Ticketmaster, Live Nation Near Merger


By ETHAN SMITH

Ticketmaster Entertainment Inc. and Live Nation Inc. are close to a merger, people familiar with the matter said, in a deal that would consolidate two of the most powerful forces in the music industry under one roof.

The combined company would be called Live Nation Ticketmaster , and would merge the world's biggest concert promoter with the world's dominant ticketing and artist-management company. The resulting firm would be able to manage everything from recorded music to ticket sales and tour sponsorship. It could package artists in new ways, for example, allowing corporations such as a cellphone provider to sponsor a concert tour and to sell an exclusive download of a song.


Because it would be so vertically integrated, the new company would also be able to muscle out competing concert promoters and have more power to dictate ticket prices to consumers.

The boards of both companies have yet to approve the all-stock merger, these people said. Terms of what these people described as a merger of equals have yet to be worked out. It was unclear last night which company would be acquiring the other. Live Nation's market capitalization, at $390 million, is slightly higher than Ticketmaster's $351 million. But the concert promoter has more debt and less cash.

Sticking points remain to any deal. Because a merger would concentrate so much power in the music industry under one company, it would require review by antitrust authorities. The deal, which wouldn't entail any exchange of cash, could be announced as early as next week, these people said.

Spokesmen for Live Nation and Ticketmaster didn't respond to requests for comment.

Live Nation's shares Tuesday fell 5%, or 26 cents, to $4.99, while Ticketmaster shares were up 5%, or 29 cents, to $6.14, both in 4 p.m. trading on the New York Stock Exchange.

The new company would have close ties to more than 200 artists, thanks to Ticketmaster's acquisition last year of Front Line Management, whose artist managers handle the affairs of around 200 major acts, including the Eagles, Miley Cyrus and Christina Aguilera. That transaction vaulted Front Line's veteran chief executive, Irving Azoff, to the helm of Ticketmaster.

Ties to Major Artists

Live Nation and Ticketmaster are in talks to merge. A deal would combine the world's biggest concert promoter with the world's dominant ticketing and artist-management company, have close ties to over 200 major artists including Madonna and Jay-Z.

Live Nation brings to the table close ties of its own to several major artists, including Madonna and Jay-Z, both of whom have signed far-reaching pacts that pay them hundreds of millions of dollars for a broad range of rights.

The structure of the new entity hasn't been nailed down, and it isn't entirely clear, for instance, what titles would be held by Mr. Azoff and Live Nation Chief Executive Michael Rapino. Both men are expected to remain at the combined organization.

As sales of compact discs plummeted in recent years, artists have come to rely increasingly on other sources of revenue, including concert tours. That has vastly diminished the major record labels' clout, and enhanced the power of concert promoters and artist managers alike.

Music-industry executives have struggled to come up with a new business model as paid digital downloads have grown too slowly to make up for the loss in CD sales, and concert ticket sales and corporate sponsorships have become integral to artists' income.

Live Nation has sought to capitalize on that shift by rolling up dozens of regional promoters. But it has struggled as artists have claimed the lion's share of ticket sales for themselves. That has left the company looking for new slivers of revenue from sources such as parking fees and concession sales, a strategy one analyst has dubbed a "river of nickels."
New Model

Ticketmaster began seeking its own new model for the music business with the acquisition of Mr. Azoff's Front Line. The pending deal with Live Nation appears to represent a further step in that quest.

Live Nation was part of Clear Channel Communications Inc. until 2005, and Ticketmaster was a unit of Barry Diller's IAC/InterActiveCorp until last August.

In addition to the effects of the broader turmoil in the markets, investors have been wary of the Live Nation's costly deals with top talent. The company has also had a difficult time turning a profit in its core business of staging and promoting concerts, because artists command a massive share of box office revenue -- up to 90% in some cases. In 2007, the company had a loss of almost $12 million on $4.2 billion in revenue, and has never turned a full-year profit. Its stock price is well off its 2007 high of $24

Ticketmaster's shares, which traded as high as $27 each after its August spinoff, slid after the company projected weakness in ticket sales starting last fall. Thanks to the near-monopoly it holds on sales of tickets to major concert and sporting events, Ticketmaster enjoys healthy profit margins.

Last year it reported net income of $169 million on $1.2 billion revenue. But those margins are under attack as so-called secondary ticketing services such as eBay Inc.'s StubHub begin encroaching on its core business.

Since taking the reins at Ticketmaster, Mr. Azoff has sought to make the company more friendly to artists and consumers. Both constituencies long complained about the ticketing service's heavy-handed tactics in negotiating deals and setting prices. One of Mr. Azoff's first acts was to sell tickets to a number of shows by his longstanding clients the Eagles on what is known as an "all-in" basis: The posted price for the ticket was the final price, without additional "convenience" fees and other charges added during the purchasing process.
Potential Packages

As the two entities further combine their operations, they could begin to offer more packages to consumers such as discounted bundles of tickets and recorded music, and could offer corporate sponsors more attractive terms, too. At the same time, a vertically integrated behemoth could have the power to dictate higher prices.

The deal may neutralize a Live Nation initiative that is also one of the biggest challenges facing Ticketmaster. Live Nation last year broke with Ticketmaster and launched its own competing ticketing service. By selling its own tickets, Live Nation said, it would be able to control a larger share of the pie.

