26 January 2010

Ticketmaster -- Live Nation Deal Cleared by U.S. With Changes


The U.S. Justice Department approved Ticketmaster Entertainment Inc.’s merger with Live Nation Inc., while imposing conditions on their plan to create a new music- industry power.

Under terms accepted by both companies, Ticketmaster must license its software to AEG Live, its largest customer. Ticketmaster also must sell its Paciolan unit to a Comcast Corp. joint venture or another suitable buyer. The new company also will be banned for 10 years from retaliating against any concert site that signs a ticket-sales contract with a competitor.

The $889 million merger “will change the landscape of the live entertainment business,” said Allen Grubman, a New York- based music industry attorney whose clients include Madonna, Elton John and U2. “Artists are focusing tremendously on live performance because that’s an area where there is still a lot of money to be made.”

The combined company creates a new business model with a presence in almost every segment of live entertainment, including the operation of concert venues and merchandise sales. Worldwide concert ticket sales more than doubled to $4.4 billion in 2009 from $1.7 billion in 2000, while compact disc sales fell 65 percent, according to industry magazine Billboard.

Live Nation is the world’s largest concert promoter, while Ticketmaster is the leader in ticketing and artist management.

“We concluded the transaction as originally proposed was anticompetitive,” Justice Department antitrust chief Christine Varney told reporters today, saying the settlement will be good for consumers. The deal is subject to public comment and requires approval by a federal judge.


Varney said the merged company also will be prohibited from bundling ticketing services with concert promotions. Seventeen states joined in the settlement, and Canada’s Competition Bureau announced a similar resolution.

Ticketmaster Chief Executive Officer Irving Azoff called the resolution “a great win for fans.”

The combined company, to be called Live Nation Entertainment, will be led by Barry Diller as chairman, Michael Rapino as chief executive officer and president, and Azoff, executive chairman and CEO of Front Line artist management.

The companies overcame opposition from U.S. lawmakers, rival concert promoters, consumer groups and artists including Bruce Springsteen, who argued the deal centralizes too much power in concerts and ticketing.

Shares Rise

Ticketmaster, based in West Hollywood, California, rose $2.10, or 16 percent, to $15.40 at 4 p.m. New York time in Nasdaq Stock Market trading. Beverly Hills, California-based Live Nation rose $1.35, or 15 percent, to $10.51 in New York Stock Exchange composite trading.

Based on today’s closing prices, Ticketmaster investors will receive stock in Live Nation valued at $15.49 a share, or a total of $889 million. Following the Justice Department announcement, the companies said they completed the deal and that today marked the final trading of Ticketmaster stock.

“The proposed settlement allows for strong competitors to Ticketmaster, allowing concert venues to have more and better choices for their ticketing needs, and provides for anti- retaliation provisions, which will keep the merged company in check,” Varney said.

The case is the first major antitrust action by President Barack Obama’s administration. Matthew Cantor, a partner at New York law firm Constantine Cannon, said the compulsory licensing provision was unusual and a sign that the Justice Department had serious concerns with the merger.

‘This is a Win’

“Clearly Justice felt that merely having sold assets would not have allowed the potential competitors to be significant players,” Cantor said in a phone interview. “From the Justice Department standpoint this is a win.”

Los Angeles-based AEG said it can abandon the licensing partnership at any time. The company said in a written statement that it intends to “aggressively explore” using a new service to replace Ticketmaster.

Following the merger announcement, AEG had expressed concerns about using a ticketing service controlled by a rival. AEG is the second-largest concert promoter behind Live Nation.

“AEG is already engaged in ongoing discussions,” AEG President and Chief Executive Officer Timothy J. Leiweke said in the statement.

The companies agreed to combine almost a year ago. Under the amended terms announced today, Ticketmaster investors will receive 1.474 shares of Live Nation for each they now own. Live Nation expects to issue 84.6 million shares to Ticketmaster stockholders, according to a statement.

Under the original accord, the exchange rate was set at 1.384 shares of Live Nation for each of Ticketmaster.

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