Ticketmaster and Live Nation, two of the biggest names in the live entertainment and ticketing industry, announced their merger in February 2009. This created a new company called Live Nation Entertainment, which brought together Ticketmaster’s ticketing services and Live Nation’s promotion and venue operations. The merger was highly significant in the industry, though also controversial due to concerns about its impact on competition and ticket prices.
The Companies Before the Merger
Ticketmaster was founded in 1976 as a ticketing service for concert venues. It initially started by selling tickets for events at the Arizona Veterans Memorial Coliseum, but soon expanded to provide ticketing services for venues across the United States. By 1993, Ticketmaster had sold over 100 million tickets, and by 2001 it was selling more than 140 million tickets per year. The company grew by signing exclusive deals with major venues and promoters, giving it control over a large percentage of event ticket sales.
Live Nation was formed in 2005 after Clear Channel Communications spun off its live entertainment division as a separate company. Live Nation promoted or operated a large number of major concert venues and festivals. It worked with many top artists and owned prominent venues like the House of Blues chain. In 2005, Live Nation promoted or hosted over 16,000 events for 1,500 artists in 33 countries. Like Ticketmaster, Live Nation continued growing rapidly in the 2000s through acquisitions and mergers with other promoters and venue operators.
Ticketmaster as the Dominant Ticketing Service
By the late 2000s, Ticketmaster had become the dominant player in the ticket market. It provided ticketing services for 80 of the top 100 concert venues in the U.S. It also had contracts with all of the major concert promoters, giving it control over the majority of major event tickets. Critics argued that Ticketmaster essentially had a monopoly that allowed it to charge high fees on tickets with little competition.
Despite complaints, Ticketmaster continued to grow and thrive. In 2008, prior to the merger, Ticketmaster sold 141 million tickets and its parent company IAC reported over $1.2 billion in revenue from Ticketmaster operations. Clearly, Ticketmaster had established itself as the undisputed leader of event ticketing heading into the merger with Live Nation.
Live Nation Grows Through Acquisitions
Much like Ticketmaster, Live Nation rose to prominence through aggressive expansion and acquisitions. Some key moves included:
- 2006 – Acquired House of Blues and concert promoter Bill Graham Presents
- 2007 – Formed joint venture with Cirque du Soleil
- 2007 – Acquired stake in C3 Presents, producer of Lollapalooza
- 2008 – Acquired promoter and venue operator Daytona International Speedway
- 2008 – Formed Front Line Management Group with over 200 artist managers
Through big deals like these, Live Nation established itself as the nation’s second-largest concert promoter behind AEG Live. It also built a strong management division and continued expanding its network of owned or operated venues. The strength of Live Nation’s promotions business made it an ideal partner for the ticketing giant Ticketmaster.
Details of the Merger Deal
In February 2009, Ticketmaster and Live Nation announced plans to merge and form a new company called Live Nation Entertainment. The deal was structured as an all-stock reverse merger. This meant that Ticketmaster was technically the acquiring company and would change its name, while Live Nation was the acquired company.
Under the agreement, Ticketmaster paid $2.5 billion to combine the companies. Each Live Nation shareholder received 1.384 shares of Ticketmaster stock for each share they owned. This valued Live Nation at around $2.35 billion at the time, with 52% ownership going to Ticketmaster shareholders and 48% going to Live Nation shareholders. The new merged Live Nation Entertainment company would trade on the New York Stock Exchange under Ticketmaster’s old stock ticker LYV.
The CEOs presented the deal as a way to combine Ticketmaster’s ticketing services with Live Nation’s front-end operations and bring significant synergies. However, it also eliminated a major competitor for Ticketmaster and reduced options for venues and promoters.
Share Prices and Ownership After the Deal
At the time of the merger announcement, Ticketmaster had a share price of around $10.90, while Live Nation traded at around $8.15 per share. This relative valuation was used to establish the exchange ratio of 1.384 Ticketmaster shares for each Live Nation share.
