Department of Justice imposes conditions on merger

The long-pending merger between concert promotion giant Live Nation and major ticketing and artist management firm Ticketmaster will go through, pending approval of a settlement to an antitrust suit filed Monday by the Department of Justice.

As expected, the firms must agree to make concessions and sell off some of their interests to ensure approval of the multi-million dollar deal.

The civil suit was filed in federal court in Washington, D.C., by the Justice Department and 17 state attorneys general. At the same time, a proposed settlement that would resolve competitive issues was filed with the court for approval.

Assistant Attorney General Christine Varney said Ticketmaster must license its ticketing software to its major competitor Anschutz Entertainment Group, and must sell off its ticketing subsidiary Paciolan to within 60 days to Comcast Spectacor, which has already signed a letter of intent to purchase the unit, or to another suitable buyer.

The merged entity would also have to submit to a 10-year court order barring it from retaliating against venues that sign pacts with competing ticketing firms.

Varney said, “The Department of Justice’s proposed remedy promotes robust competition for primary ticketing services and preserves incentives for competitors to innovate and discount, which will benefit consumers.”

Toppers at Live Nation and Ticketmaster hailed the settlement in statements

Calling the Justice Department’s investigation “thorough and aggressive,” Live Nation president/chief operating officer Michael Rapino said, “[W]e are confident that with this resolution the playing field is competitive and broader as a result of this transaction.”

Ticketmaster chief operating officer Irving Azoff said, “We appreciate the Department of Justice’s effort. Their resolution is a great win for fans. The entertainment industry needs innovation and we are ready to deliver.”

Some observers had believed that Live Nation would have to sell off some of its venue interests, such as the House of Blues club chain, to eliminate Justice’s concerns about the deal. But the settlement posited Monday required no such remedy.

Regulators in the U.K. gave their blessing to the Live Nation-Ticketmaster deal in December.

If the settlement is approved by the court, the splicing will create a single, vertically integrated operation out of two of the largest concerns in the U.S. music business.

Beverly Hills-based Live Nation operates 140 U.S. venues; the concert promoter also has exclusive deals with top acts like Madonna and Jay-Z. West Hollywood-based Ticketmaster controls an estimated 80% of domestic ticketing services for concert and sporting events; the company also owns Front Line Management, which reps major performers like the Eagles.

Last February, the two companies announced their intention to merge, in a stock deal valued at $400 million.

The merger faced immediate opposition from a chorus of artists and competitors. Bruce Springsteen – who was stung when Ticketmaster placed thousands of tickets to two New Jersey concerts on sale at its subsidiary resale site TicketsNow – voiced his opposition on his Web site.

At hearings before the Senate Antitrust Committee last February, promoters like Jerry Mickelson of Chicago’s Jam Productions and Seth Hurwitz of I.M.P. Productions in Washington, D.C., assailed the deal as anti-competitive and monopolistic.

Azoff and Rapino argued before the panel that the merger would provide new efficiencies during grave times in the music industry, and posed no serious threat to competitors.

The Justice Department began its investigation of the merger last summer. In a letter to Varney, Senate subcommittee chairman Herb Kohl (D-WI) said he believed the deal presented “serious competition concerns.”

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