Live Nation Entertainment: A Cheer for Sellers I of II
Back in February of 2009, Live Nation and Ticketmaster announced that they were going to merge into one mega company. On Monday, January 25th, after nearly a year of investigation, the United States Department of Justice approved the merger of Live Nation Entertainment.
Ticketmaster was founded in 1976 by Albert Leffler and Peter Gadwa, two staff members from Arizona State University. Alongside businessman Gordon Gunn, Ticketmaster sold its first tickets for an Electric Lights Orchestra show in New Mexico in 1977[1]. The small company grew rapidly and soon became the world’s largest ticket vendor in the US. By 1983 they had expanded into the UK, signing large deals with the Superdome in Louisiana, the NBA’s Utah Jazz (known then as New Orleans Jazz), the Los Angeles Philharmonic Orchestra and LA Forum, LA Lakers, and LA Kings[2]. They had deals with venues in Canada as well as Norway[3].
Ticketmaster never won a popularity contest, nor, it seems, artists’ hearts. In 1994, Pearl Jam wanted to offer summer tour tickets to fans for under $20 and asked Ticketmaster to charge less than $2 in service fees[4]. When it refused to do so, Pearl Jam cancelled their tour and took their case to Congress. More recently, Bruce Springsteen took Ticketmaster to task for putting concert tickets on sale at the Ticketmaster auction site TicketsNow–before making them available to the public at face value[5].
Live Nation emerged in 2005 from a buying spree by radio giant Clear Channel[6]. As music industry veteran Jeff Dorenfeld remarks : “to Clear Channel, it seemed to make the most sense to develop acts while simultaneously growing attendance at their venues.” But the synergy did not work, largely because program directors in radio didn’t seem to work well with concert promoters. The result was the new Live Nation spun off from Clear Channel.[7]
Live Nation is considerably younger than its new partner, but it too has been heavily criticized. Live Nation recently joined in the ticket-selling game. Problems abounded. For example, the band Phish became Live Nation’s first real ticket-selling test when they sold tickets to their 2009 reunion tour through Live Nation instead of its former competition Ticketmaster. Rolling Stone’s Daniel Kreps would write that, “according to reports across the Internet, the concert giant failed to deliver as countless fans encountered a system unready for the throng of Phishheads scrambling for tickets …[resulting] in users losing the tickets they were in the process of buying.”[8] Overall, consistently high and sometimes outrageous ticket fees have also added to Live Nation’s negative impression among avid concert goers.
Given this history, a merger between the two companies is hardly welcome among many music lovers. As Ticketmaster is the world’s largest ticketing company and Live Nation is the world’s largest concert promoter, owning more than 140 major venues, the fear of monopoly power always looms large. Together, Live Nation and Ticketmaster sell more than 80% of tickets for seats at major concert venues[9].
Certainly, the logic of the union made absolute economic sense to both companies. Dorenfeld postulates that if Ticketmaster was already making money on the show, the merger will certainly add value to the company. For Live Nation, the merger was part of its struggle for survival, given a drop in attendance and a drop in box office revenues for 2009.
There were always obstacles to negotiate, and current proceedings recognize much negotiation with anti-trust objections. For instance, Ticketmaster now states that “the companies have agreed to divest Ticketmaster’s self-ticketing subsidiary, Paciolan, to Comcast-Spectacor and to license the Ticketmaster Host technology to Anschutz Entertainment Group, Inc. (“AEG”), as well as to other terms that protect competitive conditions in ticketing and promotions.” [10] CEO Michael Rapino argues that this particular transaction made the playing field more competitive, and bowed to the pressures coming from the Department of Justice.
Irving Azoff , CEO of Ticketmaster, says that the critics of the merger are “missing the point” and assures that “it would produce greater efficiencies in the music business, which theoretically would benefit ticket buyers and artists.”[11] Jeff Dorenfeld seems inclined to agree, and believes that the sheer volume of competing shows will make it harder for the new conglomerate to take advantage of higher charges.
Still there are many that express reservations. Lisa Madigan, an Attorney General for the State of Illinois, joined the federal government and 16 other state Attorneys General in a proposed antitrust settlement relating to the merger of Ticketmaster and Live Nation[12]. Madigan says, “we have serious concerns when a company that controls more than 80 percent of the ticketing market seeks to merge with its biggest competitor, which is the largest entertainment promotion company in the country and owns and operates 85 concert venues across the country. This sort of merger bears close scrutiny because it can impact consumers nationwide.”[13]
A 300 pound gorilla, in short, has doubled in size and is causing anxiety in the trade and among consumer advocates nationwide. It certainly has independent promoters like Seth Hurwitz, president of IMP Entertainment, worried. Uncertainty still looms large over the repercussions of the merger, but greater coordination among sellers of live music is hardly a recipe to build trust among the buying public, which is concerned as ever with higher ticket prices.
By Amy Mantis
[1]1 Ticketmaster. “Ticketmaster Company History.” Web. 15 Feb. 2010
[2]2 Ticketmaster. “Ticketmaster Company History.” Web. 15 Feb. 2010
[3]3 Ticketmaster. “Ticketmaster Company History.” Web. 15 Feb. 2010
[4]4 Pickert, Kate. “A Brief History of Ticketmaster.” TIME Magazine. 11 Feb. 2009. Web. 15 Feb. 2010.
[5]
Kreps, Daniel. “Bruce Springsteen “Furious” At Ticketmaster, Rails Against Live Nation Merger.” Rolling Stone. 4 Feb. 2009. Web. 16 Feb. 2010.
[6] “Live Nation History.” Live Nation Encyclopedia II. Web. 15 Feb. 2010
[7] Interview with Jeff Dorenfeld. 4 Feb. 2010.
[8] Kreps, Daniel. “Phish Fans Furious As Live Nation Fails At First Major Ticketing Test.” Rolling Stone. 2 Feb. 2009. Web. 17 Feb. 2009.
[9] Pie chart from the Los Angeles Times. Source: Department of Justice
[10] “Live Nation and Ticketmaster Entertainment Merger Receives U.S. Department of Justice Clearance.” Ticketmaster News Releases. 25 Jan. 2010. Web. 16 Feb. 2010.
[11] Morissey, Janet “Ticketmaster, Live Nation: Obama’s Antitrust Test.” TIME Magazine. 10 Jun. 2009. Web. 16 Feb. 2010.
[12] “Attorney General Madigan Joins Federal Government In Proposed Remedies For Ticketmaster / Live Nation Merger.” Illinois Attorney General Lisa Madigan Press Releases. 15 Jan. 2010. Web. 16 Feb. 2010.
[13] “Attorney General Madigan Joins Federal Government In Proposed Remedies For Ticketmaster / Live Nation Merger.” Illinois Attorney General Lisa Madigan Press Releases. 15 Jan. 2010. Web. 16 Feb. 2010.
