Ticketmaster: AEG may bail

Ticketmaster’s chief executive sought to allay antitrust fears Thursday over the ticket seller’s planned merger with concert promoter Live Nation by revealing that a major venue operator has threatened to cancel its contract if the merger goes through.

The revelation, made before a House subcommittee examining the deal for antitrust concerns, was meant to suggest that the merger might weaken Ticketmaster Entertainment Inc.’s grip on ticket contracts with a majority of top U.S. venues.

Ticketmaster CEO Irving Azoff said his company had received a warning from AEG Live, the owner of 130 venues, including Staples Center and L.A. Live in downtown Los Angeles, that it might cancel its contract with Ticketmaster if the merger with Live Nation Entertainment Inc. is completed. The all-stock deal would value the combined entity at about $2.2 billion.

“Others will most certainly leave if this merger is consummated,” Azoff testified before the House subcommittee on courts and competition policy. “AEG has notified us by letter that they believe they have the right to terminate our agreement in connection with this merger.

“If that’s not competition, I don’t know what is,” he said.

Ticketmaster said in a Securities and Exchange Commission filing Thursday that income from the AEG contract amounted to less than 10% of its revenue.

But AEG Live Chief Executive Randy Phillips said the letter was merely to “reserve our rights” and that the company was unaware of the possible merger until it was leaked about a month ago.

Phillips also strongly disputed testimony from Live Nation CEO Michael Rapino that AEG could easily break free from Ticketmaster’s services. AEG’s contract with Ticketmaster runs through mid-2012.

“This testimony is completely and totally disingenuous,” Phillips said.

“It’s taken Live Nation two years to get ready to sell their own tickets. You’re talking about spending probably somewhere in the neighborhood of $30 million to $50 million,” he said.

“We’re a really great company, but I guarantee that we could not do that in three weeks,” he said.

Ticketmaster has deals with the NFL, NBA, NHL and Britain’s top soccer league and sells tickets for more than 80% of the major arenas and stadiums in the United States, according to the concert tracking firm Pollstar.

Live Nation, the world’s No. 1 concert promoter, and Ticketmaster say that together they could better withstand the recession, sell more tickets and improve service to fans by bringing together their expertise in promotions and ticketing.

The companies expect that the merger, announced this month, will close in the second half of the year.

But policymakers and consumers fear the deal could monopolize the business of selling concert tickets.

Many lawmakers and antitrust experts have noted that Live Nation’s launch of its own ticketing system in January had threatened to siphon off about 15% of Ticketmaster’s revenue and put the two in direct competition.

A merger would squelch that battle for new ticketing contracts.

Live Nation’s Rapino told the committee that it was easy for a venue to break away from Ticketmaster by hiring CTS Eventim, a German company that competes with Ticketmaster overseas and is the market leader in Europe.

CTS would be available to license its technology to other venue operators.