CEOs attempt to sway skepticism

The CEOs of Ticketmaster and LiveNation went to Capitol Hill on Tuesday to try to perform a political feat: convince skeptical lawmakers that their proposed merger is a good thing.

Before a Senate antitrust subcommittee, Irving Azoff and Michael Rapino, respectively, met with an environment about as hospitable as the nosebleed section.

Sen. Herb Kohl (D-Wis.), the subcommittee chair, said that it would create a “stranglehold on all segments of the concert business.” Sen. Orrin Hatch (R-Utah) expressed his concerns. Sen. Chuck Schumer (D-N.Y.) called it “monopolistic behavior, plain and simple.” Sen. Amy Klobuchar (D-Minn.) was a little kinder, but she also shared her frustration at trying to buy Hannah Montana tickets in 2007 before they were swooped up by resellers and sold at a premium.

It would combine the top ticket- selling network with the top concert promoter, a move that Azoff and Rapino defended as necessary in the face of devastating changes in the music business. They each claim that competition would still thrive, while they enjoy cost efficiencies that can benefit the consumers.

Noting a two-thirds decline in the LiveNation stock price and troubles with real estate venues, Rapino said that a business bolstered by a merger would help artists struggling to find viable platforms with the falloff in the recording industry and with radio stations grappling with declining ad revenue.

The Justice Dept. currently is in the process of investigating the proposed merger.

Some lawmakers already are on record against it, and they have been joined in opposition by Bruce Springsteen. That star power was countered by a list of performers who have expressed support for it, although some are clients of Front Line Management, which is owned by Ticketmaster. According to Reuters, one who is not affiliated with either, Seal, argued in a letter to the subcommittee that the merger would not only “benefit established acts like myself, but the up-and-coming acts who are trying to build a following.”

Ticketmaster in particular is well aware of the challenge it has in trying to convince the public of the merits of the deal, given that the company is usually the first to get the blame when consumers balk at high ticket prices, extra service fees, or being shut out of an event altogether.

What has been a PR blow to Ticketmaster, however, was a recent incident in which fans of Bruce Springsteen seeking concert tickets went to the website but were instead directed to TicketsNow, a resale site also owned by the company where tickets cost more.

Azoff apologized for the snafu, blaming it on a “computer malfunction,” and vowed, “We will never let something like this happen again.”

But Schumer zeroed in on the incident and grilled Azoff on whether he would sell TicketsNow, which Ticketmaster bought before he assumed the helm of the company last year. Pressed by Schumer on whether he personally would have made such a decision, Azoff said, “In my view I never would have bought it.”

Also testifying was Jerry Mickelson, a concert promoter whose Jam Prods. is among those that use Ticketmaster to sell tickets to its events. He said the new company would have the ability “to suppress and eliminate competition in many segments of the music industry.

“The unification will create a business with extraordinary market power and clout unlike any I have ever seen in my life.”

His sentiments were echoed by two others on the panel, concert promoter Seth Hurwitz and antitrust attorney David Balto.

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