A Tangle Over Tickets : Ticketmaster, Target of Lawsuits, Says It Offers Broad Service
Ticketmaster, the largest entertainment ticket agency in the nation, has big plans. The Los Angeles company--which broadened its product base last winter to include marketing albums, videos and T-shirts to ticket buyers--is even moving into the international ticket business, as well as selling “preferred” seating in Dallas movie theaters.
However, some California consumers, disgruntled over the increasingly centralized control of ticket sales to live entertainment events in California, believe the company is already too mammoth. They have responded with two $100-million class-action antitrust lawsuits that charge Ticketmaster with unfair competition and deceptive advertising.
Filed in San Francisco Superior Court, the suits allege that the ticket agency and its Concord-based affiliate, Bay Area Seating Service Inc., have conspired with prominent California promoters and venue operators to bilk consumers by arbitrarily fixing the price of ticket “convenience” fees, the service charges that add 20% to 44% to the price of tickets.
“I am sick and tired of paying these outrageous convenience fees,” said Michael Bustamente, a 30-year-old Los Angeles County Transportation Commission worker who is a party to one of the suits. “I buy about two dozen tickets a year and the service charges just keep going up.
“It’s not like you have a choice with Ticketmaster. In many cases, the box office is closed the day the tickets go on sale--either you deal with Ticketmaster or you don’t go.”
Frederic D. Rosen, chairman of the board and chief executive officer of Ticketmaster, denied allegations that the company has been unfair and said that, on the contrary, Ticketmaster has greatly facilitated the ability of consumers to buy tickets.
“These suits are a sad commentary on what is happening to America,” said Rosen, whose firm processes an estimated $1 billion worth of tickets each year to concert and sporting events in 42 states. “The minute you become successful at what you do, you immediately become a target.
“The only reason Ticketmaster is being harassed is because we’re so successful. What’s going to happen next? Is someone going to sue an arena because it serves Coke exclusively instead of Pepsi?”
Ticketmaster is principally owned by Chicago financier Jay Pritzker, who also holds controlling interest in Spectacor, a Philadelphia-based concert promotion firm that manages the Los Angeles Coliseum, the L.A. Sports Arena and the Long Beach Convention Center.
Ticketmaster’s domination of the service fee market became an issue last year when the giant firm proposed to buy certain assets from Ticketron, essentially putting its largest competitor out of business. Because of the size of the transaction, both companies were required to file notice with the federal government under the Hart-Scott-Rodino Act to seek anti-trust exemption.
Despite objections to the takeover raised by the Washington-based Consumer Federation of America and other critics, the Justice Department declined in May, 1991, to oppose the acquisition.
“We were virtually certain that prices would rise if the government allowed the acquisition to move forward,” said Consumer Federation Executive Director Stephen Brobeck, whose organization represents more than 250 pro-consumer groups across the nation. “And sure enough, consumers are now being forced to pay much higher ‘convenience’ fees throughout the country.”
State Sen. Milton Marks (D-San Francisco) resurrected the debate in March when he introduced a bill seeking to place a 15% cap on service charges and asked the California attorney general to launch an investigation into what he called Ticketmaster’s “monopoly” over the ticket service market. Marks’ proposal died in committee, as did a similar measure introduced in 1990 by State Assemblyman Rusty Areias (D-Los Banos).
After the attorney general declined to investigate the matter, San Francisco attorney Joseph M. Alioto, who has specialized in anti-trust litigation since 1970, filed a class-action claim June 1 on behalf of consumers who complained to his office that Ticketmaster was “gouging” its customers. A second suit on behalf of Bustamente and others was filed two days later by another San Francisco law firm.
“What you have here is an old-fashioned monopoly, plain and simple,” said Alioto, who is the son of former San Francisco Mayor Joseph L. Alioto and an unsuccessful Democratic candidate in last week’s U.S. Senate primary. “This is just one more in a long line of horrendous acquisitions and mergers that the government has allowed to go forward in the past 10 years.
“Just because the government OKs something, that doesn’t necessarily make it right. I’ve prevailed in dozens of these cases over the last two decades and I feel absolutely confident in saying that Ticketmaster is operating in clear-cut violation of the law.”
Ticketmaster’s Rosen disagrees.
“The people filing these lawsuits are seriously misinformed,” Rosen said. “Service companies, by their very nature, do not fit the definition of a monopoly. We do not control the price of the product--which in this case is the ticket. We provide a service, and the fee we charge for that service is set by those who own the building where the event takes place.”
In his suit, Bustamente also alleges “kickbacks” are paid to the three major California concert promotion firms that grant Ticketmaster the exclusive right to sell tickets to events presented at venues in which they have a financial interest.
Because Ticketmaster pays venue owners a portion of each convenience fee it collects to subsidize exclusive long-term contracts, facilities have no incentive to open their box offices until the day of the event, long after most tickets have been sold, the complaint says. The promoters cited in the suit are Bill Graham Presents, Avalon Attractions and Nederlander of Calif.
Representatives for the promoters--who said they had yet to be served with the lawsuit--declined to comment on allegations. However, Rosen called the charges “unfounded.”
“People who complain about Ticketmaster forget what it used to be like before we came to California nine years ago,” he said. “Back then, there were only 35 outlets and 25 phone operators. Now we have 180 and 150 respectively. We continue to expand the operation to meet the demands of servicing our customers. The problem with our critics is that they enjoy the convenience Ticketmaster provides, but they just don’t want to pay for it.”