Ticketmaster, Live Nation to merge

Unless authorities block the merger on antitrust grounds, the nation's largest owner of concert venues and the nation's largest ticket broker will become one company.

After a couple weeks of rumors reported by The Wall Street Journal and other outlets, it's finally happened: concert promoter and venue owner Live Nation and the nation's largest ticket seller, Ticketmaster, have merged in a deal worth approximately $2.5 billion.

Why is this important? Because the combined companies are, in my opinion, dangerously close to building a vertical monopoly. The new company, Live Nation Entertainment, will own concert venues, the ticketing system for those venues, and exclusive rights to certain major acts that play those venues. In other words, if you thought concert prices were high now, just wait a couple years.

Some background, if you haven't been following along: Live Nation was spun off from radio-advertising giant Clear Channel back in 2005. Its main business at that time was concert promotion and ownership of concert venues--particularly large amphitheaters.

It's hard to get an idea of the company's scope, as it doesn't disclose exactly how many concert venues it owns in its financial statements, but in the last three months of 2008, it produced almost 5,700 events with attendance of over 18 million. Of those events, 600 were produced by Live Nation in Live Nation-owned or operated venues in North America.

Under the leadership of CEO Michael Rapino, Live Nation diversified and began signing a new type of business deal known as a "360 deal" with major artists like Madonna and U2.

In a traditional old-fashioned music business deal, the record company controls recording and distribution. In a 360 deal, a single company handles all aspects of an artist's career--recordings, concerts, and merchandise.

Ticketmaster, meanwhile, is the same company concertgoers have known and loved (or loathed) since the 1980s, though it's changed hands a few times, and was most recently spun off from Barry Diller's InterActiveCorp into an independent company.

Earlier this year, Live Nation and Ticketmaster severed their ticketing relationship--instead of using Ticketmaster, Live Nation would create its own ticketing system and sell tickets for its own venues and the shows it promoted. For a brief shining moment, it looked like there'd be new competition in the concert industry, perhaps leading to lower prices.

But Live Nation apparently had problems handling demand for recent concerts. Meanwhile, Ticketmaster was up to the same tricks that have given it such a sterling reputation among fans--Bruce Springsteen recently criticized the company for guiding concertgoers straight to the TicketsNow auction site (also owned by Ticketmaster) after tickets from the regular site sold out in a few minutes. Of course, the auction-site tickets were much more expensive. (The practice has drawn a class action lawsuit in Canada.)

Now it appears that the Live Nation-Ticketmaster spat was just gamesmanship, part of the negotiation process. So forget about competition--rock concerts are a private party for the rich, and the rest of us will be left to watch the DVD after the tour ends. That's going to be the new norm, not the exception. It's a shame--going to big concerts was a rite of passage back when I was a kid--but the spirit of rock and roll lives on in small clubs, garages, and laptop battles.

 

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