Company Town : Lack of Evidence Cited in Ticketmaster Case : Entertainment: Attorney general implies probe was closed because competition appears healthy. Consumers vow to fight.

U.S. Atty. Gen. Janet Reno said Thursday that the Justice Department pulled the plug on its antitrust probe of Ticketmaster because new competition is entering the ticket industry and there was inadequate evidence to proceed.

“It did not seem an appropriate time to continue to pursue the investigation,” said Reno, whose investigators have spent the past 13 months interviewing talent managers, promoters, venue operators and ticket software firms.

Reno declined to elaborate on her decision, but implied that she believes competition is alive and well in the ticket business.

“My understanding is that the division found that there were new enterprises coming into the arena,” she said at her regularly scheduled press briefing, “and that based on the evidence . . . we do not have a basis for proceeding.”

Hailing the government’s decision along with Los Angeles-based Ticketmaster Corp. were concert venue operators and promoters, who feared a major disruption of their business if action was taken against the company.

“This is terrific news,” said John Swinburn, executive director of the International Assn. of Auditorium Managers, which represents 1,000 owners of the nation’s major live entertainment venues. “We’ve always believed that we should control how ticketing is handled in our buildings, not the government.”

But angry consumer groups vowed to increase pressure on federal and state lawmakers to regulate the live entertainment business.

“We’re outraged,” said Bill Wood, education director of the U.S. Public Interest Research Group. “The Justice Department dropped the ball and consumers got the shaft. We plan to turn up the heat now on lawmakers--and hope they won’t let consumers down as badly as the antitrust division just did.”

Wood and other consumer advocates are seeking legislation at the state and federal levels to curb service charges that in some cases boost the price of a ticket by more than a third. At least one proposal would place a 15% cap on service charges.

A similar measure is pending in the House of Representatives that would mandate disclosure of service charges in concert advertising, but few political observers believe it will pass. It would also require the Federal Trade Commission to conduct a study of current ticketing practices, including the exclusive arrangements among promoters, venue operators and vendors--such as Ticketmaster--that underlie pricing decisions.

Those arrangements were the primary focus of the Justice Department investigation, which was begun after Seattle rock group Pearl Jam filed a memorandum in May, 1994, accusing Ticketmaster of exercising a national monopoly over ticket distribution.

“I think everybody who has a contract with Ticketmaster is relieved,” said Gary Bongiovani, editor of Pollstar, the nation’s premier concert trade publication. “If Justice had fired a shotgun blast and decreed that exclusive contracts were not viable, such an action would have completely disrupted the business as we know it.”

Sources close to the investigation said employees in the antitrust division were divided over the merits of the case. In the end, the government decided it would be difficult to bring a case against Ticketmaster, primarily because venue owners and promoters willingly signed the exclusivity contracts.

In addition, sources said, the antitrust division is stretched thin, in part because of its investigation of software giant Microsoft Corp. Indeed, Robert Zastrow, who headed the Ticketmaster probe, was asked to help out on the Microsoft case last month and has been dividing his time between the two probes.

Sources in the Justice Department said Pearl Jam’s aborted attempt to stage a tour this summer turned the tide in the case. The sources said Costa Mesa-based ETM Entertainment’s role in selling tickets for the tour proved that other ticketing companies could compete with Ticketmaster.

One Justice Department official familiar with the case, who spoke on condition of anonymity, cited as another example of an emerging competitor a department store in the Southwest that “is making a significant run in the ticket business.”

But several of Ticketmaster’s competitors, who have complained to the Justice Department for the past year about how difficult it is to break into the ticket distribution market, scoffed at Reno’s assessment of the future.

“The attorney general’s statements are absurd,” said Peter Schniedermeier, co-founder of ETM. “We’re the only company who has ever sold tickets to a national tour since Ticketmaster took over the business. I wish Janet Reno would explain to me and every other average Joe on the street exactly what a monopoly is and what Justice has been doing with our tax dollars this past year.”