Last summer, Mr. Rapino told The Wall Street Journal, "there is one reason you should buy our stock or you should watch our company: It's because we are entering the ticketing business next year." Live Nation Ticketing's fate is now unclear.

I really think a very small chance it gets approved by regulators. There would essentially be no competition.

how would you get OAR tickets?

Just ask Michael Phelps given2trade.

given2trade = michael phelps?

stop smoking weed plz

Shut up, drunk.

TicketMaster-Live Nation: An Obama Layup
Consumers and performers would rejoice if the President's Justice Dept. were to nix the merger of the ticket-selling and concert-promoting titans

By Jon Fine
BW Exclusives


When you're in the midst of a successful run for President, every day brings ample gifts: adoring crowds, rock-star receptions, and, above all, the pure buzz of promise minus the nasty bit of actually having to get things done.

When you become President, much of this goes to hell. That's why President Barack Obama should crank up the thank-you machine, because the proposed merger of Ticket­Master Entertainment (the world's largest ticket seller) and Live Nation (the world's largest concert promoter, which also manages many blue-chip acts) is his Administration's equivalent of finding a pony by the tree on Christmas morning. A nascent Presidency that is caught in the muck—as I write this, at least—of the legislative process as it grunts out something resembling a stimulus package can now go back, if only for a moment, to the clean and lofty ideals of the campaign. And pretty simply. All it would take is for the new Administration's Justice Dept.—which, by one Beltway insider's account, is staffing up especially quickly—to kill this deal.

If there is a political downside to doing so, neither I nor anyone I talked to can discern it. Here you have not one but two companies that are despised, be it for high ticketing fees or tight control of what was once an exquisitely local business, by a large portion of their key customers. (That group includes a sizable contingent of youngish music fans who likely skew Obama-ward in their politics, to boot.) How despised are these companies? One is commonly referred to as TicketBastard, as a simple Web search shows. Historically, this is possibly the one that was hated less. Live Nation changed its name from Clear Channel Entertainment in 2005, when that name was provoking frothing at the mouth. (It's telling that the combined entity would be called Live Nation Entertainment; representatives declined to make Michael Rapino, the CEO of Live Nation who would maintain that role in the proposed new company, available for comment.)

An individual familiar with the companies' calculus regarding regulatory concerns argues that the entities are "overwhelmingly complementary"—as opposed to competitive—and few such mergers have been challenged. And that consumers and performers would still have other options. The companies will begin making this case to Justice next week.
The Boss Is Angry

But TicketMaster (TKTM) and Live Nation (LYV) remain the kinds of companies that are magnets for ire, and at least one of them keeps finding ways to be charbroiled by the public, press, and pols. Bruce Springsteen is outraged that ticketmaster.com redirected fans to pricier seats at its resale site, TicketsNow.com. (In a conference call, Barry Diller, chairman of TicketMaster and nonexecutive chairman of the proposed company, blamed a technical glitch.) Politicians are piggybacking on Springsteen—as they've done, or tried to do, for a quarter-century—and demanding investigations. It takes a special company to infuriate a key business partner who, when not busy with his day job, serves as one of America's secular saints. Nice going, guys.

Perhaps when pressed by the feds, Live Nation and TicketMaster will claim that, as entities dependent on the music industry, they're under great stress. (Their stocks certainly are, having declined 67.8% and 70.9%, respectively, in the six months before the merger moves.) And no matter how antitrust-minded Obama's Justice Dept. might turn out to be, it's likely to relent when it comes to companies attempting resuscitation via merger. Does anyone think this Justice Dept. would kill a Chrysler-General Motors (GM) merger?

But these companies aren't drowning in losses. Yes, the concert industry has thin profit margins. Yet at a time when practically every other media business was eroding fast, Live Nation posted revenue and operating profit gains in the third quarter of last year, the most recent period for which either company reported results. While TicketMaster's operating profits fell, revenues rose 16%. More tellingly, for the first nine months of 2008 the average revenue TicketMaster netted from each ticket sale rose by over 7%.

Obviously, that won't last forever, and executives have discussed the need to fill unsold seats, even at a discount. But that stat shows that, unlike much of the media world, these businesses still have pricing power. The music industry has been file-shared into oblivion. Live events can't be. There is great power in controlling the last bastions of scarcity, as anyone who has marveled at the "convenience" fees tacked onto a simple ticket purchase on the Web knows. Ticket­Master and Live Nation have built formidable franchises on these advantages. Live Nation's position in the venue ecosystem allowed it to offer nine-figure deals that include recording rights to the likes of Madonna and Jay-Z.

But if one is to judge by sore consumers, perhaps the companies played those cards too well. Merging would increase scarcity and boost the companies' control. (Live Nation entered the ticketing business last month; so much for that plausible and powerful competitor.) Consumer benefits? Let me keep staring at this. Perhaps something will come to mind. Mr. President, enjoy this layup. You may not get another like it for a very long time.

Deal confirmed.



I don't think this will get approved, but at some point I bet there is a huge grassroots effort to get this blocked. I'll do my part.

It completes the music industry's decline into irrelevance. Nobody buys records, soon nobody will got to concerts.