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Live Nation-Ticketmaster Chief Michael Rapino Talks Dept. of Justice Inquiries

Live Nation Chief Michael Rapino Talks
CORAL VON ZUMWALT

Back in August, Senators Richard Blumenthal of New Jersey and Amy Klobuchar of Minnesota made the most recent of several requests for an Department of Justice antitrust investigation into competition in the ticketing industry, and it soon became clear that the target of the probe was Live Nation and its 2010 merger with Ticketmaster, which has created an online live-event ticket marketplace that the senators say is not working for consumers.

Live Nation/ Ticketmaster operates under a consent decree that bars Live Nation from withholding concerts and tours from venues that opt to use a different ticketing service than Ticketmaster, and from retaliating when venues go with a competitor.

Just yesterday, the DOJ confirmed that it is examining alleged violations of that consent decree by Live Nation. Ticketmaster, which works with 80 of the top 100 venues in the country, has been under attack for allegedly monopolistic practices for many years. In June, Sen. Blumenthal and Reps. Bill Pascrell, Jr. and Frank Pallone, Jr. introduced the BOSS Act in an effort to bring more transparency to the ticketing business; last year Pascrell called on the DOJ to investigate “Ticketmaster corruption” and in April 2018 a New York Times article claimed that DOJ officials were “looking into serious accusations about Live Nation’s behavior in the marketplace.” The article said that AEG Presents, which is Live Nation’s chief competitor, told DOJ officials that venues it manages in several major U.S. markets “were told they would lose valuable shows if Ticketmaster was not used as a vendor, a possible violation of antitrust law.”

Live Nation has steadfastly maintained that the calls for investigation are based on “a fundamental misunderstanding of our consent decree and general ticketing industry dynamics,” as it said in a statement in response to the August request. At Goldman Sachs’ Communacopia conference in New York on Wednesday, Live Nation chief Michael Rapino addressed the issue.

Asked by the moderator to share his views on “the state of competition in the ticketing market,” Rapino sighed, “Yes, the question we all want.

“I’ll do my best not to sound offensive and just try to give you the facts,” he said. “It’s a bit ironic [for the senators to make the announcement], you’d think they would have called our office. We’re very open, we’ll discuss anything with anybody if they have concerns — except maybe a lobby group!

“The decree gets a lot of misconception,” he continued. “I negotiated it and it’s very simple: It says we can’t threaten venues. We can’t say to a Ticketmaster venue that says they want to use a different ticketing platform, ‘If you do that, we won’t put shows in your building.’ It also says we can do what’s right for our business, so we have to put the show where we make the most economics, and maybe that venue [that wants to use a different ticketing platform] won’t be the best economic place anymore because we don’t hold the revenue.

“Now, we’re eight-plus years into the decree, and with 30,000 shows a year and 30,000 employees, you can imagine all the emails flying around. Every now and then one of our competitors runs to the DOJ and says ‘We lost the Kansas City venue, [Ticketmaster] threatened!’ We get an inquiry from the DOJ, ‘Hey, can we get some emails from over the years,’ they’ve done it and we’ve never found anything wrong. We’re very compliant, we understand it clearly — trust me, after eight years and all those emails, if you weren’t compliant, with your competitors playing that game, you’d have been exposed as being in violation long ago.

“With all the recent press” about the senators’ requests, he continued, “there’s no new litigation, no new claims, no new anything. We educate all of our employees: ‘This is how you go to market [with] Ticketmaster versus Live Nation, this and this is what you can’t say. Win the business straight: You can bundle the business, you can add value, you can present together — it’s great to have Ticketmaster ticketing your building and have Live Nation as your content partner. That’s how we generally win a business: because of the strong value proposition we provide. When we win a venue in Kansas City or L.A., where we took over a venue from a competitor, of course they’re gonna run to the DOJ. But we’re too smart for that, we’re very clear on what we can and can’t do.

“To an investor in the business,” he concluded, “be reassured that our business model has been continually tested over the years, that we are compliant, we will be compliant, we see no reason not to be compliant, and it’s business as usual.”

The moderator then said, “I think there’s a misunderstanding about how the DOJ oversight works — they have the option of asking for information.”

Rapino replied, “I’m not a lawyer so I’m not going to be perfect on this, but there’s a fine line. ‘Investigating’ makes for a good headline, but when you’re under a decree, that means you are in theory obligated to comply with it, and they can ask for information [any time] — you don’t have to be summoned. If you’re not under a decree, it’s bigger news that the DOJ woke up one day and said, ‘We’re gonna look at this guy.

“Hey, we want them to be educated, there’s a new staff [at the DOJ] every two months. There’s always some new kid who thinks something’s going on, and our lawyers have to sit down with them and walk them through it, ‘This is how the decree works, we haven’t violated anything, there’s nothing going on in Pittsburgh.’ [The new staffer says], ‘Oh, okay,’ and then another new kid comes in, AEG calls and says, ‘Hey, they threatened somebody in Kansas City!’ I don’t want to belittle them — we’re very aware of it, we’re compliant with it, we don’t need to threaten to win business.

“It’s a very competitive market,” he concluded. “AEG has a ticketing platform, Stubhub has grown their marketshare, Vivid has come out of nowhere. It’s not like venues don’t have options. If you’re a venue you can pick any ticket platform you want, and we have to provide a better product and win that business fair and square.”