Concert Giants Unfurl Merger

By David Montgomery
Washington Post Staff Writer
Wednesday, February 11, 2009

Ticketmaster and Live Nation -- the biggest ticket seller and the largest live-event promoter -- announced a $2.5 billion merger yesterday, creating a vertically integrated entertainment behemoth that has competitors nervous and federal regulators watching.

What's in it for ticket buyers is far from clear. The era of the dreaded "convenience charge" might be ending -- but there's no guarantee of lower ticket prices.

The deal must still be approved by shareholders and pass regulatory scrutiny, probably by the Justice Department, which has looked into a major ticket company merger in the past. A department spokeswoman would only say, "We are aware of the proposed transaction."

Shareholders of Ticketmaster and Live Nation, both publicly traded companies based in Los Angeles, would each own about half of the new entity, called Live Nation Entertainment, which, if the deal is approved, would be born later this year.

"Too many tickets go unsold and too many fans are frustrated with their ticket-buying experiences," said Michael Rapino, chief executive of Live Nation. "The current inefficiencies in the system result in higher costs and confusion over access to seats."

Rapino, Ticketmaster chairman Barry Diller and Ticketmaster chief executive Irving Azoff portrayed the deal in a conference call with industry analysts as a way to simplify the process for fans while simultaneously selling more seats and making more money.

The goal: "Putting the right fan in the right seat at the right time," said Rapino.

And: "We will create greater connections between artists, performers, athletes and fans," and "improve the experience for all," said Diller.

But the executives were short on specific examples of how they will accomplish this. They did acknowledge their business has an image problem.

"Ticketmaster is never perceived to be on the side of the angels," Diller said.

Some analysts say that's why the name "Ticketmaster" will not live on in the combined company.

The executives touted one specific innovation launched on the Eagles' recent tour. Extra charges and fees were rolled into the face value of the ticket. Fans didn't necessarily pay less, but at least they escaped the annoyance of incremental unexpected price hikes.

Still, this idea of combining ticket selling, artist management (another part of Ticketmaster's business), concert promoting and concert venue ownership (another part of Live Nation's portfolio) in one vast entity gives pause to some skeptics.

Bruce Springsteen criticized the deal after a ticketing snafu caused some fans to pay inflated prices for his current tour. Diller said it was a technical glitch and fans are being reimbursed.

Independent club owners and promoters worry about this massive potential competitor gaining access to their private sales information. Many sell tickets through Ticketmaster, which has deals with many key local venues. If Ticketmaster becomes part of a rival entity that also promotes shows and competes for artists, the rival will have immediate access to ticket sales data -- invaluable inside intelligence for competitive marketing.

"They basically have all your books, how many tickets sold, how fast, how much they cost, all of that private data going to the 800-pound competitor," said Audrey Schaefer, spokeswoman for the 9:30 club and I.M.P., the local concert promoter and producer.

Live Nation is planning to open a Fillmore rock club in Silver Spring by 2011. It also promotes shows in such venues as the Warner Theatre, Lisner Auditorium and Rams Head Live.

The new merged rival also would presumably be able to harvest e-mail addresses of online ticket buyers for future marketing purposes.

"Of course, that's bad -- why wouldn't that be bad?" said Seth Hurwitz, co-owner of the 9:30 club and I.M.P.

A promoter tied to another prominent local venue raised the same complaint but said he couldn't be quoted without permission of the club owner, who did not return telephone calls for comment. A spokeswoman for Live Nation did not have an immediate response to those concerns.

"I think every concert promoter in the country is wondering the same thing," said Gary Bongiovanni, editor of Pollstar, a concert trade publication. "If you're inside the circle of the merger, it does allow you to control everything from fan to artists. The question is, if you're outside the circle, what it's going to mean."

"It's easy to see why people who aren't involved in this might be nervous," said Ray Waddell, who covers the concert business for Billboard. "So much power is concentrated under one roof -- ticket seller, promoter, manager, merchandiser, content distributor. . . . You're tapping into the revenue stream before the event, during the event, after the event, online, face-to-face, all these different ways."

Still, Waddell and Bongiovanni said they could also imagine advantages for fans, if the merger moguls live up to their promises of a more efficient, friendly ticket-buying experience. Some fans, said Waddell, desire all the cross-promotion, VIP access and special deals that the setup could create -- for a price.

The proposed merger comes as the live-concert business is under some stress. Rock stars depend on tours rather than album sales for most of their riches. Concert industry revenues were up 7 percent last year to a record $4.2 billion, according to Pollstar. But that was because of higher ticket prices. The number of tickets sold for the top 100 touring acts was down slightly.

Don't be too hard on the ticket purveyors and promoters, Waddell said. Artists still have the greatest say in the fans' experience, right down to ticket prices, he said. "Ticket prices are a direct function of how much the artist is being paid."

More bluntly: "Ticketmaster is a front for the greed of the artists," said Bob Lefsetz, editor of the Lefsetz Letter, a trade newsletter for music-industry insiders.

On the other hand, Lefsetz added: "Consolidation has never been good for the consumer or the still-independent concert promoter. The real issue becomes, will it pass antitrust scrutiny?"

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