Merger has few fans at hearing
Senators and independent concert promoters took turns at a hearing Tuesday slamming a proposed merger of two of the biggest forces in the music industry -- Ticketmaster Entertainment Inc. and Live Nation Worldwide Inc.
“It seems to be monopolistic, plain and simple,” Sen. Charles E. Schumer (D-N.Y.) said. “This is not the American dream, as the companies’ witnesses might have you believe.”
The Senate’s antitrust subcommittee grilled chief executives Michael Rapino of Live Nation and Irving Azoff of Ticketmaster and solicited input from concert promoters on how the industry would be affected.
“This merger is vertical integration on steroids,” Jerry Mickelson, chairman of concert promoter Jam Productions in Chicago, told the committee. “The amalgamation of these two companies into one should make them the poster child for why this country needs antitrust laws.”
But Rapino and Azoff presented their case as two companies trying to weather the recession as best they could, creating a new model for the music industry in the process.
“The economic foundation that supported artists in the past is crumbling,” Azoff said. “We cannot just cling to the old ways. This merger will allow the live music industry to avoid repeating the mistakes of the record industry.”
Azoff and Rapino said their companies, by combining, could eliminate $40 million in inefficiencies.
“We have an opportunity to create a truly modern business by merging these companies together, something we can’t do alone,” Rapino said.
But Mickelson and Seth Hurwitz, co-owner of 9:30 Club and I.M.P. Productions in Washington -- who both use Ticketmaster for their events -- told the committee they feared a merger would result in Live Nation, a competitor, gaining access to their sensitive information and benefiting financially from fees added to their ticket sales. .
“Our competitors would be receiving income from every ticket we sell,” Mickelson said. “They’d have access to our ticket sales information, they’d have access to our customer databases, they’d have access to the terms of our ticket agreements.”
Rapino, who said he understood why Mickelson and Hurwitz would be concerned about their information being shared, said in response to a question from subcommittee Chairman Sen. Herb Kohl (D-Wis.) that the concert division wouldn’t have access to information from the ticket division.
A major point of discussion at the hearing was a flap involving rock star Bruce Springsteen. When fans went to Ticketmaster’s website to purchase tickets to Springsteen concerts in New Jersey recently, they were redirected to TicketsNow.com, a site owned by Ticketmaster that offers tickets at a significant markup. In the incident’s wake, Springsteen publicly criticized the proposed merger.
Ticketmaster settled the dispute Monday, agreeing to pay the state of New Jersey $350,000 and promising to compensate about 2,200 people who complained about the marked-up tickets. However, it remained a popular subject at the hearing.
“Bruce Springsteen says Ticketmaster abused his fans, and I agree with the Boss,” Schumer said.
But not all artists oppose the merger. Eddie Van Halen, Shakira, Journey, Seal and others sent letters endorsing the merger to members of the committee.
“If this deal helps bring our fans closer to the band, with more direct access to merchandise, new music we write and other promotions we do, it’s going to ensure that . . . I have a future in music,” Van Halen wrote.
The Senate doesn’t have the power to stop the companies’ merger. That authority lies solely with the Justice Department, which is staying mum for the moment.
“We’re committed to vigorous enforcement of the merger antitrust laws,” Justice spokeswoman Gina Talamona said.