February 18, 2009 / 2:16 AM / 10 years ago

Promoters wary of Live Nation/Ticketmaster merger

WASHINGTON (Reuters) - Live Nation Inc’s (LYV.N) rivals in the rock concert business worry that its planned merger with Ticketmaster Entertainment Inc TKTM.O would mean they would lose control over business secrets — an issue that could complicate chances of antitrust approval.

These complaints by Live Nation’s competitors add to the woes piling up on the proposed merger. There are also calls for a federal investigation into Ticketmaster’s relationship with subsidiary TicketsNow because of incidents where fans were told by Ticketmaster that concerts were sold out but then were offered tickets on its subsidiary — for considerably more money.

The Senate Judiciary Committee’s antitrust subcommittee will hold hearings on the merger next Tuesday.

The latest concern is that the shrinking number of independent promoters, many of which use Ticketmaster for selling seats, fear that the company’s deal with the world’s biggest promoting company, Live Nation, would hurt the independents.

A representative for one of Live Nation’s bigger rivals, which asked to remain unidentified, said the merger was “a major concern” because Live Nation would gain access to confidential sales data.

“Plus the fact that we would be helping to feed a competitor, since they would be making money from selling tickets to our events,” the person wrote in an email to Reuters.

Dante Ferando, owner of the Black Cat rock bar in Washington, said the merger would hurt his ability to compete.

“Your ticket sales include your entire list of customers — names, addresses, zip codes — and how many tickets you sold to a certain band, and how many tickets you sold,” he said. “Suddenly Live Nation has access to your ticket information. That’s not the kind of stuff that you want to hand to your competition on a silver platter.”

Seth Hurwitz of I.M.P. productions in Washington D.C., who has done business with Ticketmaster for decades, agreed.

“They (Live Nation) have never divulged their ticket accounts to anyone. That’s just bad,” he said.

One promoter said he was looking at switching from Ticketmaster to another ticketing company but wasn’t sure the Ticketmaster rivals had the capacity that his company needed.

The Justice Department, which will assess the merger to ensure it complies with antitrust law, would take the promoters’ worries seriously, said John Briggs, an antitrust attorney with Axinn, Veltrop and Harkrider LLP.

“They’d take that into consideration,” said Briggs, who declined to predict whether the deal would be eventually approved.

Evan Stewart of Zuckerman Spaeder LLP said the worries would figure into the macro framework of the relationship among the promoting companies.

“That’s the macro hurdle they have to get over: ‘Why is the consumer better off with this huge consolidation of the soup to nuts of how concerts are arranged, sold and etc.?’” he said.

Live Nation defended the planned merger as a good thing for the music industry. “The reality is that too many tickets go unsold, which hurts the entire industry,” said a spokesman, who asked not to be named. “Our merger will help fill venues and directly benefit not only these promoters, but also fans, artists and local communities.”

‘FULL YEAR SOAP OPERA’

David Joyce, an analyst with Miller Tabak & Co LLC, said the antitrust issues were a clear “hot button issue” even though this type of transaction, a vertical merger which does not involve direct rivals, is usually approved.

But, he said, Ticketmaster doesn’t have a strong competitor and Live Nation had recently tried to move into its territory. Its first big test went poorly; its system couldn’t handle demand for a Phish reunion tour.

“I am leaning on the side of the deal not getting done,” said Joyce. “It’s going to be a full-year soap opera.”

The stock deal is now worth about $275 million, considerably less than the $400 million it was worth when first announced.

Reporting by Diane Bartz, editing by Gerald E. McCormick

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