The various scenarios under which Ticketmaster and Live Nation might satisfy Department of Justice (DOJ) officials in order to get their merger approved still present some difficulties, but Ticketmaster Entertainment CEO Irving Azoff remains as confident as ever that the deal will go through.
Before a group of entertainment lawyers and others over the weekend, Azoff said he still believes the merger will happen, and he sounded as defiant as ever concerning his views against the secondary ticket market.
“I tell them [government officials] that they wouldn’t allow someone on the street to scalp a gallon of gasoline when there’s an oil crisis” Azoff said, as reported by BusinessWeek. “Why would they allow someone to stand on a street corner and scalp a ticket when it’s in high demand, too?”
Ticketmaster, through its TicketsNow subsidiary, resells tickets, too, and Azoff has said that he would like to sell the company. The move could help with federal regulators, but selling it remains a difficult proposition, in no small part to Azoff’s criticism of the secondary ticket market and the $265 million Ticketmaster spent to acquire the company. In addition, the sale of TicketsNow would not address Ticketmaster’s TicketExchange, where dozens of sports teams and artists resell tickets at a premium, nor does it stop Ticketmaster from marketing VIP or other premium seat packages.
“It’s up to those rights owners [teams and artists] to decide what they want to do with those tickets,” Azoff said over the weekend, as reported by BusinessWeek.
Besides Ticketmaster’s potential problem with TicketsNow, Live Nation also could have some issues to resolve with some of its contracts, namely with CTS Eventim, the German company that provides the technology backbone for Live Nation’s fledgling ticketing operation, and with SMG, the venues operator that signed a ticketing deal with Live Nation.
With these contracts, Live Nation and Ticketmaster would have enormous control over new markets (SMG-operated venues) and new entrants into the primary ticketing industry (theoretically, Live Nation could possibly try to squash a deal CTS Eventim might try to sign with a competing company). In both cases, the obstacles might be surmountable, but they pose additional concerns.
Azoff doesn’t believe any significant obstacles exist. “We would never have undertaken this merger if we thought it wasn’t legal,” he said, according to BusinessWeek.
(The image accompanying this story is from Boston.com)
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You know, everyone has picked up on this story and is basically repeating the same thing… that being that Azoff wants to sell TicketsNow, but what I believe everyone is referring to is when he joked to congress (or whoever) to make him an offer for the company. Anyway, I’d like to hear someone explain how and why the government should care that Ticketmaster owns TicketsNow when investigating the merger of TM and LiveNation. From what I understand about this TM/LN proposal, the only concern as far as competition is concerned should be in regards to primary market ticketing, venues, and things like things like that, not the secondary market.
So, the question is, why would TM selling TicketsNow help the merger go through…?
Because when TM manipulated the primary market for gain on the secondary market, TN was the vessel they used to capitalize on that manipulation. Somehow I guess they think selling TN will remove all the concerns about TM doing it again, even though it really makes no difference. If one of the conditions DOJ imposes is that TM has to sell TN, then it is because DOJ likely feels that a primary vendor like TM and LN should not be also involved in the secondary market. That being the case, they should also require TM to sell off TicketExchange, which was used frequently by TM prior to its acquisition of TN for the same purpose. Now that Azoff’s regime has devalued TN, I’m sure they’re resolved to getting very little for the company, and they don’t care because they still have TicketExchange. If Azoff really feels so strongly against the secondary market, the DOJ should call his bluff and force him to sell both TN and the TicketExchange, both of which are secondary market vendors. Considering how profitable the latter has been for TM, I have a tough time thinking he’d give up TicketExchange, which of course would only provide further evidence of his hypocrisy. He only hates the secondary market because he has been unsuccessful in penetrating it.
