Opinion: Ticketmaster ceases to exist (in name only)


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Well, that didn’t take long. Mere hours after the Justice Department announced a proposed settlement (download it here) that set conditions for a merger between Live Nation and Ticketmaster, the two companies announced that they had completed the merger. As of the final bell today, Ticketmaster’s stock ceased to exist. Investors will receive about 1.5 shares of Live Nation Entertainment stock for every share they’d held in Ticketmaster. Meanwhile, the legions of concert-goers angered by Ticketmaster’s convenience charges and other add-ons will have to channel their ire at a different brand.

To its credit, the settlement negotiated by the Justice Department and 17 state attorneys general has the potential to leave the primary ticketing market -- that is, the market for ticket sales, not resales -- in better shape than it was before Live Nation decided to join Ticketmaster rather than trying to beat it. Back then Live Nation represented the most significant challenger to Ticketmaster’s 80% market share, and much of its strength came ...


... from the venues and concert-promotions business it owned. Under the pending settlement, another major concert promoter and venue owner, AEG, will get into the ticketing business by acquiring a license to Ticketmaster’s event-ticketing software. And Comcast-Spectacor, a top promoter of athletic events, will also get into the market by acquiring Paciolan, a subsidiary of Ticketmaster that sells tickets mainly for live sports. The settlement also tries to shield AEG, Comcast and other ticketing rivals from unfair competition by forbidding the new Live Nation from offering packages of its ticketing and promotions services at anti-competitive prices. In addition, the settlement tries to protect venues and promoters by barring the merged company from retaliating against businesses that don’t use its ticketing or concert-promotions services. It also forbids Live Nation’s ticketing business to share ticket sales data with other parts of the company. That firewall is designed as a safeguard for promoters who stage shows at venues that have exclusive contracts with Live Nation for their ticket sales.

Those provisions will only be effective, however, if they’re well enforced. There’s no structural protection. Consequently, the reaction to the deal from opponents of the deal was muted praise. John D. Breyault of the National Consumers League, part of the coalition that opposed the merger, said his group would have been happier had the Justice Department sought to block the deal. ‘The conditions that they have imposed on this merger are not insignificant,’ he added, ‘if DOJ is committed to strong and enduring enforcement of the consent decree.’

For their part, Live Nation executives said the deal would be good for consumers. One thing the settlement probably will not do, however, is end those noxious service charges. Remember, Ticketmaster wasn’t the only company imposing high add-on fees. The practice has become institutionalized as a way to generate profit margin for promoters, venues and ticketing companies while holding down the face value of the ticket. When they announced the merger, executives at the two companies argued that it would allow them to eliminate the practice by giving them control over more pieces of the value chain. But in many cases the problem stems from touring acts demanding large guarantees but refusing to set ticket prices high enough to cover them.

Nor will the settlement achieve the kind of vigorous competition in ticketing that the airline industry has seen, where multiple vendors compete to sell each seat on most flights. Its authority to review the merger gave the DOJ jurisdiction over Ticketmaster and Live Nation, not unaffiliated venues. That’s why the settlement could not require venues to hire more than one ticketing company per show. Similarly, Justice Department officials didn’t believe they had the authority to bar the merged company from striking exclusive deals to provide tickets for all a venue’s events.

Here’s what Seth Hurwitz, an independent promoter who owns the 9:30 Club, had to say:

It seems the DOJ has created a healthier atmosphere for venues to explore other ticketing providers. However, unless any promoter is free to use any ticketing company they wish, at any venue, at any time, then nothing has been solved. In America, no one should be forced to do business with a company. If one ticketing company has a lock on an arena for instance, I could still be forced to have my competitor sell my tickets, which is an issue for a host of reasons including they can gather all my financial information and my customers’ information. We’re waiting to see how the DOJ will address this. The DOJ’s intent to spur competition is there, but it must be backed up with genuine mechanics to ensure independent promoters can try to compete on a level playing field.

Another problem for concert-goers has been the efforts by acts and promoters to capture more of the revenue from ticket resales. That has led to a profusion of carve-outs that make prime seats available to select groups willing to pay a significant premium.


Nevertheless, Christine Varney, chief of the Justice Department’s antitrust division, predicted that the settlement would bring down the cost of attending live events. Live Nation’s ticketing arm will have to compete for venues’ business with multiple rivals, and that should reduce the price they -- and their customers -- have to pay for ticketing services, Varney says. I agree that the settlement could be a good thing for venues; I just have a tougher time seeing how that will translate into cheaper seats for a hot show.

A U.S. District Court judge in Washington, D.C., will decide whether to approve the settlement after reviewing comments on the proposal.

-- Jon Healey