Live Nation, Ticketmaster Merger Gets Approval

The U.S. Justice Department will allow the creation of ticketing and promotions mega-company.

The two biggest names in the concert business are about to become one gigantic one. The U.S. Justice Department on Monday approved the merger of ticketing giant Ticketmaster and concert promoter Live Nation, creating a live entertainment conglomerate the likes of which has never been seen before in the music industry.

Live Nation Entertainment, as the company will now be called, is expected to begin merging its operations as early as Wednesday, and experts predict that the combined forces of the two companies could alter the live music landscape.

According to the Los Angeles Times, the controversial $889 million merger, in the works for nearly a year, came with a number of major concessions to address concerns that the combined companies would possibly have an unfair near-monopoly on ticket sales, with an ability to book concerts, sell tickets and merchandise, and manage such major acts as the Eagles, Christina Aguilera, Guns N Roses and Aerosmith.

Among the concessions was the order to create a pair of rivals in the $4.8 billion ticketing industry to ensure a competitive market for ticket sales, which have been strong even as record sales continue a nearly decade-long decline. The provisions call for Ticketmaster — for nearly two decades the dominant ticket seller in the country — to give Live Nation rival AEG Live access to its ticketing technology so that it can create its own ticketing service. Before announcing plans to merge last year, Live Nation had attempted to launch its own rival ticketing agency, with mixed results.

Ticketmaster also has to divest in a subsidiary called Paciolan that provides software for venue operators to sell their own tickets. The sports division of Comcast Corporation has signed a letter of intent to purchase Paciolan. Finally, Live Nation — the largest venue owner/operator and promotions firm in the world — agreed that it will not retaliate against venue owners who leave to sign up with its rivals.

After the surprising announcement about the intended merger was made last February, consumers, artists and competitors cried foul, citing concerns that Ticketmaster's increased power and control over the concert industry could lead to price increases and decreased competition. Ticketmaster sold more than 141 million tickets worth more than $8.9 billion in 2008, grabbing an 83 percent share of the market for major venues, with the next-biggest competitor holding just under 4 percent of that market.

"While we appreciate the efforts of the DOJ to extract meaningful concessions from the parties, we remain concerned that these two companies, with a history of anti-consumer behavior, will abide only by the letter and not the spirit of the settlement agreement," said Sally Greenberg, executive director of the National Consumers League.

Ticketmaster CEO Irving Azoff has long said that the merger will actually help the moribund music industry by helping to smooth the efficiency of delivering music and music-related merchandise to fans, the Times reported. The Department of Justice said the initial filing for the merger did contain anti-competitive elements, which is why the concessions were ordered before final approval was given.

Under the new deal, some major acts could conceivably have their merchandising, ticketing and management under the control of the same company that owns the venues they perform in, a first for the music industry.

Despite the grumbling that a merger could give consumers less choice and lead to higher prices, the companies have argued that their combined power will be good for customers. "It will give us greater flexibility in how we promote, market and sell tickets to events," Azoff told the Senate Judiciary Committee in February. "It will give us a pathway to alternative pricing and fee structures."