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Live Nation fires back at DOJ antitrust lawsuit

Live Nation’s Dan Wall has insisted there is no “good faith argument” to break up the company with Ticketmaster amid the fallout from the Department of Justice’s (DOJ) antitrust lawsuit.

Wall, the company’s EVP, regulatory affairs, joined president/CFO Joe Berchtold on a call with investors to discuss the suit, which accuses LN and Ticketmaster, who merged in 2010, of engaging “in a variety of tactics to eliminate competition and monopolise markets”.

The DOJ’s allegations include acquiring competitors and competitive threats, restricting artists’ access to venues, threatening and retaliating against venues that work with rivals, locking out competition with exclusive contracts and blocking venues from using multiple ticketing firms. It also claims the firm “exploits” its relationship with venue giant Oak View Group (OVG).

Live Nation’s share price dropped in the wake of yesterday’s (23 May) announcement but has since stabilised.

Speaking to shareholders on the regulatory update call, Berchtold said he had been optimistic of reaching a resolution with the DOJ prior to the filing in the United States District Court Southern District of New York.

“We didn’t see any of the issues to be structural or fundamental to the nature of the makeup of the company,” he said. “[We] saw them all as discrete business practices and were hopeful that, because of that, we would be able to reach a settlement. Obviously, that wasn’t their agenda, ultimately, and we are where we are today.”

“It is exactly the concerns that were considered by the Obama administration 15 years ago, and that are covered by the consent decree”

Berchtold suggested one area of “disconnect” with the DOJ centred on the definition of competition in the marketplace.

“In our mind, competition is competing in the promotion side with the artist as the consumer, and then that artist very effectively engages multiple bidders to compete for their services,” he said. “The artist takes an increasing portion of the money from the show, and they are the beneficiary of that competition.

“The DOJ has a different view in terms of holding us accountable for the service fees and the ticket prices, even though we’re not the beneficiary to the largest extent of either those numbers. We don’t unilaterally make the decision on what those numbers are going to be; they’re driven primarily by the venues and by the promoter. So we clearly don’t agree with them in terms of the fundamental of the assertions that they’re making.”

Wall, who joined Live Nation last year after more than 12 years as a key advisor to the firm, alluded to US attorney general’s Merrick Garland’s statement that it was “time to break up Live Nation-Ticketmaster”.

“It is exactly the concerns that were considered by the Obama administration 15 years ago, and that are covered by the consent decree,” he argued. “And in those circumstances, we just don’t believe that there’s really any good faith argument to be made here that there could be a breakup. However, we all know that that’s what the most effective way to get the big headlines was and I think that that’s why we’re seeing that. It’s very unfortunate.

“There’s never been a circumstance where the DOJ allowed a merger to happen under a consent decree with behavioural remedies, which it said was an effective remedy, and then came back later and tried to say that that should be broken up.”

“We will make every effort to try to get this case to trial in a year”

Addressing the likely timescale of the case, Wall said: “We will move this along as quickly as we can. We will make every effort to try to get this case to trial in a year, or if not in a year, a year and a half, and certainly not long after that. We’re committed to putting the resources in to get that done and getting this behind us because we feel very confident about about our position on these claims.”

He was also critical of the DOJ’s demand for a jury trial, dismissing the move as a “stunt”.

“This is a stunt, a strategy that the DOJ used in the Google ad-tech case, and it’s highly unusual in that antitrust cases like this, historically, have always been tried to to judges rather than juries – because when the government is the plaintiff, it is seeking injunctive relief and all claims for injunctive relief are tried by judges rather than juries.

“It seems like a pretty transparent effort to try to avoid the scrutiny of a judge. And I don’t think it’s necessarily a smart move, because the very first message that you send to the judge is that you don’t really want him or her to have control over the outcome of this, and that’s not a very smart message to send a judge at the beginning of a case.”

Wall was also asked about the implications for the lawsuit of a potential administration change, should Donald Trump return to the White House following November’s US election.

