Some fear the government deal announced on Monday to allow Live Nation (NYSE:LYV) and Ticketmaster to merge - creating a colossal concert promoter and ticketing agent - will weigh on ticket prices.
The merger, approved on Monday by the Department of Justice has allowed for the formation of a company with the power to manage artists, book them at venues that it owns and sell tickets to their concerts.
When the DOJ announced its approval for the merger, it did so under certain conditions, which the companies agreed to. The department said it was confident that under those measures, the newly formed giant - Live Nation Entertainment Inc. - would promote competition among ticketing services. As a result, ticket prices are expected to come down, Christine Varney, the Assistant Attorney General leading the DOJ’s antitrust division said on Monday.
Consumer-rights advocates and antitrust groups remained skeptical.
“The DOJ has asked consumers, independent promoters, ticket brokers, artists, and venue owners to take a very large leap of faith – that the conditions imposed on the merger will improve competition and ultimately lead to greater choice and lower prices,” said Sally Greenberg, executive director of the National Consumers League in a statement.
The NCL, which had opposed the merger since it was announced in February of last year, says the companies carry a history of anti-consumer behavior. It fears they will abide only by the letter, and not the spirit of the settlement agreement, Greenberg said. Mostly, they fear that the companies will take advantage in charging excessive fees.
The conditions established by the DOJ ordered the merged company to license its ticketing software to AEG, a unit of Anschutz Corp. Also, Ticketmaster’s Paciolan division, which sells tickets to college sporting events, is to be sold to a unit of Comcast. The conditions also require that the merged firm be forbidden from retaliating against any venue owner that chooses to use another company’s ticketing services or another company’s promotional services, including restrictions on anticompetitive bundling.
Approval of the deal is also depended upon acceptance of a 10-year period of government oversight.
Live Nation based in Beverly Hills, Calif., is the world’s largest promoter of live concerts, with 2008 worldwide gross revenues of $4 billion. It also owns or operates more than 75 concert venues in the United States. West Hollywood-based Ticketmaster is the world’s largest ticketing company. It sold 141 million tickets in 2008, valued at more than $8.9 billion, the DOJ said.
Live Nation’s chief executive officer Michael Rapino and Ticketmaster CEO Irving Azoff have previously said they would like to use their combined company to set ticket prices that more accurately reflect their market value, according to the Wall Street Journal. As a result, the combined firm would charge more for the most desirable seats and perhaps lower the price for the rest, the paper noted.
To ensure protection for the public, a strong effort will be required, noted David Balto, the former Federal Trade Commission policy director and lawyer to consumer and industry groups in a statement.
“The dominant market power of the newly-merged Live Nation Entertainment will require both the DOJ and FTC to commit to a vigorous oversight capacity, including additional enforcement actions where necessary,” he said.