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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