“That’s a tough one, for sure,” he said. “If we just kind of go back in time and you asked me whether I think that the first Trump administration would have brought this case, I would tell you that I don’t think that any prior administration – Republican or Democrat – would have brought this case. But the circumstances, looking to the future, it would depend a lot on who was appointed to these positions, and that just makes it kind of vulnerable.”

“Live Nation has scolded Oak View Group multiple times for trying to compete”

The 128-page filing makes reference to LN’s relationship with OVG, which it describes as a “potential-competitor-turned-partner that has described itself as a ‘hammer’ and ‘protect[or]’ for Live Nation.

“In recent years, Oak View Group has avoided bidding against Live Nation for artist talent and influenced venues to sign exclusive agreements with Ticketmaster,” it states. “For example, Live Nation has scolded Oak View Group multiple times for trying to compete. In one instance, Live Nation asked, ‘who would be so stupid to… play into [an artist agent’s] arms,’ and on another occasion, Live Nation stated, ‘let’s make sure we don’t let [the artist agency] now start playing us off.’

“Live Nation and Oak View Group have colluded and established a partnership to allocate business lines, avoid competing with each other, and chart a mutually beneficial plan to cement Live Nation’s dominance.”

Wall has contested the claims in a lengthy blog, pointing out that OVG is a venue management company rather than a concert promoter.

“DOJ’s claim is based on two incidents in which Live Nation and OVG were discussing what to do when an OVG venue wanted to book on occasional show itself on a dark night,” he continued. “To portray that as an agreement not to compete in concert promotion is farcical.

“Regardless, OVG’s behaviour as a venue operator is fully consistent with every major arena and stadium in the country – they need to have an in house booker who helps fill otherwise dark nights, but they have no interest in systematically taking on the risk of guarantees that could be in the millions of dollars for a show or tens of millions of dollars for a tour.”

“There is no truth that this brief exchange had anything to do with Silver Lake’s decision to sell its stake in TEG”

In another startling allegation, it says that LN threatened commercial retaliation against private equity firm Silver Lake in 2021, unless the latter’s subsidiary TEG stopped competing with Live Nation for artist promotion contracts in the US. It claims that the threats “ultimately succeeded, and Silver Lake has tried to sell TEG altogether”.

“This claim reveals not only a disregard for the facts, but also deep hypocrisy,” replied Wall. “The current DOJ and FTC have been vocal critics of private equity companies making multiple investments in the same industry because of competitive ‘entanglements’. So was Live Nation CEO Michael Rapino when, after it had already made an investment in OVG, Silver Lake Partners decided to invest in the Australian live entertainment company, TEG.

“Rapino’s complaint was fundamentally the same as the DOJ/FTC concern with private equity rollups: it created a conflict between OVG, which had become a close partner to Live Nation, and TEG. So, in December 2021 when a TEG employee wrote to say that it did not intend to compete with Live Nation in the US, Rapino replied to Silver Lake’s management that he did not care about TEG, but still had a problem with Silver Lake’s decision to make multiple conflicting investments in the industry.

“There is no truth that this brief exchange had anything to do with Silver Lake’s decision to sell its stake in TEG.”

Elsewhere, Variety has published an article asking whether things would get better for fans in the event of a Live Nation-Ticketmaster breakup.

“In reality, music fans’ concerns boil down to one question: Would breaking up the two companies make the ticket-acquisition process less of a soul-crushing nightmare?” writes Jem Aswad. “In the short term anyway, the answer is pretty much no… In fact, the things that most enrage fans – cryptic ‘service’ fees, long wait times, the predatory secondary market and its bots that buy up blocks of tickets before ordinary humans can get near them – are outside the purview of the lawsuit.

“It also must be noted, as Live Nation often does, that Ticketmaster does not set ticket prices – artists or promoters do – and it does not charge the bulk of the service fees that so enrage fans (venues do).”


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Class action lawsuit launched against Live Nation

A number of legal firms have instigated class action lawsuits against Live Nation over claims the company downplayed allegations that it had breached antitrust laws.

According to the Hollywood Reporter, New York-based Bernstein Liebhard has invited investors to join a lawsuit against LN filed in the US District Court for the Central District of California, with three other law firms reportedly having done the same.

