Ticketmaster, Live Nation defend merger

CEOs testify that fans will benefit from deal

Ticketmaster's chief executive sought Thursday to allay antitrust fears 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 proposed merger for antitrust concerns, was meant to suggest the combination might somewhat weaken Ticketmaster Entertainment Inc.'s grip on ticket contracts with a majority of top U.S. venues.

Ticketmaster CEO Irving Azoff said his company received a warning from AEG Live, the owner of 130 venues including the Staples Center in Los Angeles, that it may cancel its contract with Ticketmaster if it merges with Live Nation Entertainment Inc. in an all-stock deal that would value the combined entity around $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. AEG Live Chief Executive Randy Phillips did not immediately return a message for comment.

Live Nation, the world's No. 1 concert promoter, and Ticketmaster argue 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 planned merger announced earlier this month will close in the second half of 2009.

But policy makers and fans fear that such a merger 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 around 15% of Ticketmaster's revenue and put the two in direct competition for the first time.

A merger would squelch that battle for new ticketing contracts.

Live Nation CEO Michael Rapino told the committee that it was easy to break off from Ticketmaster by hiring CTS Eventim AG, 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.

"Part of the contract is clearly stated that if we were ever to merge with Ticketmaster, they have full rights to leave and pursue another U.S. client," Rapino said.

Lawmakers are also concerned, however, that a combined entity could wield undue influence over artist, fans and venues because of its ability to control every aspect of a live show, including ticket sales, artist management, concession sales, venue operations and promotions.

At a similar hearing before a Senate subcommittee on Tuesday, independent concert promoters raised concerns that Live Nation would be able to obtain proprietary sales and consumer data after the merger because they use Ticketmaster to sell their tickets.

At that hearing, Rapino vowed to support a data firewall preventing such sharing of information.

Azoff also said Tuesday that he would not have bought TicketsNow, the resale site at the core of an uproar over Bruce Springsteen concert tickets, if he were in charge when Ticketmaster acquired it in February 2008.

Several politicians and fans accused Ticketmaster this month of redirecting consumers to the TicketsNow site, where resale tickets were on sale with huge premiums, despite regular price tickets still being available.

Azoff went further Thursday, saying he would recommend that his board sell TicketsNow if an appropriate offer was made.
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