filled by angry concert promoters who believe their competitive business information is compromised because Ticketmaster is the ticket provider for so many venues they book shows in. Although the DOJ stipulated that LNE could not retaliate against any venues or promoters that stopped using their services, supposed wall protecting that information from Live Nation’s promotions division has never been fully defined.
“Those people [at the DOJ] aren’t going to do anything about it,” veteran rock promoter Seth Hurwitz, owner of Washington DC’s famed 9:30 Club and concert company I.M.P., recently told TicketNews about the DOJ’s monitoring efforts.
Christine Varney, the assistant attorney general who runs DOJ’s antitrust division, has defended the decision to allow the merger, and recently told The Washington Post that the DOJ aims to avoid the extremes in such matters to provide workable solutions.
“There are always ideologues on both sides of the debate. Some want us to block every deal, and some want us to allow every deal to go through. I’m not an ideologue. I’m a law enforcer making decisions based on the facts and the law,” she said.