The letter alleges the defendants “made materially false and misleading statements”, failing to disclose that Live Nation “engaged in anticompetitive conduct, including charging high fees and extended contracts with talent, and retaliated against venues”.

“As a result, Live Nation was reasonably likely to incur regulatory scrutiny and face fines, penalties, and reputational harm,” it continues.

It follows Politico‘s 28 July report that the Department of Justice could file an antitrust lawsuit against Live Nation and Ticketmaster – who merged in 2010 – by the end of 2023, alleging that “the entertainment giant is abusing its power over the live music industry”. LN’s stock price fell 7.8% after the report.

“There has never been a situation where the DOJ has come and attempted to retrade a settlement”

Live Nation is yet to comment on the proceedings. However, CFO Joe Berchtold alluded to the DoJ investigation at Morgan Stanley’s Technology, Media and Telecom Conference back in March, stating it could have a “chilling impact on their ability to do settlements ever again”, due to its previous settlements with LN in 2010 and 2019.

“We have a binding agreement with the DOJ as it relates to any perceived deeds in the past, much as you have individual settlements,” he said. “There has never been a situation where the DOJ has come and attempted to retrade a settlement. So a) there are legal questions about whether or not they could retrade a settlement. And b) it would have a chilling impact on their ability to ever do settlements again.

“The first barrier that you got to overcome is the fact we’ve actually had settlements. Two, is it seems to be, pick any random data path you want and it’s, ‘Ticketmaster’s a monopoly, therefore Live Nation-Ticketmaster should be broken up.’”

Berchtold said the assertion that Ticketmaster is a monopoly was not borne out by the facts.

“Market share has declined and more of the money has consistently gone to the venues, as opposed to Ticketmaster,” he said. “Neither of those things happens with a monopoly.”


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Taylor Swift ticketing fallout continues

The fallout from the controversial presale for Taylor Swift’s 2023 stadium tour has escalated, with a US Senate antitrust panel set to look into a “lack of competition in ticketing markets”.

Senators Amy Klobuchar and Mike Lee of the senate judiciary subcommittee on competition policy, antitrust and consumer rights have announced the hearing – which will take place on a date to be confirmed – in response to last week’s cancelled onsale.

Swift shifted more than two million tickets – a new record for an artist in a single day – for her AEG-promoted 52-date The Eras Tour, but the sale was marred by reports of “significant service failures” and lengthy delays on Ticketmaster’s website.

“Last week, the competition problem in ticketing markets was made painfully obvious when Ticketmaster’s website failed hundreds of thousands of fans hoping to purchase concert tickets,” says Klobuchar. “The high fees, site disruptions and cancellations that customers experienced shows how Ticketmaster’s dominant market position means the company does not face any pressure to continually innovate and improve.

“This is a story about the status of Taylor Swift, not the status of Ticketmaster”

“That’s why we will hold a hearing on how consolidation in the live entertainment and ticketing industry harms customers and artists alike. When there is no competition to incentivise better services and fair prices, we all suffer the consequences.”

Days before the announcement, Klobuchar wrote an open letter to Live Nation chief Michael Rapino, expressing “serious concerns about the state of competition in the ticketing industry”. The letter came just weeks after a coalition of American consumer, artist and lobbying groups launched a Break Up Ticketmaster campaign, claiming that artists and venues are being exploited by the company.

Several industry commentators have been quick to point out that unprecedented demand for Taylor Swift tickets has little to do with Ticketmaster’s relationship with Live Nation. “This is a story about the status of Taylor Swift, not the status of Ticketmaster,” wrote Bob Lefsetz. “I wish everybody would STFU! There is no villain here. Just an incredibly successful pop star and a company that was caught off guard by demand.”

In his weekly Full Rate No Cap email, former Billboard editorial director Bill Werde wrote, “It’s pretty obvious that putting 52 dates on sale at once is an unnecessary stress to any tech platform,” adding that Swift’s team had been advised not to put all dates on sale at the same time, “But they wanted the big splash. End result? Her fans suffered.”

