Investors frown on Ticketmaster-Live Nation merger
Posted
Feb 10 2009, 02:21 PM
by
Kim Peterson
Rating:
A merger between Ticketmaster (TKTM) and Live Nation (LYV) would create a massive conglomerate controlling the live music industry in this country. Investors aren't happy and concertgoers are wary.
Shares of both companies fell after news that Live Nation wants to buy Ticketmaster for $400 million in stock. That's mostly because of concerns that antitrust regulators are going to spike the deal like a Super Bowl football. Already, lawmakers and artists are signaling their opposition, and investors are worried that the Obama administration might do the same.
This merger "would give a giant, new entity unrivaled power over concertgoers and the prices they pay to see their favorite artists and bands," said Democratic Sen. Charles Schumer.
And from what I can tell, he's probably right. The new company would sell more than 150 million concert tickets and promote 22,000 concerts a year, and own more than 140 venues globally, according to Reuters. It will also manage at least 200 big-name artists, including Madonna, Jay-Z, Miley Cyrus and the Eagles.
The combined company wouldn't really have much in the way of competition.
Now, Ticketmaster and Live Nation have good reasons for merging. The companies used to be solid business partners, but Live Nation broke off the relationship and said it was going to start competing with Ticketmaster instead. I have no doubt that a merger plan was already baking even then.
The companies say they need to combine to survive in this economy, and would save about $40 million a year in operating costs.
To be fair, we have no evidence that a combined company would raise concert fees or try to squeeze concertgoers in other ways. It's hard to imagine Ticketmaster piling on to its already onerous fee structure. But the merger's impact on customers is clearly a concern, and I imagine that regulators will be poking and prodding the proposal for quite some time.
Shares of Ticketmaster were down 6.4% today to $6.15, and shares of Live Nation dropped 8.9% to $4.82.
Related reading:
Ticketmaster could get even bigger with merger deal
Ticketmaster headed for a big fight
A new threat for Ticketmaster?
