The merger message
The Obama administration made its first major antitrust pronouncement this week, approving the blockbuster merger between Ticketmaster and Live Nation. On the surface, the Justice Department seemed to be continuing the permissive approach it took during the second half of the Bush administration, when it offered so little resistance to mergers that the Wall Street Journal declared the government had “nearly stepped out of the antitrust enforcement business.” But the details tell a different story, one that suggests a more aggressive approach to promoting competition while still permitting industries to consolidate to achieve efficiencies.
The proposed marriage between Ticketmaster, which held 80% of the market for major concert tickets in 2008, and Live Nation, the largest concert promoter in the U.S., presented a perfect opportunity to fulfill Assistant Atty. Gen. Christine Varney’spledge to take a tougher stance on mergers and market-dominating companies. Consumer groups, independent promoters and ticket brokers all urged the department to block the deal, warning that it would give the resulting company the power to dictate terms for live entertainment at the expense of venues, artists and consumers. The companies argued that combining their ticketing and promotions arms would enable them to offer better services to venues and acts, and better value to fans.
The settlement negotiated by the Justice Department strikes an extraordinary compromise. Although it allows the merger to proceed, it effectively engineers the creation of two rivals for the new Live Nation Entertainment by enabling AEG and Comcast Spectacor to lease or buy key ticketing assets from Ticketmaster. As a result, concert halls and sports arenas could wind up with more sources for ticketing services than they had before. The settlement also forbids Live Nation to compete unfairly, either by bundling its services improperly or by retaliating against companies that do business with its rivals. It remains to be seen how vigorously the department will enforce those rules, but at least Live Nation’s customers and competitors will have a new legal weapon to defend themselves with.
None of these safeguards will help consumers irked by the high “convenience” charges for advance tickets, which are sustained by the exclusive deals between venues and ticketing companies. The Justice Department didn’t have the authority to address that issue during the merger review. Nor will the approval please consumer advocates who argue that big means bad in the corporate world. Still, the department’s approach portends a bumpy road for mergers and acquisitions that can’t be engineered to deliver more competition. That’s a message Comcast and NBC Universal should take to heart.