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Department of Justice ‘Looking Into Accusations’ Against Live Nation, Report Claims

UPDATED: On Easter morning, AEG threw down the latest salvo in the ongoing turf battle that pits it against Live Nation and its subsidiary, Ticketmaster.

Much of the attention in recent months has been directed at a related battle over venues — particularly a policy that requires artists who want to perform at the AEG-affiliated O2 Arena in London perform at its Staples Center in Los Angeles instead of the nearby Forum, which is run by Azoff-MSG Entertainment, and which AEG claims is in response to a similar policy involving Madison Square Garden and the Forum. But a New York Times article published Sunday (April 1) says that some eight years after the Live Nation-Ticketmaster merger (which was orchestrated by Azoff, then-CEO of Live Nation, who stepped down in 2012), “the ticketing business remains dominated by Live Nation and its operations now extend into nearly every aspect of the concert world. Ticket prices are at all-time highs. Service fees are far from reduced. And Ticketmaster, now part of the Live Nation empire, still tickets 80 of the top 100 arenas in the country. No other company has more than a handful.

“Now Department of Justice officials are looking into serious accusations about Live Nation’s behavior in the marketplace,” it claims. “They have been reviewing complaints that Live Nation, which manages 500 artists, including U2 and Miley Cyrus, has used its control over concert tours to pressure venues into contracting with” Ticketmaster, reporting that AEG has told officials that venues it manages in the Atlanta, Salt Lake City, Oakland, Minneapolis, Louisville and Las Vegas areas “were told they would lose valuable shows if Ticketmaster was not used as a vendor, a possible violation of antitrust law.”

In a long response posted on the company’s website, Ticketmaster president Jared Smith said in part: “Ticketmaster continues to maintain its position as the clear industry leader. That leadership, however, is not the result of any unfair advantages resulting from being a part of Live Nation Entertainment as some are suggesting. … The New York Times article suggests that any benefits of being a vertically integrated company are, in and of themselves, anticompetitive. They insinuate that we “condition” content. That we “retaliate” when Ticketmaster is not selected as a venue’s ticketing partner. In short, they say we have stifled competition.

“The reality is that none of these things are true,” he continues.  “It is absolutely against Live Nation and Ticketmaster policy to threaten venues that they won’t get any Live Nation shows if they don’t use Ticketmaster. We also do not re-route content as retaliation for a lost ticketing deal. Live Nation is the most artist-focused company in the world, and misusing our relationship with artists to ‘settle scores’ with venues would be both bad business and counter to our core beliefs.”

Reps for the Department of Justice and AEG did not immediately respond to Variety’s request for comment. The report says Justice officials declined to comment on the status of their inquiries, and several of the venue owners have denied the accounts of threats reported by others.

The article cites an example in Atlanta, where the city’s Gwinnett Center was bypassed by many Live Nation tours after it adopted AXS, AEG’s ticketing program, in 2013. Live Nation said the change was due to “routine fluctuations” and dismissed the complaints as “tactical, deliberate mischaracterizations by AEG.” AEG provided emails it said included threats; one said in response to Gwinnett’s request to resolve any issues, “Issue?” a Live Nation exec wrote back. “Three letters. Can you guess what they are?”

While AEG acknowledges that part of its ticketing challenges are “rooted in its own missteps in developing a competitive ticketing system,” the article says, “For the live music market, a larger question going forward is whether Live Nation is now so big, so empowered by the merger, that competition in ticketing at the major venues is effectively blocked. … It’s clear that Ticketmaster, by whatever means, has kept its rivals from gaining a meaningful foothold in the market for major music venues.”

Last month Ozzy Osbourne sued AEG over its block-booking policy involving O2 and Staples in a strongly worded lawsuit. In the lawsuit, Osbourne’s attorney Daniel Wall of Latham Watkins accuses AEG of “blatant, anticompetitive conduct—specifically, tying—by Anschutz Entertainment Group, Inc. (“AEG”) and certain subsidiary and affiliated entities,” and of being a “clear monopolist for arena-sized venues in greater London” that “through management contracts it also controls a number of other large concert venues in greater London in addition to the O2,” which it notes is the only indoor arena in London with the capacity to host major concerts.” The move was the latest in a long-simmering battle over the issue.

Live Nation is the world’s largest live-entertainment company and AEG is second. According to Live Nation’s financial results for 2017, its revenue was up 24% to $10.3 billion; attendance at the company’s concerts was up 21% to 86 million; and sponsorship and advertising revenue was up 18%. Ticketmaster showed strong growth as well, with its fee-bearing gross transaction value (GTV) up 15%. Breaking that down, according to the report the company added 15 million fans globally for a total of almost 86 million fans, with concerts revenue rising 26%. The company invested $5.6 billion to promote 30,000 shows in 40 countries.

“In 2018, I expect us to further consolidate our global concerts position while enhancing our on-site hospitality business and capturing additional pricing opportunities,” Live Nation CEO Rapino wrote in the report. “And a more effective Ticketmaster marketplace, along with further alignment with artists, should continue to build on Ticketmaster’s success.”

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