Live Nation (NYSE: LYV) stock has taken a significant hit on Tuesday morning, dipping by nearly 10 percent at the opening of trading. The dip is presumed to be related to the news that broke after trading hours on Monday – that the Department of Justice is planning to file an anti-trust lawsuit against the company within weeks.
FURTHER READING | Department of Justice to File Antitrust Lawsuit Against Live Nation
Stock for the entertainment giant had been trading at $99.77 at market close Monday, plummeting to $90.65 as the market got underway Tuesday. Prices have recovered slightly – up to $93 by 10:30 a.m.
Live Nation has been accused of anti-competitive conduct by competitors for ages, and subject to a consent decree regarding its behavior agreed to with the DOJ as part of the approval of its merger with Ticketmaster in 2010. That decree was amended and extended in 2019 after an investigation found multiple violations of that agreement.
News that the DOJ was once again investigating the California entertainment giant coming out of the Taylor Swift Eras Tour debacle led to multiple shareholder lawsuits filed against Live Nation. Many are still ongoing, with the company struggling to get class actions removed to arbitration per their usual legal tactics after it was alleged that the arbitration process was unfairly rigged against plaintiffs.
FURTHER READING | Justice Department Has Opened Antitrust Investigation of Live Nation
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Tuesday’s market drop erased – at least temporarily – the gains that the company trading saw following its earnings report beating investor predictions in February.
Should the reported lawsuit result in a break up of the company – removing the globe’s largest ticketing company from the same corporate umbrella as the globe’s largest event promoter – the stock price would be effectively cut in half, according to one analyst’s report – which came before the investigation was even known to be underway in late 2022.
“If the DoJ seeks to unwind the merger – and is successful – we believe: standalone Live Nation would fetch 13.5x EV-EBITDA; standalone Ticketmaster would fetch 8.0x EV-EBITDA; and the firm would incur $100 million of dis-synergies,” Bazinet wrote in a note to clients.
However, Bazinet added that he believes there is only a 20% likelihood that there is a break-up of the firm.
FURTHER READING | Analyst: Live Nation Stock Would Fall by 50% If Company Split
Obviously there is a significant difference between an investigation or even a lawsuit being filed and the potential for a break-up. Live Nation brought in longtime outside counsel Dan Wall to be its executive vice president last year – likely with the defense of such a lawsuit in mind. Wall made his bones as one of the attorneys making the antitrust case against AT&T in 1982 that resulted in the breakup of the telephone system.
FURTHER READING | Live Nation Brings In Top Antitrust Attorney as EVP
Since that time, Wall has served as the chief voice in Live Nation’s antitrust public relations campaign, attempting to place blame for surging consumer ticket prices on resale rather than his company’s allegedly monopolistic behavior in the market. He has also coordinated its response to multiple lawsuits and inquiries from lawmakers seeking to reform the ticketing industry.
FURTHER READING | Live Nation: Privacy Demands “Stonewalling” of Senate Document Requests
