In 2010, Ticketmaster and Live Nation merged to create Live Nation Entertainment, the largest live entertainment company in the world. This merger raised significant antitrust concerns at the time and continues to draw criticism today. Critics argue that the merger has led to high fees and poor service for consumers. So why was the merger approved in the first place?
The Companies Involved
Ticketmaster was the dominant primary ticket seller for major concerts and sporting events in the US. The company sold over 140 million tickets per year through exclusive contracts with many major venues. It also owned several large ticketing companies in Europe. Live Nation was the largest concert promoter in the world, owning 120 venues and promoting over 16,000 shows per year. Live Nation contracted with Ticketmaster to sell tickets to its events.
Why a Merger Made Sense to the Companies
There were several reasons why Ticketmaster and Live Nation wanted to merge:
- Vertical integration – By merging, Live Nation would have full control of the entire live event process from promotion to ticketing.
- New revenue streams – The companies could cross-sell their services and products to each others’ customers.
- Cost savings – They estimated over $40 million in cost savings through synergies in overhead, IT systems, and operational staff.
- Competitive edge – Together they would have unmatched scale and comprehensiveness in live entertainment.
Additionally, the companies faced challenges that a merger could help address:
- Ticketmaster’s main revenue stream of service fees was under threat as more events began selling direct tickets without an outside vendor.
- Live Nation had incurred massive debt from rapid expansion and acquisitions.
- The recession decreased consumer spending on live events.
By merging, the companies aimed to solidify their dominance in live entertainment and provide financial stability through diversified operations.
The Antitrust Review Process
Because of the potential monopoly concerns, the Ticketmaster-Live Nation merger underwent a lengthy antitrust review by the U.S. Justice Department. The key issues considered were:
- Market concentration – The combined company would have over 80% market share in primary event ticketing and major concert promotion.
- Barriers to entry – High upfront ticketing technology costs and exclusive venue deals made it very difficult for competitors to enter the ticketing market.
- Vertical integration – The merged company might restrict competitors’ access to tickets or engage in exclusionary practices.
Despite these concerns, the Obama administration’s Justice Department ultimately approved the merger in January 2010 under a few conditions:
- Ticketmaster had to license its ticketing software to competitors AEG and Comcast-Spectacor for 10 years to allow independent ticketing companies to compete.
- The combined company was prohibited from retaliating against concert venues that chose to use other ticketing or promotional service providers.
- They appointed an independent monitor to ensure compliance with the merger terms.
Why Critics Think the Merger Should Have Been Blocked
The Ticketmaster-Live Nation merger has continued to draw strong criticism from consumer rights groups, music artists, competing ticketing companies, and politicians. Some of their key arguments include:
- The merger allowed Ticketmaster to impose exorbitant fees up to 25-30% on top of ticket prices with little competition.
- It created an illegal monopoly in the live entertainment market – the combined company today has 80-90% market share in major ticketing and concert promotion.
- Despite the regulatory conditions, genuine competition has not emerged and barriers to entry remain due to Ticketmaster’s longstanding exclusive deals.
- The independent monitor was not effective – a 2018 DOJ review found the company repeatedly violated the terms and extended the monitor until 2025.
- The merged company has retaliated against venues that consider working with other ticketing firms.
Critics argue the Obama administration was wrong to approve the merger and should have blocked it or imposed structural solutions like splitting the companies. With less competition, Ticketmaster-Live Nation has been able to continuously raise fees, exploit artists and venues, and provide subpar customer service.
Factors That Led Regulators to Approve the Merger
Despite valid antitrust issues, there were some key factors that convinced regulators in 2010 to approve the Ticketmaster-Live Nation merger with conditions rather than blocking it outright:
- Lack of consumer outcry – There was not a loud public opposition campaign against the merger at the time.
- Economic conditions – Allowing the merger provided financial stability for the companies during the recession.
- Limited direct competition historically – Ticketmaster and Live Nation operated in complementary businesses with Live Nation historically not competing in primary ticketing.
- Commitments to competitors – The requirement to license ticketing software and refrain from retaliation was seen as keeping doors open to competition.
- Influence of lobbyists – The companies spent millions on lobbying efforts to promote and ease the merger approval.
The DOJ likely felt that the proposed conditions would be enough to prevent significant future consumer harm from the increased market consolidation. But critics argue that regulators underestimated Ticketmaster-Live Nation’s ability to skirt those conditions and stifle competitors in practice.
Ongoing Controversy and Attempts to Enhance Competition
In the years since, controversy around the merger has only increased as consumers complain about added fees and artists like Bruce Springsteen condemn Ticketmaster’s practices. Multiple antitrust investigations have been opened examining their monopolistic power. Some actions include:
- In 2018, the DOJ reviewed and extended the merger oversight terms by 5 years for noncompliance.
- In 2019, the DOJ launched a new antitrust probe looking at allegations of anticompetitive conduct.
- In 2021, Senators Amy Klobuchar and Richard Blumenthal introduced the BOSS Act to encourage more competition in ticketing.
- Mulitple states have sued or launched investigations into Live Nation Entertainment’s practices and fees.
While it seems unlikely that the merger will be completely overturned at this late date, the ongoing scrutiny and proposals aim to improve consumer protections and help independent competitors gain traction in live event ticketing and promotion.
Conclusion
The Ticketmaster-Live Nation merger combined the two largest players in live entertainment ticketing and promotion into a behemoth controlling over 80% of major concert tickets and venues. While the Obama DOJ identified anti-competitive risks, it ultimately allowed the merger to proceed with some conduct conditions meant to protect consumers and competitors. In practice, critics argue those conditions have not been effective as Ticketmaster-Live Nation continues to impose high fees and stifle rivals. Ongoing controversy, lawsuits, and proposals for pro-competition legislation indicate the need for stronger solutions to prevent monopolistic power and exploitation in the ticketing industry.
