Critics howled about one company having too much control of the music industry when what is now Live Nation was called Clear Channel Entertainment and was a wholly owned subsidiary of the radio giant. As first reported by the Wall Street Journal, Live Nation is now on the verge of a merger with Ticketmaster, setting up the first major antitrust case for the Obama administration to tackle in the face of a beleaguered economy that’s as tough on the concert business as every other industry.
Ticketmaster (ticker TKTM) was recently spun off from Barry Diller’s IAC/Interactive. As the name indicates, it is best known for its business selling tickets to major concert and sporting events, but the company also owns Front Line Management, which handles some 200 major acts, including Miley Cyrus, Christina Aguilera and The Eagles.
Live Nation (ticker LYV), meanwhile, has multi-faceted deals with several major artists, most notably deals with Madonna an Jay-Z that pay them hundreds of millions of dollars over a number of years. And it is the world’s biggest concert promoter.
The combined company would reportedly be called Live Nation Ticketmaster, a firm able to manage everything from recorded music to ticket sales and tour sponsorship for artists. That sounds good for the merged companies and their shareholders, but the WSJ story notes the potential drawback: “Because it would be so vertically integrated, the new company would also be able to muscle out competing concert promoters and have more power to dictate ticket prices to consumers.”
For all the grief that Clear Channel took for combining radio airplay and concert promotion under a single corporation, the effort never paid off financially and Clear Channel wrote off billions when it spun-off Clear Channel Entertainment into a completely independent company that was renamed Live Nation. What that demonstrated, though, was how much attention there is from Congress when major music stars head to Capitol Hill to voice their complaints. If the stars turn out to fight this pending merger, you can bet that politicians will be rushing to share the spotlight.
RBR/TVBR observation: For Clear Channel employees (and former employees) still holding shares from the spin-off of Live Nation, you missed selling at the peaks around $25 in 2006 and 2007 before the dramatic plunge below $3 at one point last year. News of the likely merger sent the stock back toward $6 in trading yesterday, so you have an opportunity for a while to salvage some cash before this gets bogged down in antitrust review.