“We did sell over two million tickets that day, we could have filled 900 stadiums”

The Eras Tour attracted “historically unprecedented demand” as 3.5m people pre-registered for Swift’s Verified Fan presale, 1.5m of whom were later invited to participate in the onsale. However, the Ticketmaster site struggled to cope with the traffic after being swamped by bot attacks. Seatgeek (which took on $238m in private equity investment in August) experienced similar technical issues ticketing five of the Swift dates.

“The site was supposed to be opened up for 1.5 million verified Taylor Swift fans,” said Live Nation chair Greg Maffei. “We had 14 million people hit the site, including bots – another story – which are not supposed to be there. And despite all the challenges and the breakdowns, we did sell over two million tickets that day, we could have filled 900 stadiums.

“Interestingly, AEG our competitor, who is the promoter for Taylor Swift, chose to use us because we are in reality, the largest and most effective ticket seller in the world. Even our competitors want to come on our platform.”

However, in a rebuttal that may add fuel to the antitrust fire, AEG Presents yesterday told CNBC, “Ticketmaster’s exclusive deals with the vast majority of venues on The Eras Tour required us to ticket through their system…We didn’t have a choice.”

“We’re working to shore up our tech for the new bar that has been set by demand”

Ticketmaster has apologised to Swift and her fans, “especially those who had a terrible experience trying to purchase tickets”.

“Historically, we’ve been able to manage huge volume coming into the site to shop for tickets, so those with Verified Fan codes have a smooth shopping process,” it said in a blog post. “However, this time the staggering number of bot attacks as well as fans who didn’t have codes drove unprecedented traffic on our site, resulting in 3.5 billion total system requests – 4x our previous peak.

“We handle onsales for countless top tours, some of the biggest sporting events, and more. Never before has a Verified Fan onsale sparked so much attention – or traffic. This disrupted the predictability and reliability that is the hallmark of our Verified Fan platform.

“We’re always working to improve the ticket buying experience. Especially for high demand onsales, which continue to test new limits. We’re working to shore up our tech for the new bar that has been set by demand.”

Live Nation released a statement addressing competition concerns last weekend. “Live Nation takes its responsibilities under the antitrust laws seriously and does not engage in behaviours that could justify antitrust litigation, let alone orders that would require it to alter fundamental business practices,” it said.


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Live Nation shares up 10% post DOJ settlement

Live Nation’s share price rose by US$6.79 to $70.60 yesterday (Thursday 19 December) following news that it had reached a settlement with the US Department of Justice (DOJ) over antitrust allegations.

The DOJ had opened investigations into Live Nation last Friday over concerns that the company had violated the terms of a decree governing its 2010 merger with Ticketmaster.

Both Live Nation and Ticketmaster refuted all allegations of anti-competitive practice.

As part of the settlement, the DOJ is extending and modifying the decree that permits the merger, and which was set to expire next year, until 2025. The justice department calls the agreement the “most significant enforcement action of an antitrust decree in 20 years”.

Following the news, Live Nation’s stock, which had dropped to around $64 per share following news of the DOJ investigation, rebounded to the levels it had been trading at before, jumping almost 10% to just over $70. Shares remained up at $69.83 at the time of writing.

“We believe this is the best outcome for our business, clients and shareholders as we turn our focus to 2020 initiatives”

“We have reached an agreement in principle with the Department of Justice to extend and clarify the consent decree,” comments a Live Nation spokesperson. “We believe this is the best outcome for our business, clients and shareholders as we turn our focus to 2020 initiatives.”

Under the terms of the modified agreement, Live Nation is prohibited from pressuring venues to use Ticketmaster and from withholding shows from a venue if it chooses to go with another ticketer. An independent party will monitor Live Nation’s compliance with the decree, and a $1 million fine will be levied for any violation of the agreement.

“When Live Nation and Ticketmaster merged in 2010, the Department of Justice and the federal court imposed conditions on the company in order to preserve and promote ticketing competition,” says assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.

“Today’s enforcement action including the addition of language on retaliation and conditioning will ensure that American consumers get the benefit of the bargain that the United States and Live Nation agreed to in 2010. Merging parties will be held to their promises and the Department will not tolerate transgressions that hurt the American consumer.”

The full DOJ statement can be read here.


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