U.S. punches Live Nation’s ticket

But will fans benefit from event giant?

The merger of the world’s largest ticketing company, Ticketmaster, with the world’s largest live concert promoter, Live Nation, doesn’t exactly produce waves of excitement among any music fan who’s bristled at transaction fees or a bad seat.

In fact, when the Justice Dept. gave its clearance to the creation of Live Nation Entertainment last week, subject to a number of conditions and oversight, some fans, music journos and competitors were left wondering why the newly named Live Nation Entertainment got off so easy.

“I’m not sure how this ruling benefits the consumer, nor any of the competitors,” Jam Prods. co-founder Jerry Mickelson told the Chicago Sun-Times, noting that regulators “focused on one aspect of the vertical integration: ticketing. They didn’t focus on venues, on promoters, on merchandise companies, on artists’ managers or on any other aspect.”

But the road to regulatory approval, which looked to be in doubt shortly after the pact was announced early last year, may have as much to do with strategic calculation on the part of the Dept. of Justice and its Antitrust Division as it does on its philosophy toward such pacts.

The onus, say consumer groups and lawmakers who had major misgivings or actively opposed the merger, will be on how strong the division under Christine Varney enforces the settlement, which calls for Ticketmaster to license ticketing software to its major competitor, AEG Live, and to sell off its subsidiary, Paciolan, which provides ticketing services for sporting events, to Comcast Spectacor, or another suitable buyer.

It also requires the merged entity to submit to a 10-year court order barring it from retaliating against venues that sign pacts with competing ticketing firms, and sets up what the Dept. of Justice calls “firewalls” to prevent the firm from gaining an advantage by using its ticketing information in the day-to-day operations of its management and promotion business — a prospect that has been a big concern of competitors .

Obviously, the chief worry among concertgoers is whether they will face higher ticket prices, and Varney argues that the settlement will preserve competition as well as incentives to innovate and discount. “This is the right result,” she says.

Bert Foer, president of the American Antitrust Institute, which was part of a coalition of orgs urging regulators to block the deal, says that time will determine the effectiveness of the conditions of the merger approval. “I really think that this is one of those remedies where it may take three, four or five years to determine whether it is a strong remedy or a weak remedy.”

Foer suggested that Justice Dept. officials saw that the risk of challenging the merger in court was greater than coming to an agreement with the two companies. In other words, there was a chance that the government could lose, or even if it won, the companies could merely enter into long-term, exclusive ticketing arrangements.

The settlement “will give the government some leverage, and it also gives competitors … an opportunity to go to Justice and bring a quick case to the court. All they have to prove is that the consent order has been violated,” Foer says.

What will be critical in determining whether or not the settlement works will be its execution, and on that, Foer is uncertain.

Factoring in the government’s case is that the merger was vertical in nature, meaning that it was a matchup of businesses within the same chain, rather than the horizontal linkage of two competing firms performing predominantly identical functions. The former apparently makes it more difficult to prove that a deal will stifle competition, and observers say that even though the merger obtained clearance, antitrust officials were more aggressive than they would have been during the Bush years.

The Antitrust Division didn’t touch the secondary ticketing market, somewhat ironic given that when Ticketmaster CEO Irving Azoff and Live Nation CEO Michael Rapino appeared before a Senate committee last February to testify about the deal, that very topic was front and center, chiefly because of an embarrassing snafu that took place around the same time that the merger was announced. Fans trying to buy tickets to a Bruce Springsteen concert on Ticketmaster instead were directed to TicketsNow, a resale site where tickets cost much more. Ticketmaster came to an agreement with the New Jersey attorney general that places a wall between its direct-ticket site and re-sale site for at least a year. In her press conference, however, Varney said that the resale market was not part of the investigation.

David Balto, former Federal Trade Commission policy director and counsel to consumer and industry groups opposed to the merger, says that he expected other agencies like the FTC to address that issue. “They are going to be under the spotlight for quite some time,” he says of the newly merged company.

Competitors may fear Live Nation’s influence beyond ticketing, but company reps note that antitrust regulators have some latitude in monitoring other market behavior. Live Nation officials have insisted that the new company will help artists — already struggling with the decline of the record industry — with a much stronger selling platform in one of the music business’s few bright spots: live entertainment. They also believe it will help increase attendance at events, boosting the health of the business overall.

Some consumer and industry groups are crying foul about electronic ticketing, like that deployed by Miley Cyrus in her concert tour last year, which freezes out many secondary ticket firms, although artists see benefit in anything that helps eliminate the influence of scalpers on their fans.

There has been some suggestion, in the press and elsewhere, that the Justice Dept., in giving clearance to Live Nation Entertainment, is perhaps gearing up for a bigger battle: the merger of Comcast and NBC Universal. Brian Roberts and Jeff Zucker are to take to Capitol Hill this week for the first in what is expected to be a series of congressional hearings.

As Balto says, “Every long journey begins with a small step, and maybe the big journey is NBC Comcast.”

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