Live Nation’s Outlook Downgraded by S&P Global Amid Justice Department Antitrust Lawsuit

S&P Global lowered its outlook on Live Nation Entertainment (LYV) to negative on Thursday, citing the Justice Department’s antitrust lawsuit against the box office giant.

“While the impact on the company and the live events industry is uncertain, we believe the lawsuit could harm Live Nation’s operating results,” S&P said in its report. “As a result, we have changed our outlook on Live Nation from stable to negative. We have also revised our governance and management performance from neutral to moderately negative.”

Last week, U.S. prosecutors and a group of states argued in a complaint that Live Nation used its alleged monopoly on Ticketmaster ticket sales to suppress competition, leading to higher prices and fees. The lawsuit, seeking to dissolve the company, follows a two-year investigation into Live Nation’s practices.

“The Negative Outlook reflects our view that the increased regulatory scrutiny, financial costs and potential disruption to Live Nation’s competitive position in the live events industry as a result of the antitrust lawsuit could impair the company’s creditworthiness and thus potentially result in a lower rating,” the agency added.

S&P maintained all of its ratings on the company, including its ‘BB-‘ credit rating. According to S&P, a speculative rating of “BB-” is assigned to companies that face “serious ongoing uncertainty related to unfavorable business, financial and economic conditions.”

Since the merger of Live Nation and Ticketmaster was approved in 2010, the company has been at the center of antitrust concerns, with critics focusing on exorbitant ticket fees and accusing the entertainment giant of anti-competitive behavior.

In 2020, the Justice Department updated the company’s consent decree, an agreement that prohibited Live Nation from heavily armed venues from using Ticketmaster for its tours, and extended it through 2025.

It did so after it said it found evidence that the company had repeatedly engaged in conduct over several years that violated its prior agreement.

Meanwhile, Capitol Hill stepped up its fight against Live Nation during a Senate Judiciary Committee hearing early last year following the 2022 Taylor Swift concert ticket debacle.

Ticketmaster’s online software struggled to cope with the demand for pre-orders, and fans complained that they were denied tickets when they tried to buy them.

While a company breakup is a significant risk, some Wall Street analysts consider it unlikely. Benchmark analyst Matthew Harrigan believes the Justice Department’s lawsuit against Live Nation is “significantly politicized” in the context of a U.S. election year and says the department has “generally failed to apply horizontal M&A theories.”

The story continues

“We continue to maintain that any targeted termination of the 2010 Live Nation Ticketmaster merger is likely unlikely under established antitrust law, although we would be cautious about the likely initial venue in New York State Federal Court,” it said.

Aleksandra Channel is a senior reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].

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