After completion of the deal, former Ticketmaster shareholders owned approximately 50 million shares of the new Live Nation Entertainment company. Former Live Nation shareholders received around 37 million shares of Live Nation Entertainment. Additional stock grants to Live Nation employees brought the total outstanding shares to around 94 million after closing.
Management of the Combined Company
The merger deal put executives from both companies into leadership roles at the combined Live Nation Entertainment:
- Michael Rapino, CEO of Live Nation, became President and CEO
- Irving Azoff, CEO of Ticketmaster, became Executive Chairman of the Board
- Several other senior executives were brought over from both companies
Michael Rapino has remained President and CEO of Live Nation Entertainment up to the present day. The company is headquartered in Beverly Hills, California.
Government Review of the Merger
Due to the major impact the deal would have on the live entertainment industry, the merger was closely reviewed by the U.S. government. Primary concerns were the merger’s implications for competition and ticket prices. Some specific issues raised:
- Ticketmaster would gain additional leverage over venues.
- Artists would lose a major promoter competitor when signing touring deals.
- Ticketmaster could retaliate against venues that used other ticketing services.
- The combined company could engage in anticompetitive practices like bundling and tying arrangements.
In response, Ticketmaster and Live Nation agreed to a 10-year consent decree with the Department of Justice to get approval. This decree prevented certain types of exclusive contracts and retaliation by the company. Even with the decree, many critics remained concerned about loss of competition.
Department of Justice Review
The U.S. Department of Justice conducted an eight-month review of the proposed merger. It evaluated the deal’s impact on competition in ticketing, promotions, artist management, and related businesses. Ultimately, the DOJ approved the merger but with several conditions to promote competition. Key provisions included:
- 10-year ban on exclusive contracts with the top artists, venues, or promoters
- Required to license its ticketing software to two competitors
- Required to divest ticketing assets in several key markets
- Prohibited from retaliating against venues that use competitors’ ticketing services
These conditions were part of a consent decree formalizing the DOJ requirements. Live Nation Entertainment agreed to the decree to gain antitrust clearance for the deal.
Additional Government Reviews
Along with the DOJ, the merger was reviewed by multiple other agencies in the U.S. and internationally. These included:
- Federal Trade Commission
- State attorneys general
- U.S. Senate Judiciary Subcommittee
- European Commission
- Canada’s Competition Bureau
While they raised similar competition concerns, none of these regulators formally blocked the merger. Live Nation Entertainment was able to proceed once reaching the consent decree with the DOJ.
Closing of the Merger
After gaining government approval, Live Nation and Ticketmaster officially closed their merger on January 25, 2010. Trading in Live Nation stock was halted and each share automatically converted to 1.384 shares of the new Live Nation Entertainment stock.
The combined company reported pro forma 2008 revenue of over $5 billion. It kicked off operations with about 6,500 employees globally. Live Nation Entertainment instantly became a media and entertainment powerhouse with a dominant position in live event ticketing along with concert promotion, operation of major venues, management of artists, and related services.
Final Ownership Stakes
When the deal closed, ownership of the merged Live Nation Entertainment company was as follows based on the original exchange ratio:
- Former Ticketmaster shareholders: 50.01%
- Former Live Nation shareholders: 49.99%
Within several years, Liberty Media acquired a major stake in Live Nation Entertainment. By 2012, Liberty owned over 26% of the company’s shares.
Stock Prices Following the Merger
In the first day of trading after the merger closed, the stock price of new Live Nation Entertainment shares opened at $12.09. This represented a modest increase over Ticketmaster’s pre-merger price and implied a market capitalization around $11.5 billion for the combined company.
The stock traded inconsistently in the months after closing as the company worked to integrate operations and shift to the Live Nation Entertainment branding. Within the first year, shares traded between $8 to $15 as the company faced some post-merger challenges.
Merger Impact and Criticisms
The Ticketmaster-Live Nation merger brought together two enormous players to create a clear market leader in live entertainment. However, it also generated significant criticism and controversy around competition issues. Some key impacts and criticisms:
- Created a giant with big competitive advantages through its integrated business units and extensive resources.
- Provided the merged company increased leverage over vendors, venues, and artists.
