Ticketmaster Merger Plan Could Touch on Antitrust

Ticketmaster Merger Plan Could Touch on Antitrust

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By TIM ARANGO
Published: February 4, 2009
If Ticketmaster Entertainment and Live Nation agree to merge, it would become a powerhouse in the music industry and an early test of the Obama administration’s views on concentrated corporate power, particularly in an area with potentially stark implications for consumers.

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“For a couple of different reasons this is likely to have reasonably intense scrutiny,” said Bruce Sokler, a lawyer in the Washington office of Mintz Levin, who focuses on antitrust matters. “One is, it’s going to be an early, big spotlighted merger for the new administration. Second, it is a deal with great interest for consumers.”

While hurdles remain that could scuttle a deal, the two companies have been in merger talks and could announce a pact as early as Friday, although a likelier possibility is next week, according to two people briefed on the matter who spoke anonymously because they were not authorized to speak publicly.

The combination of the two companies would place under one corporate umbrella dominant players in all sides of the live concert business: the sale of tickets, the representation of artists and the control of concert halls. Of particular issue to regulators, say lawyers with expertise in antitrust law, would be Live Nation’s recent entry into the ticket-selling business — essentially a challenge to Ticketmaster on its own turf.

“That would definitely be something the government would want to look at,” said Joseph J. Simons, a partner at Paul Weiss Rifkin Wharton & Garrison, and a former chief antitrust enforcer at the Federal Trade Commission.

Regulators, Mr. Simons said — whether from the Department of Justice or the F.T.C., the two government bodies that review mergers — are often hesitant to approve deals that quash new competition in a historically concentrated business.

In the ticket business, Ticketmaster had 30 percent of the $21 billion events market last year, according to data from Forrester Research. But in the more narrow view of just concerts, Ticketmaster’s market share was closer to 70 percent, according to Scott W. Devitt, an analyst at Stifel Nicolaus. Mr. Devitt estimates that Live Nation, as a promoter of concerts, is three times the size of its next nearest competitor, the Anschutz Entertainment Group.

“I think it’s safe to say this will be reviewed aggressively,” Mr. Devitt said.

Robert W. Doyle Jr., a partner at Doyle Barlow & Mazard, a Washington law firm that specializes in antitrust litigation, said that the high market share in ticketing and event promotion made this “a problematic deal.”

“I think the Obama administration would be much more aggressive” than the prior administration in reviewing merger deals, he said.

A representative for Live Nation declined comment, and a spokesman for Ticketmaster was not immediately available for comment.

Ticketmaster has a long history of entanglement with regulators and plaintiffs over questions of anticompetitive practices, but has mainly escaped those complaints intact.

This week, a congressman sent a letter to the F.T.C. seeking an investigation into the company’s relationship with a subsidiary, TicketsNow.com, that sells tickets on the secondary market.

The congressman, Representative Bill Pascrell Jr., Democrat of New Jersey, wrote in a letter that he was responding to concerns that fans of Bruce Springsteen had technical problems when trying to buy concert tickets on Ticketmaster’s Web site. But an ad on the same page could direct them to buy tickets on TicketsNow.com at a “value marked up hundreds of dollars beyond their original value,” according to Mr. Pascrell.

In the letter, he wrote, “there is significant potential for abuse when one company is able to monopolize the primary market for a product and also directly manipulate, and profit from, the secondary market.”