Musical megadeal under fire
EmptyTicketmaster and Live Nation on Tuesday made official their intent to merge, after which executives at both companies began making their case that the creation of a giant firm consisting of concert promotion, venues and ticketing would be a good thing for a struggling industry and music fans.
The merged company would be called Live Nation Entertainment and be run by CEO Michael Rapino, currently CEO of Live Nation; executive chairman Irving Azoff, CEO of Ticketmaster; and chairman Barry Diller, currently Ticketmaster's chairman.
But the trio first needs to convince skeptical lawmakers and even a celebrity or two that combining the industry players won't result in a monopoly tempted to abuse.
Diller seemed to take the lead Tuesday, reminding reporters and analysts that "Ticketmaster does not set prices; Live Nation does not set ticket prices. Artists set prices."
Tell it to the Boss.
Bruce Springsteen railed against a merger at his Web site, and New Jersey investigators are looking into why Ticketmaster was steering customers seeking Springsteen concert tickets to its more expensive TicketsNow subsidiary.
More significantly, Sen. Charles Schumer, D-N.Y., also needs to be convinced of the merits of the deal. He called the Springsteen incident "a classic bait-and-switch," while Diller characterizerd it as a "technical glitch."
Springboarding off of the Springsteen issue, Schumer and other lawmakers spoke against a merger even before Tuesday's announcement of a deal.
Rep. Bill Pascrell Jr., D-N.J., for example, complained in a letter to the Federal Trade Commission last week that a merger would result in "an incredible potential for abuse."
The deal has Live Nation buying Ticketmaster for about $400 million in stock, with shareholders of each company owning about 50% of the combined entity. Shares of Live Nation lost 9% on Tuesday, and Ticketmaster shed 6%.
Diller, Azoff and Rapino also were making the case that a merger is necessary to better navigate a nasty U.S. recession.
Live Nation owns about 140 venues, including the Wiltern, Gibson Amphiteatre and House of Blues in L.A., and produces 22,000 concerts annually. Ticketmaster sold 141 million tickets in 2007 for more than $8.3 billion. Ticketmaster also owns a controlling interest in Front Line Management Group, whose clients include Eagles and Jimmy Buffett. (partialdiff)