The merger between Live Nation and Ticketmaster was approved by the U.S. Department of Justice in January 2010. This allowed the two companies to combine into the world’s largest live entertainment and ticketing company. The approval came after an in-depth investigation by the DOJ into potential antitrust issues. However, the DOJ ultimately concluded that the merger would not harm competition in the industry.
Background on Live Nation and Ticketmaster
Live Nation was formed in 2005 after the spinoff of Clear Channel’s (now iHeartMedia) live entertainment division. The company promoted, operated, and managed live entertainment events like concerts and festivals. Ticketmaster had been founded in 1976 as a ticketing service and dominated the market. In 2008, Live Nation and Ticketmaster announced plans to merge into a new entity called Live Nation Entertainment.
Why did Live Nation and Ticketmaster want to merge?
There were several reasons the two companies wanted to merge:
- Ticketmaster wanted access to Live Nation’s artist relationships and promotion abilities.
- Live Nation wanted to secure a reliable ticketing provider and gain access to Ticketmaster’s distribution network.
- The companies believed integrating ticketing and live event promotion would lead to efficiencies and growth.
- They wanted to leverage combined data to improve sales and marketing.
- The merger would give them more scale and synergy to compete against other players in the entertainment industry.
Essentially, the merger was aimed at creating a vertically integrated powerhouse in the live entertainment industry. Live Nation would provide the content via promotions and artist relationships, while Ticketmaster would handle ticketing logistics.
The DOJ review
Given the dominance of Ticketmaster in event ticketing, the merger raised anti-competitive concerns. As a result, the U.S. Department of Justice conducted an extensive year-long investigation into the merger’s potential impact on competition.
They looked at:
- Ticketmaster’s share of primary ticketing services for major live entertainment venues.
- The companies’ respective shares in event promotions and artist management.
- Barriers to entry for potential competitors.
- Lock-in effects of Ticketmaster’s long-term exclusive contracts.
The DOJ held discussions with promoters, venue owners, artist managers, and ticketing competitors during its review. They wanted to determine if the merger would substantially lessen competition.
Why did the DOJ ultimately approve the merger?
In the end, the DOJ determined that the merger would not violate antitrust laws for the following reasons:
- There were still competitors in the ticketing market, even if Ticketmaster was dominant.
- The ticketing and live entertainment promotion markets were evolving with new entrants.
- Efficiencies from the merger would likely outweigh anti-competitive concerns.
- Live entertainment promotion did not depend heavily on ticketing control.
- The companies agreed to license a copy of Ticketmaster’s software to its competitor Anschutz Entertainment Group (AEG) to mitigate competitive concerns.
The DOJ also noted that problematic exclusive dealing contracts used by Ticketmaster would expire over the next few years. This would reduce barriers to entry and lock-in effects going forward.
Overall, the DOJ felt comfortable that consumer harm was unlikely given the proposed procompetitive efficiencies, existing competitors, and ongoing evolution in the industry.
Key conditions imposed on the merger
Despite approving the deal, the DOJ did impose certain conditions on Live Nation Entertainment aimed at protecting competition:
- They were barred from retaliating against venue owners who choose to use other ticketing companies.
- The merged company had to provide competitors access to tickets if a venue owner requested it.
- They could not force bundling of ticketing with their event promotion services.
- The DOJ appointed an independent monitor for a period of 10 years to ensure compliance.
These were intended as safeguards to prevent anticompetitive behavior and maintain options for venues and artists.
Criticisms and outcomes of the Live Nation-Ticketmaster merger
Despite the DOJ approval, the merger has faced ongoing criticisms and scrutiny over the years:
- Consumer rights groups argued it created a monopolistic environment leading to higher fees and limited choices.
- Some competitors claim Live Nation has still managed to block them from getting access to tickets.
- There are concerns over conflicts of interest in Live Nation representing both artists and owning/operating many venues.
- In 2018, the DOJ launched a new probe into possible anticompetitive practices by Live Nation Entertainment.
On the other hand, Live Nation Entertainment has pointed to continued innovation, strong competition, and increased consumer choice since the merger:
- They’ve expanded platform options – mobile apps, Reserved Seating, and Presence (RFID technology).
- The development of the secondary ticket market provides more options for obtaining tickets.
- Fans have access to more algorithmic and curated recommendations for events.
- New ticketing entrants like AXS, SeatGeek, and Eventbrite have emerged.
The debate continues around whether the merger has ultimately benefited consumers and competition in the live entertainment industry. But the original approval paved the way for the combined company to dominate the sector for the past decade.
The Live Nation Entertainment merger was ultimately approved based on an assessment by the DOJ that efficiencies would outweigh potential harms, existing competition provided discipline, and conditions could mitigate concerns. However, critics argue the merger has still led to a less competitive industry with higher fees and barriers to entry. The impact of the vertically integrated company on consumers and emerging competitors remains a point of contention over 10 years later. But the DOJ approval in 2010 enabled Live Nation and Ticketmaster to combine into a powerful force shaping the live entertainment business.