My point is, TM already owns TNow, and to your point already has ticket exchange. How does this matter to the proposed merger between TM & LN? It doesn’t as far as I can tell. If there was really that big a problem with TM/TNow, they had their chance to kill that deal two years ago. I’m yet to hear a reason that legitimately leads me to believe that if the DOJ has concerns about the proposed merger that those concerns will be allayed by the sale of TNow… Now, I’ve also read reports of TM possibly parting with paciolan, which makes more sense…
To your point about the “manipulation” of the primary market… As far as I’d ever see it was all hearsay. There was never concrete evidence of the “manipulation”, maybe somewhat deceptive/misunderstood business practices sure, but without evidence of this “manipulation” I don’t see it as a reason the DOJ would require TM to part with TNow…
The answer to your question is easy. When any regulatory body examines a venture for possible monopolistic concerns, they generally look at an industry holistically – not in pieces, as you have indicated. The problem with your perspective is that it breaks ticketing into two different industries: primary and secondary. This may have been appropriate 4 or 5 years ago, but the ticket-selling business has evolved significantly since that time, and there’s been a tremendous amount of “blurring of the lines”. As a result, the “ticketing industry” is effectively comprised of both primary AND secondary ticketing. Case in point, TicketNetwork logs the “Top Sellers” each week, but they don’t separate primary and secondary – they simply lump everything into one big category. So as it relates to the definition of this industry, there’s no longer any segmentation; ergo there are no longer two smaller industries – just a really big one. So if you therefore look at “ticketing” as a gigantic pie comprised of both primary and secondary slices, think about how large Ticketmaster’s slice of that pie is at the moment. They have the largest primary slice (by a large margin), and the second largest secondary slice. Put the two together, and you virtually consume the entire pie. Cut one from the other, however, and now Ticketmaster’s overall slice has deminished significantly. Therefore no more “ticketing” pie monopoly, and a material issue is removed from the DOJ’s arsenal.
Now, I’m by no means arguing that a divestiture of TNow is the only exercise that would lead to DOJ approval. There are clearly other concessions that both companies would need to make. I’m merely attempting to explain how selling TNow gets Ticketmaster closer to the finish line.
Bottom line:
Ticketmaster Live Nation would own almost all of the primary market (as it gobbled up TicketWeb and a few other smaller rivals) own the second largest ticket brokerage as well as TicketExchange and a increasing number of live nation and house of blues venues. The number of venues it owns would be small market share, but it would totally dominate the primary ticket seller sector. The fact that he wants to “get rid” of the secondary market (by his own admission) is enough fact for me to say he wants to monopilize the indsutry as a whole.
It’s just ridiculous that Azoff now wants to put limits on ticket scalping, when it was Ticketmaster that spent tons of time and money to repeal anti-scalping laws in many states just a few years ago.
Azoff, what a hipocrite! Talk about selling gas on street corners. The Oil companies have the biggest monopoly in the world and he’s looking to become the biggest monopoly in the entertainment business.
Also we live in America, not in the middle east.
This still has nothing to do with why TM selling off TNOW would appease the DOJ.
Anyone else?
Read that “Easy explanation” entry above. It answers your question perfectly. If you still disagree, then I don’t think anything will convince you.
The ticketing aspect of the proposed merger does not concern me as much as the combination of everything which would create a monopoly if the merger is allowed.
Just think of a world where TicketMaster/Live Nation (TMLN) would have the ability to control:
1. Act Management (Azoff)
2. Ticketing (TicketMaster)
3. Venues (Live Nation)
There would be no checks and balances.
Think of all the venues that would go out of business as TMLN acts would only play TMLN facilities. This merger would force venues to play ball TMLN way or no way at all.
Think of all the new and/or up and coming acts who might not even get a chance as they would be forced to join the TMLN stable or mayby get no play at all.
If you don’t think this merger will create a monopoly, you’re not thinking at all.
Because DOJ sees a conflict of interest between a primary market vendor like Ticketmaster owning a secondary market vendor like TicketsNow. This conflict has only been reinforced by Ticketmaster’s manipulation of the primary market in order to make gains on the secondary market using TicketsNow.
The irony is that, as long as Ticketmaster has TicketExchange, they will still be able to have that conflict by being in the secondary market. Selling TicketsNow is an act of appeasement with little substance in addressing the underlying problems DOJ and Congress has with Ticketmaster’s role in the secondary market.
BTW…totally different DOJ two years ago. The Bush Administration was fiercely ‘pro-free market’ and to a fault. Many of the mergers that went through over the last eight years did so with little to no real oversight by DOJ and/or Congress. The Ticketmaster/TicketsNow transaction was rubber stamped and approved in less than 60 days. The new administration has promised to have more teeth in reviewing such mergers and acquisitions.
