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MarketScreener Homepage  >  Equities  >  Nyse  >  Live Nation Entertainment, Inc.    LYV

LIVE NATION ENTERTAINMENT, INC.

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Justice Department Preparing Legal Action Against Live Nation for Ticketing Practices -- Update

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12/13/2019 | 04:22pm EST

By Brent Kendall and Anne Steele

WASHINGTON -- The Justice Department is preparing to take legal action against Live Nation Entertainment Inc. on allegations the company has sought to strong-arm concert venues into using its dominant Ticketmaster subsidiary, according to people familiar with the matter.

The department believes the concert-promotion giant's conduct has violated the merger settlement Live Nation and Ticketmaster reached with the government in 2010, the people said. Under that agreement, the department's antitrust division allowed the companies to combine, but required them to abide by conditions designed to keep consumer prices in check by preserving competition in the music and ticketing industries.

As ticket prices have risen, critics have questioned whether the settlement has worked as intended. It is due to expire next year, but the Justice Department now plans to ask a judge to extend the restrictions by several years and prohibit the alleged coercive conduct by Live Nation, the people said.

Live Nation's chief executive has publicly denied that the company has violated its agreement. The company and the Justice Department have engaged in talks but haven't settled their differences, people familiar with the matter said.

Details about the department's specific concerns couldn't immediately be learned.

The Live Nation-Ticketmaster merger consolidated two of the most powerful forces in the music industry. As the world's largest concert promoter, Live Nation organizes live music events -- booking talent, securing venues, setting ticket prices and marketing shows. It has also built a robust artist-management business.

The merger faced opposition at the time it was announced in 2009, and the Obama-era Justice Department's decision to allow the deal with a settlement wasn't well-received in some industry and consumer circles. Critics who say U.S. antitrust enforcement has been too lax have often pointed to the merger as one where the government should have taken a harder line to protect consumers.

In the past decade, and particularly over the last few years, ticket prices have soared -- increasing by nearly 50% since 2009 to $92.42 on average for the top 100 tours world-wide, according to Pollstar.

The settlement, known as a consent decree, forbids Live Nation from forcing venues that want to book the concert promoter's tours to use Ticketmaster for those shows, and from retaliating when venues choose to use a ticketing competitor instead.

The deal also required Ticketmaster to license its technology to Anschutz Entertainment Group, the distant No. 2 concert promoter, to build a competitive ticketing platform. That ticketing service, AXS, has had limited success outside of AEG's own venues.

Assistant Attorney General Makan Delrahim, the Justice Department's antitrust chief, confirmed during a September Senate hearing that the department was investigating allegations that Live Nation had been violating the decree.

Typically, venues ranging from nightclubs and theaters to arenas and stadiums enter long-term contracts giving a ticketing provider the exclusive right to sell tickets to any event they host. Ticketmaster holds an estimated 80% of the market, according to people in the concert industry. Over the years, Live Nation's competitors have accused it of using its market power as a concert promoter and artist manager to coerce venues into using Ticketmaster or risk losing out on lucrative bookings.

While in theory advances in new technology have made it easier for other ticketing companies to challenge Ticketmaster, in practice few venues have defected from their longstanding contracts with the giant, according to people in the industry. Almost 10 years since the decree was put in place, Ticketmaster has no serious competitor.

Live Nation previously dismissed the calls for investigation as based on a misunderstanding of the decree and ticketing-industry dynamics. Speaking at a conference in mid-September, Live Nation Chief Executive Michael Rapino said the decree allows the company to make decisions that are "right for our business," and that booking a Live Nation tour date at a venue that uses a ticketing provider other than Ticketmaster may not make economic sense for the company. He acknowledged that competitors have raised flags to the Justice Department, but said the company had never been found to engage in wrongdoing.

"We have no fear that we have any systematic issues. We're very compliant," he said.

The company has been facing fire from Congress as well as the Justice Department.

In August, Sens. Richard Blumenthal (D., Conn.) and Amy Klobuchar (D., Minn.) asked DOJ to investigate the state of competition in ticketing, focusing on the Live Nation-Ticketmaster merger.

Last week, four House lawmakers sent a letter to the department that expressed concerns about the merger, saying, "Our constituents are facing significantly increased live event prices and a lack of meaningful alternatives to purchase tickets to live events."

The signatories were Reps. Ken Buck (R., Colo.), Matt Gaetz (R., Fla.), Lucy McBath (D., Ga.) and James Sensenbrenner (R., Wis.).

The Justice Department rarely has sued companies for alleged violations of antitrust consent decrees, but Mr. Delrahim has publicly voiced the need for companies to abide by their commitments. He has called for changes in decree language that would make it easier for the department to establish violations in court, and to force merged companies to pay the government's costs in enforcing merger settlements.

The Live Nation decree also has arisen recently in a second context with the Justice Department. The company has asked the DOJ for permission to explore a transaction involving Rival, a ticketing company launched last year by former Ticketmaster CEO Nathan Hubbard, according to people familiar with the matter.

The decree requires Live Nation to give notice of any potential transactions of a ticketing company so the department can investigate the competitive effects of any such deal.

Mr. Hubbard led Ticketmaster for four years after the merger.

Mr. Hubbard, whose efforts attracted high-profile backers including top Silicon Valley venture-capital firm Andreessen Horowitz and Santa Monica, Calif.-based Upfront Ventures, envisioned fully digitizing tickets could address inefficiencies in how live events operate, and make them safer, by connecting identity, payment and location data.

He built the aptly named Rival to be what he hoped would be a serious competitor in ticketing.

Write to Brent Kendall at brent.kendall@wsj.com and Anne Steele at Anne.Steele@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
LIVE NATION ENTERTAINMENT, INC. 1.57% 72.01 Delayed Quote.0.76%
LONDON BRENT OIL -0.13% 59.92 Delayed Quote.-10.55%
WTI 0.13% 53.8 Delayed Quote.-14.28%
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Financials (USD)
Sales 2019 11 491 M
EBIT 2019 333 M
Net income 2019 45,9 M
Debt 2019 700 M
Yield 2019 -
P/E ratio 2019 365x
P/E ratio 2020 139x
EV / Sales2019 1,38x
EV / Sales2020 1,22x
Capitalization 15 174 M
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Mean consensus OUTPERFORM
Number of Analysts 16
Average target price 78,46  $
Last Close Price 72,01  $
Spread / Highest target 18,0%
Spread / Average Target 8,96%
Spread / Lowest Target -12,5%
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Managers
NameTitle
Michael Rapino Co-President, Chief Executive Officer & Director
Joe Berchtold Co-President
Gregory Ben Maffei Non-Executive Chairman
Elizabeth Kathleen Willard Chief Financial Officer
Mark D. Carleton Director
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