About a year ago, Ticketmaster Entertainment Inc, the world's largest ticket broker, and Live Nation Inc, the nation's largest concert promoter, announced plans to merge, proclaiming a deal that would unite two of the most powerful forces in the music industry. The announcement caused a great deal of reaction, as the possible synergies the deal would create presented a big concern for both companies’ competitors as well as antitrust authorities.
About a week ago, the Department of Justice announced that the deal had been approved, but with several conditions attached, to which the companies have agreed. While the deal sets the stage for the creation of a vertically integrated multifaceted live music company that would provide different types of services ranging from managing artists, arranging for their bookings, own some of the venues booked and sell their tickets, the Department of Justice has demonstrating a great deal of support and protection for new companies that would be formed as competitors.
The conditions imposed include forcing Ticketmaster to sell one of its subsidiaries that provides industry specific software for venue operators, Paciolan, for whose acquisition Comcast Spectacor has signed a letter of intent, as well as licensing its ticketing software to AEG Live, a subsidiary of an owner of about 100 venues. Additionally the DoJ prohibits retaliation against venue owners that work with the competitors and imposes a 10 year period of government oversight.
But even with these strict conditions imposed, does competition really stand a chance? Or are customers the ones that will end up paying the price, as concert ticket prices will most likely rise, representing not only a monopoly but also an added premium for the “bundled” services? Some argue that it is not Ticketmaster’s nor Live Nation’s fault that ticket prices have doubled over the past decade, but it is rather the artists that set the prices. While this may be true in theory, when supply is controlled by the ticket broker and they have the ability to channel tickets to even more expensive ticketing services, do consumers really have a choice? And while the DoJ’s measures support the creation of companies that would provide competition, do such companies realistically stand a chance when they would be entering a market already dominated by very large companies? A sliver of hope could be the fact that the deal has already had such negative press that the new merged company would actively try to make its customers happy in order to keep being a dominant player and maximizing the synergies created from the merger without losing from its huge customer base.
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