Live Nation Responds to Department of Justice Antitrust Lawsuit

Live Nation’s Dan Wall insisted there is no “good faith argument” for the company to part ways with Ticketmaster amid the fallout from the Department of Justice (DOJ) antitrust lawsuit.

Wall, the company’s vice president of regulatory affairs, joined president/CFO Joe Berchtold on a call with investors to discuss the lawsuit, which accuses LN and Ticketmaster, which merged in 2010, of using “various tactics to eliminate competition and monopolization of markets.

The Justice Department’s allegations include acquiring competitors and making competitive threats, restricting artists’ access to venues, threatening and retaliating against venues that do business with rivals, blocking competition through exclusive contracts, and preventing venues from using multiple ticketing companies. He also claims the company is “exploiting” its relationship with facilities giant Oak View Group (OVG).

Live Nation’s share price fell following yesterday’s (May 23) announcement, but has since stabilized.

In a call with shareholders on the regulatory update call, Berchtold expressed optimism about reaching an agreement with the Department of Justice before filing a motion in the U.S. District Court, Southern District of New York.

“We have not seen that any of the issues are structural or fundamental to the nature of the company,” he said. “(We) viewed them all as separate business practices and hoped that through this we would be able to reach an agreement. Of course, in the end, this wasn’t their plan and we are where we are today.

“These are exactly the concerns that the Obama administration considered 15 years ago and that were addressed in the consent decree.”

Berchtold suggested one area of ​​”decoupling” with the Justice Department, focusing on the definition of market competition.

“Our view is that the competition competes in the area of ​​promotion, and the artist is the consumer, and that artist is very effective in engaging multiple bidders to compete for their services,” he said. “Artists are taking an increasing share of the money from the show, and they are the beneficiaries of this competition.

“The Department of Justice takes a different view on holding us accountable for service fees and ticket prices, even though we are not the primary beneficiary of either figure. We don’t unilaterally decide what those numbers will be; they are guided primarily by the places and the promoter. So we clearly disagree with them on the fundamental claims they make.”

Wall, who joined Live Nation last year after more than 12 years as a key adviser to the company, referred to U.S. Attorney General Merrick Garland’s statement that “it is time to cut ties with Live Nation-Ticketmaster.”

“These are precisely the concerns that the Obama administration considered 15 years ago and that were addressed in the consent decree,” he argued. “Under the circumstances, we simply do not believe there can be a good faith argument here that a separation can occur. But we all know that’s the most effective way to make headlines, and I think that’s why we see it. This is very unfortunate.

“There has never been a situation where the Department of Justice allowed a merger based on a consent decree that contained remedies that it said were effective remedies, and then came back later and tried to say it should end.”

“We will make every effort to bring the case to court within a year.”

Regarding the likely timeline for the case, Wall said: “We will address this matter as quickly as possible. We will make every effort to ensure that the case reaches court in a year, and if not in a year, then in a year and a half, and certainly soon thereafter. We are committed to committing the resources to get this done and get it over with because we are confident in our position on these claims.”

He was also critical of the Justice Department’s demand for a jury trial, dismissing the move as a “stunt.”

“It’s a coup, a strategy used by the Department of Justice in the Google ad technology case, and it’s highly unusual because historically, such antitrust cases have always tried to have judges rather than juries – because when the government is the plaintiff, it seeks injunctive relief, and all claims for relief are heard by judges, not juries.

“It seems like a pretty transparent attempt to avoid the referee’s scrutiny. And I don’t think that’s necessarily a smart thing to do because the first message you’re sending to the judge is that you don’t really want him to have any control over the outcome of this case, and that’s not a very smart message to send to a judge at the beginning of a case. “

Wall was also asked about the implications for the lawsuit of a potential change of administration if Donald Trump returns to the White House after the November US elections.

“It’s definitely difficult,” he said. “If we went back in time and you asked me whether I thought the first Trump administration would have brought this case, I would say I don’t think any prior administration – Republican or Democratic – would have brought this case. “But the circumstances, looking forward, will depend very much on who is appointed to those positions, and that makes it somewhat vulnerable.”

“Live Nation has repeatedly chastised Oak View Group for attempting to compete.”

The 128-page filing references LN’s relationship with OVG, which it describes as a “potential competitor-turned-partner that has described itself as ‘the hammer’ and ‘protecting (or)’ Live Nation.”

“In recent years, Oak View Group has avoided bidding against Live Nation for artist talent and has influenced sports venues to sign exclusive contracts with Ticketmaster,” it states. “For example, Live Nation has repeatedly chastised Oak View Group for attempting to compete. In one instance, Live Nation asked, “Who would be so stupid as to… play into the arms of (the artist’s agent), and on another occasion Live Nation stated, “Let’s make sure we don’t let (the artist’s agent) start ridiculing us now.”

“Live Nation and Oak View Group have colluded and entered into a collaboration to allocate lines of business, avoid competition with each other, and develop a mutually beneficial plan to consolidate Live Nation’s dominance.”

Wall disputes these claims in his extensive blog, pointing out that OVG is a venue management company, not a concert promoter.

“The Department of Justice’s claim is based on two incidents in which Live Nation and OVG discussed what to do when an OVG venue wanted to book occasional performances on its own on a dark night,” he continued. “Praying this as an agreement not to compete in concert promotion is a farce.

“Regardless, OVG’s behavior as a venue operator is fully consistent with every major arena and stadium in the country – OVG must have an in-house booker to help fill the dark nights, but is not interested in systematically taking on the risk of guarantees that could be millions of dollars per performance or tens of millions of dollars per tour.”

“There is no truth that this brief exchange had anything to do with Silver Lake’s decision to sell its shares in TEG.”

In another surprising accusation, LN is threatening commercial retaliation against private equity firm Silver Lake in 2021 unless the latter’s subsidiary, TEG, stops competing with Live Nation for artist promotion contracts in
US. He claims the threats “ultimately backfired and Silver Lake attempted to sell TEG altogether.”

“This claim reveals not only a disregard for the facts, but also a profound hypocrisy,” Wall responded. “The current Department of Justice and FTC have been vocal in their criticism of private equity firms making multiple investments in the same industry because of competitive “connections.” It was the same with Live Nation CEO Michael Rapino when Silver Lake Partners, having already invested in OVG, decided to invest in Australian live entertainment company TEG.

“Rapino’s complaint was essentially the same as the DOJ/FTC complaint regarding private equity holdings: it created a conflict between OVG, which had become a close partner of Live Nation, and TEG. So in December 2021, when a TEG employee wrote that he had no intention of competing with Live Nation in the U.S., Rapino responded to Silver Lake management that he didn’t care about TEG but still had a problem with Silver Lake’s decision to make multiple conflicting investments in industry.

“There is no truth that this brief exchange had anything to do with Silver Lake’s decision to sell its interest in TEG.”

Elsewhere, Diversity published an article asking whether things would improve for fans if Live Nation-Ticketmaster broke up.

“In reality, music fans’ concerns come down to one question: Will breaking up the two companies make the ticket purchasing process less of a crushing nightmare?” writes Jem Aswad. “In the short term, anyway, the answer is probably no… In fact, it’s the things that piss fans off the most – mysterious “service” fees, long wait times, a predatory secondary market and its bots that buy up blocks of tickets before regular people can get to the bring them closer – are beyond the scope of the lawsuit.

“It’s also important to note, as Live Nation often does, that Ticketmaster doesn’t set ticket prices – artists or promoters do – and doesn’t collect most of the service fees that so enrage fans (venues do).”

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