I tell them [government officials] that they wouldn’t allow someone on the street to scalp a gallon of gasoline when there’s an oil crisis” Azoff said, as reported by BusinessWeek. “Why would they allow someone to stand on a street corner and scalp a ticket when it’s in high demand, too?”
there’s a simple answer to this that any high school student with half a brain could answer…Gasoline is a necessity…tickets aren’t
It’s comparing apples/oranges azoff ever hear of that in 9th grade?
“It’s up to those rights owners [teams and artists] to decide what they want to do with those tickets,” Azoff said over the weekend, as reported by BusinessWeek.”
you forgot to add “until they sell them”…once you sell something you don’t have control over where it’s resold or what’s done with it…Unless it’s something that can be copied like music/tv (hence copyright laws)
Even if TM/LN sold TicketsNow, and sold or got rid of TicketExchange, what would keep them from being involved in the secondary market? TMLN and their artists could still anonymously post tickets on third-party resale sites. They could still do a deal with StubHub or the “new” owner of TicketsNow to provide links from TM.com to resale sites.
To me, the whole primary/secondary market thing is a very minor issue within the scope of this proposed merger. The real problem is a world where TMLN has vast control over artists, venues, and ticketing. Non-TMLN venues could basically be forced to play ball with Azoff/Rapino (on their terms) in order to get shows in their buildings. This is especially true in markets where LN owns its own venues and/or there are two major venues that compete. If one arena does a sweeping deal with TMLN, where will that leave the other venue? They’ll have to do a similar deal or risk losing a ton of shows and having to rustle up some other ticket distribution option. TMLN could have tremendous leverage with venues, independent promoters (if any are left), and even artists. The ramifications are staggering.
This is where the true danger lies and it has NOTHING to do with TicketsNow or the secondary market. I doubt the DOJ would even be thinking about TicketsNow if the Springsteen debacle hadn’t occurred right when the hearings started.
On the “bright” side, I suspect that if this merger goes through the combined TMLN entity will become diseased over time. Competitors could pop up to serve as an alternative for those venues who don’t want to be held hostage by the TMLN beast. As it is, Veritix has already signed four NBA arenas. And who really wants to have all of their tickets sold by TM, if TM is LN’s ticketing company, first and foremost?
This merger WILL go through because Azoff and Rapino have painted themselves into a corner. They’ll do whatever they have to do, because they’ve told the DOJ and stockholders that it is necessary. Hopefully, they’ll sell Paciolan and LN’s CTS entity to organizations that can actually use them to COMPETE, and not just stuff them into a closet where they’ll gather dust.
They don’t realize that most of their comments make them look more guilty rather than less. Ask him if someone should have a right to sell their speedboat at whatever price someone is willing to pay and they’ll say I don’t care. You can’t attach energy, or food that’s just silly politics.
Maybe they should sell TicketsNow to Rush Limbaugh I’ve heard he’s looking for something to buy.
I think another thing we may end up seeing as more of the public gets fed up with TM/LN is the municipal and state governments who funded the majority of the venues that TM/LN control start taking some of that control back. All of these venues are on contract, and when you consider in many cases taxpayer dollars helped build some or all of these buildings, it doesn’t seem reasonable to me that they be controlled by companies like TM and LN who want to stifle competition to the detriment of those same taxpayers.
Comparing the ticket market to that of oil is laughable. People NEED gasoline to drive to work and heat their homes. No one NEEDS tickets to anything, and comparing the two is both arrogant and insulting to the millions of Americans who can’t afford to take their kids to a ballgame in part because of the rising cost of fuel and energy.
But here IS a valid comparison for the ticket market. By instituting paperless ticketing in an attempt to completely control the primary market while restricting the secondary market, it is like GM and Ford merging, with little outside competition, and then instituting practices that not only allow them to set the market prices of their vehicles, but also limiting and restricting the resale of those vehicles by the people they sell them to. Would Congress allow such a hindrance of the free market? I doubt it, so why are they considering allowing it with the ticketing industry?
http://biz.yahoo.com/e/091022/tktm8-k.html
Azoff’s views of the ticket business kind of reminds me of Hitler’s view for Nazi Germany. Any and all dissidents (ticket brokers & scalpers) must be exterminated.
Enough said!!
Hey fellow brokers why dont you all say goodbye to ticketsnow and see if Azoff starts supporting brokers more…. ?
Dont you see that Azoff bought TN only to find out how the secondary market works………Now he knows so he doesnt need it anymore…
Azoff didn’t buy TicketsNow, his predecessor, Sean Moriarity, did.