UPDATED: More than two weeks after Ariel Emanuel stepped down as a Live Nation board member after 14 years, the Department of Justice announced that he and fellow top Endeavor officer Mark Shapiro resigned their board positions after the DOJ expressed antitrust concerns, according to a DOJ statement Monday (June 21). The DOJ’s concern was that Emanuel’s and Shapiro’s “positions on the Live Nation Board created an illegal interlocking directorate,” i.e. a situation where one person — or an agent of one person or company — serves as an officer or director of two companies.
However, according to an SEC filing, Emanuel actually resigned on June 3, “effective immediately,” with Live Nation stating the move “was not the result of any disagreement with the company on any matter relating to the company’s operations, policies or practices.”
Emanuel and Shapiro had planned to leave following the launch of Endeavor’s IPO in April, Billboard reported earlier this month and a source confirmed to Variety. That source also said Endeavor’s going public was an issue that created the conflict between the two companies, as Emanuel had been a Live Nation board member since 2007. However, according to that report, a reason for his timing may be the fact that on June 3, Emanuel’s final stock award of 4,470 shares issued June 2020 vested and were worth nearly $400,000, Billboard claimed, citing undisclosed documents. It reported in a later story that the DOJ’s concern was over Endeavor’s ownership of a ticketing company that Live Nation spun off in 2010, although that report was not confirmed at the time of this article’s publication.
However, the DOJ says in its announcement, “Endeavor and Live Nation compete closely in many sports and entertainment markets. Both Live Nation and Endeavor, through its wholly owned and minority owned subsidiaries, promote and sell tickets and VIP packages that include tickets, lodging and travel accommodations, to live music, sporting and other entertainment events. Based on U.S. revenues, the interlock did not qualify for any of the Section 8 safe harbors.”
“These resignations ensure that Endeavor and Live Nation will compete independently,” said Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division. “Executives are not permitted to hold board positions on companies that compete with each other. The division will enforce the antitrust laws to make sure that all companies compete on the merits.”
An Endeavor spokesperson told Variety on Monday, “While there has been no violation of law, we understand and respect the DOJ’s concerns regarding the current similarities of our businesses.” Reps for Live Nation declined Variety‘s request for comment.
According to the DOJ announcement, Section 8 imposes bright line prohibitions designed to prevent harm from competitors having overlapping directors or managers, regardless of whether any anticompetitive conduct actually occurs. Interlocking directorates can restrict competition by providing a conduit for the exchange of competitively sensitive information and by facilitating coordination between competing companies. By eliminating the opportunity to coordinate – explicitly or implicitly – through interlocking directorates, Section 8 prevents violations of the antitrust laws before they occur.
Although its business was flattened by the pandemic, Live Nation has come roaring back, with the anticipation of the return of live entertainment sending its stocks to all time highs. Not surprisingly, its first-quarter earnings were mixed, but certainly could have been worse: The company’s adjusted operating income loss for the quarter was $152 million, which consisted of $323 million in operational fixed costs and $171 million of contribution margin, which included $149 million from operations. It ended the first quarter with $1.1 billion in free cash compared to $643 million at the end of 2020, an increase of $462 million.