WASHINGTON (CelebrityAccess MediaWire) — While negotiations between Ticketmaster, Live Nation and the Justice Department continue, sources close to the matter are reporting that the two companies may need to make major concessions to get Justice to sign off on their proposed merger.
According to a story in the Wall Street Journal, sources close to the negotiations say that Justice Department officials have expressed concern that a merger between the two companies would have potentially adverse effects on artists as well as consumers.
Ticketmaster is already the biggest name in event ticketing and their acquisition of Irving Azoff's Front Line left them managing more than 200 major artists. Live Nation, the world's most prolific promoter, operates 139 venues and also runs ancillary businesses such as merch and companies that operate online artist fan clubs. Combined, the two companies have a stock market value of $1.3 billion.
While execs from Live Nation and Ticketmaster have said that the merger will create synergies that are good for fans, artists and their business and that the merger is important to the future of both firms, not everyone is in agreement. The Justice Department has heard complaints from both competitors and consumer advocacy groups who believe the merger will create a "virtual monopoly in the ticketing industry."
These concerns seem to have resonated with officials at the Justice Department who has been scrutinizing the proposed merger for almost a year. The delay appears to have worried leadership at both Ticketmaster and Live Nation and they "now sense they need to make some serious concessions," a person close to the matter, speaking on terms of anonymity told the Wall Street Journal.
Possible concessions could come in the form of Ticketmaster spinning off their management operation Front Line, which would go a long way to alleviating Justice concerns, but also is central to the deal and would diminish benefits realized by the merger. Other possibilities include Ticketmaster's secondary ticket market business TicketsNow, which has become a source of controversy for the company following recent revelations of their ticket selling practices.
While execs from both Ticketmaster and Live Nation stated earlier this year that they believed the merger would complete this fall, that timetable appears to be in some doubt and DoJ has indicated that they may not make a ruling matter until next year. The matter is further complicated by the U.K. Competition Commission, which issued an unfavorable preliminary ruling against the merger earlier this month but has yet to make a final determination. That determination is likely to inform, at least in part, DoJ's decision on the merger.
"Sometimes enforcers give you a roadmap of divestitures. Sometimes they wait for the company to provide answers. And sometimes they don't see a real solution to the concerns they have," said Lee Simowitz, an antitrust lawyer at Baker & Hostetler in Washington told the WSJ. – CelebrityACcess Staff Writers