- Reduced competition in multiple parts of the industry, including rival ticketing options for major venues.
- Allowed cross-promotion between Ticketmaster and Live Nation events and services.
- Critics argued it would lead to higher fees and ticket prices for fans over the long-term.
These factors sparked outrage from some consumer groups and watchdogs who argued the merger would be terrible for the industry. They believed it created a near-monopoly situation with limited recourse. However, the companies highlighted operational synergies and continue to defend the pro-consumer benefits of the deal.
Competition Concerns
A core criticism of the merger was that it would stifle competition by combining the two largest players in ticketing and promotions. Prior to the deal, Ticketmaster and Live Nation competed vigorously in signing venues, promoting tours, and selling event management services.
After combining, critics argued the merged company could exert unprecedented control over the industry. They would have new abilities to bundle services, cross-promote between business units, and retaliate against competitors. Rival ticketing services and promoters would struggle to compete with the merged giant.
Impact on Consumers and Venues
Another major concern was the impact on consumers, venues, and artists. Critics contended that the merger would allow Live Nation Entertainment to charge higher fees across its businesses without the competitive pressures it previously faced.
They argued that venues would be pressured into accepting Ticketmaster services even if cheaper ticketing options existed. Artists could be strong-armed into using Live Nation’s promotion services for tour deals. Ultimately, critics said these factors could result in higher ticket prices for fans as the merged giant leveraged its increased power.
Company Response
Live Nation Entertainment acknowledged the competition concerns but contended the merger ultimately would benefit consumers. The company highlighted its abilities to offer bundled services, invest in new technologies, and create a better end-to-end experience.
The consent decree with the DOJ also required steps to promote competition, though some argued these didn’t go far enough. Overall, the company stood by its position that the deal created a more innovative player capable of serving artists, venues, and fans more effectively.
Post-Merger Developments and Issues
In the years since the merger, Live Nation Entertainment has continued to grow into a live entertainment juggernaut. It has around $10 billion in annual revenue and has acquired additional companies worldwide. However, the merged company has also faced ongoing controversies and investigations over competition issues.
Ongoing Growth and Acquisitions
Live Nation has kept expanding aggressively since the merger with major moves including:
- 2012 – Purchased storied British concert promoter Festival Republic
- 2013 – Bought controlling interest in EDM promoter Insomniac Events
- 2015 – Acquired C3 Presents (Lollapalooza, Austin City Limits)
- 2017 – Acquired remaining stake in Bonnaroo Music Festival
- 2019 – Acquired Latin promoter Ocesa Entertainment
The company continues snapping up promoters, venues, ticketing platforms, and related businesses around the world. It has strengthened its global footprint, particularly in Latin America and Asia.
Criticisms and Government Intervention
Despite its success, Live Nation Entertainment continues to face scrutiny over competition issues. Ongoing controversies and government actions have included:
- 2018 – The DOJ launched a probe into possible violations of the 2010 consent decree.
- 2019 – The DOJ extended the consent decree another 5-7 years over competition concerns.
- 2022 – Multiple artist groups criticized Live Nation, accusing it of monopolistic practices that hurt consumers.
- 2022 – DOJ opened a broader antitrust investigation into Live Nation Entertainment’s practices.
Critics argue the company continues to leverage its power and influence at the expense of consumer choice. However, Live Nation states it operates ethically and has increased competition by promoting more shows globally.
Conclusion
The Ticketmaster-Live Nation merger in 2010 created a mammoth new company, Live Nation Entertainment, which has reshaped the live entertainment industry. It brought together the world’s top ticketing service with one of the biggest concert promoters.
This consolidation generated intense criticism over reduced competition and potentially higher costs for venues, artists, and fans. However, Live Nation Entertainment has continued thriving and argues the merger enabled new innovations that benefit consumers.
Over a decade later, the merged company still dominates ticketing and live events. Concerns linger about possible anti-competitive practices, prompting ongoing government reviews. But the massive extent of Live Nation Entertainment’s influence and operations can be traced back to its paradigm-shifting merger in 2009.
